Landlords and developers have a scope to upgrade about one hundred mn sq ft (9 mn sq m) of workplace space in the leading six cities, accounting for 14% of the current stock. Currently, investors are betting on underconstruction buildings due to lack of readily investible assets. However, the retrofitting of these assets has Rs 9,000 crore ($1.2 billion) worth of unrealised worth in the leading six cities, as per Colliers’ most current report.
The report, titled ‘Revitalizing outdated buildings: A requisite to avoid redundancy’, reveals that the upgradation of buildings will make them more investible, which investors and developers can then bundle into a REIT.
While upgrading buildings needs important capital, the benefits range from rental appreciation and reduced operational expenses, to attracting blue-chip occupiers and escalating the longevity of the building.
“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%,” stated Ramesh Nair, Chief Executive Officer, India & Managing Director, Market Development, at Colliers India.
The report talked about that occupiers’ desires and preferences are altering. This tends to make it crucial for outdated workplace buildings to be upgraded. Occupiers are increasingly exploring wise buildings with contemporary amenities that increase operational efficiency and allow collaboration. Moreover, COVID-19 has brought the well being and security of personnel to the centre stage. As personnel steadily return to the workplace, workspaces will have to have to meet the expectations of the new normal.
According to Colliers, CBDs of the leading Indian cities such as Nariman Point in Mumbai, Connaught Place in Delhi, and MG Road in Bengaluru are iconic. They have played an huge function in the development of these cities. However, about 60% of the total CBD stock of the leading six towns needs upgradation. Tapping into this prospective will be a excellent investment chance for developers and investors.
Bengaluru, Delhi-NCR and Mumbai with each other account for about 75% of the total stock prepared for upgradation. Mumbai has the highest prospective, with 28 mn sq ft of obsolete inventory. In the NCR, Delhi leads for upgradation in the Central Business Districts (CBDs), Nehru Place and Okhla micro-markets exactly where up to 49% of the stock 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,” stated Argenio Antao, Chief Operating Officer, India.
Upgrading these buildings with contemporary amenities, styles, and developing technologies will not only attract huge investment possibilities but also command greater rentals and worldwide corporations. Occupiers will also be inclined towards upgraded buildings additional led by the prominence of place, robust public transport, and low new provide in these markets.