India has an existing office stock of 592 million sq ft across seven major cities.
Nearly 30 per cent of office buildings in Mumbai, Delhi-NCR and Bengaluru are at least a decade old and need refurbishment that may cost about Rs 5,500 crore, according to property consultant JLL India.
After upgradation, rentals could rise by up to 40 per cent, the consultant said in a report ‘Futureproofing 2.0 Upgrading commercial assets to create lasting value’.
India has an existing office stock of 592 million sq ft across seven major cities — Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Chennai and Hyderabad. Of the total office stock, 379 million sq ft (64 per cent) is concentrated in Mumbai, NCR and Bengaluru.
“We see that while 64 per cent of India’s Grade-A office space is concentrated in its top-3 cities, 28 per cent of such spaces are at least a decade old, sans the latest facilities that newer buildings offer. Upgrading these buildings presents a massive investment opportunity of an estimated Rs 55 billion (Rs 5,500 crore),” JLL India CEO and Country Head Ramesh Nair said.
The older stock faces the risk of relatively higher attrition of occupiers and lower rents, he said.
More than 20 million sq ft of new office supply is added annually in Mumbai, Delhi-NCR and Bengaluru with greater operational efficiency and better human experience, pushing the older stock to the brink of obsolescence, the report said.
The consultant said that 34.5 million sq ft office space needs to be upgraded in Bengaluru at a cost of about Rs 1,310 crore, 26.4 million sq ft in Delhi-NCR with Rs 1,560 crore investment and 43.8 million sq ft in Mumbai at around Rs 2,610 crore.
The refurbishment may help these buildings command higher rentals. Rents could rise by 5-30 per cent in Delhi-NCR, 4-25 per cent in Bengaluru and 8-40 per cent in Mumbai after upgradation of these ageing commercial properties.