Maximize returns in India's office mkt: 'Rs 45,000 cr opportunity awaits'

Bengaluru, Delhi NCR, Mumbai, and Hyderabad account for about 81% of the total investment opportunity

India’s top office markets—Bengaluru, Delhi NCR, Mumbai, and Hyderabad—are poised to capture approximately Rs 45,000 crore (roughly $5.3 billion) in investment opportunities through retrofitting (improving the existing building design and engineering, integrating new technology, enhancing user experience, and incorporating climate adaptive features and capabilities) and upgrading existing buildings), according to the latest report by property consultant JLL. 

 

According to the JLL report Futureproofing 4.0: Opportunity through obsolescence, approximately 62% of India's Grade A office stock across top seven cities, equivalent to 530.8 million sq. ft, requires upgrades – spanning from light to moderate to deep interventions. "This presents both a challenge and an unprecedented opportunity for stakeholders across the industry. The focus of this transformation opportunity is primarily headlined by four key markets - Bengaluru, Delhi NCR, Mumbai, and Hyderabad - which account for about 81% of the total capex spend. These four markets also represent about 75% of occupier activity in the country and thus need critical developer and investor interventions to keep office assets ‘relevant’," noted the report. 

 

 

Retrofitting buildings to meet modern standards can result in rental premiums of 15-30%, with some prime locations, like Mumbai’s SBD BKC (Bandra-Kurla Complex) and Western Suburbs, seeing increases of up to 50%. For property owners, upgrading older office buildings is not just about modernizing the physical space; it’s about transforming these properties into competitive assets that stand the test of time in a rapidly changing market.

 

The Key Markets: Bengaluru, Delhi NCR, Mumbai, and Hyderabad

While the retrofitting opportunity is national, four cities stand out due to their substantial share of occupier activity and investment potential. Bengaluru, Delhi NCR, Mumbai, and Hyderabad account for a combined 81% of the total retrofitting opportunity and 75% of national occupier activity. These cities are where the lion’s share of investment will flow, making them crucial hubs for both current and future office market developments.

 

Bengaluru: The Silicon Valley of India leads in office retrofitting opportunities offering the largest potential among major Indian cities, with 155.9 million sq. ft of Grade A stock requiring an estimated Rs 14,410 crore in upgrade spends. The Outer Ring Road Southeast, Whitefield, and SBD City submarkets present the most significant opportunities, with potential rental premiums of 10-25%, said the report. 

 

Chennai: 76% of Chennai's office stock is primed for upgrades with the city presenting Rs 4,390 crore investment opportunity across 60 million sq. ft. Top submarkets PBD OMR, SBD, and SBD OMR offer rental premium potential of 16-43%, making Chennai an attractive market for office retrofits.

 

Delhi NCR: Rs 7,690 crore office upgrade opportunity highlights Delhi NCR's substantial office retrofitting potential, with 88.2 million sq. ft of Grade A stock ready for upgrades. Gurugram Prime NH-8, Noida-Greater Noida Expressway, and Noida City lead the charge, offering 17-35% rental

premiums post-renovation.

 

Hyderabad: Hyderabad's tech corridors present massive office upgrade potential at an Rs 7,010 crore investment opportunity in Hyderabad's office market. With 95.7 million sq. ft of upgradable stock, Hitec City and Gachibowli stand out, offering 19-36% rental premiums for renovated spaces.

 

Kolkata: Rs 600 crore retrofit opportunity awaits Kolkata. Rajarhat and Salt Lake submarkets offer the most potential, with possible rental premiums of 10-20% for upgraded spaces.

 

Mumbai: Rs 7,240 crore retrofitting opportunity across 72.4 million sq ft of upgradable office space is on offer in the megapolis. Navi Mumbai, Western Suburbs, and SBD BKC lead the pack, with potential rental premiums ranging from 20-50% post-renovation.

 

Pune: Pune's office market offers Rs 3,690 crore retrofit opportunity across 51.5 million sq ft. SBD East, Suburbs West, and SBD West present the most significant  potential, with achievable rental premiums of 10-24%.

 

“India's commercial real estate sector is at a pivotal moment, with an estimated Rs 45,000 crore opportunity in retrofitting across 530.8 million sq. ft of office stock. Around 32% of India's office stock was built earlier than or in the first decade of the new millennium. Even assets built later but prior to 2020 need to look at upgradation considering what tenants need today, given the changing dynamics  round the need for offices to become 'experiential', fulfilling the twin objective of being modern (agile, tech-driven, amenity-rich) and sustainable/low-carbon. Post-retrofit rental premiums offer tangible returns, while improved occupancy rates and longer lease terms further enhance the per-square-foot value of assets. By investing in these retrofits, property owners can expect rental premiums of 15- 30%, with some prime locations seeing increases of up to 50%,” said Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.