Retrofitting Offices: A ₹45,000 Crore Investment Potential for Enhanced Rentals in India

Key Takeaways

₹45,000 crore investment potential in retrofitting.
62% of Grade A office stock requires upgrades.
Bengaluru leads with ₹14,410 crore needed for retrofitting.
Four key markets account for 81% of capex.
Rental premiums can reach 50% in prime locations.

Mumbai, April 4 (NationPress) The office sector in India’s top seven cities presents an estimated ₹45,000 crore (around $5.3 billion) opportunity in retrofitting (enhancing existing building designs and engineering, integrating modern technology, improving user experience, and adding climate-resilient features) and upgrading current structures, as highlighted in a report released on Friday.

Approximately 62% of India's Grade A office stock across these major cities, totaling 530.8 million square feet (sq ft), is in need of upgrades, ranging from minor to extensive interventions.

The Silicon Valley of India, Bengaluru, stands out with the highest potential for office retrofitting, with 155.9 million sq ft of Grade A stock requiring roughly ₹14,410 crore for upgrades.

This scenario presents both challenges and significant opportunities for industry stakeholders, according to the report by JLL.

The transformation is primarily concentrated in four key markets: Bengaluru, Delhi NCR, Mumbai, and Hyderabad, which together account for around 81% of the total capital expenditure.

These four regions also encompass about 75% of the occupier activity in the nation, necessitating critical interventions from developers and investors to maintain the relevance of office assets.

“Around 32% of India's office stock was constructed earlier or during the first decade of the new millennium. Even properties built post-2020 must consider upgrades to meet current tenant demands, especially as the dynamics shift towards offices becoming more 'experiential', combining modernity (agile, tech-driven, amenity-rich) with sustainability,” explained Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

Post-retrofit rental increases provide tangible benefits, with enhanced occupancy rates and extended lease agreements further boosting per-square-foot asset values.

“Investing in these retrofits can yield rental premiums of 15-30%, with prime locations potentially experiencing increases of up to 50%,” added Das.

In prime areas, such as Mumbai's SBD-BKC and western suburbs, rental premiums could rise significantly, reaching 40-50%.

“Modernizing older buildings is essential; it is a strategic necessity in today’s competitive real estate environment,” stated Aditya Desai, COO-Project and Development Services and Head-Investor Solutions.