100 mn sq ft office space needs upgradation in top 6 cities with Rs 9,000 cr investment
New Delhi: Retrofitting and upgrading outdated office buildings holds investment potential of as much as Rs 9,000 crore in the top cities of the country with a scope to improve about 100 million square feet of office space.
The upgradation process of the office buildings will make them more attractive for investment and can be included in REIT. Right now, investors are resorting to putting their money in under-construction buildings as there is lack of investible assets, according to a study by Colliers India.
“This is an opportune time for landlords to upgrade their properties. Many occupiers are considering moving from old-generation to new-generation buildings and, more than ever before, looking at aspects like HVAC upgrades, improved indoor air quality standards and smart features. The focus is also on modern amenities which improve operational efficiency and enable collaboration. Occupiers are also looking at a reduced CAPEX from their side. In this context, retrofitting buildings will revive demand by generating a renewed sense of interest among occupiers. While up-gradation can involve increased costs, landlords can see the rental appreciation of up to 20 percent,” said Ramesh Nair, Chief Executive Officer- India & Managing Director, Market Development, at Colliers India.
Around 60 percent of the overall CBD stock of buildings in the top six cities require up-gradation. Bengaluru, Mumbai and Delhi-NCR account for about three-fourths of the overall stock ready for up-gradation. Mumbai has the maximum potential with 28 million square feet of obsolete inventory. In Delhi NCR, Nehru Place and Okhla have about 49 percent of the office stock which is outdated.
“Energy retrofitting, technology integration and design are some vital elements for retrofitting. Tech-enabled air distribution systems, innovative glass technology, double glazing to cut energy requirements are some essential aspects that landlords can look into while retrofitting. Well-being focused design elements like increased natural lighting and ventilation, and occupiers will increasingly prefer integrated outdoor spaces, says Argenio Antao, Chief Operating Officer, India.