Upgrading India's Office Buildings: INR 45,000 Crore Opportunity

• Approximately 62% of India's Grade A office stock, or 530.8 million sq. ft, requires upgradation interventions to meet future occupier needs and sustainability standards.
  
  
• Bengaluru, Delhi NCR, Mumbai, and Hyderabad account for about 81% of the total investment opportunity, underscoring the importance of these key markets in driving the retrofitting trend.
  
  
• Successfully upgraded assets can potentially see rental upside of 15-30%, with some submarkets offering up to 40-50% rental premium post such upgrades.

MUMBAI, APRIL 04, 2025: While India’s office market remains a strong global performer, it also needs to keep pace with the rapidly evolving sustainability standards, occupier demands, and regulatory requirements. The office market across the top seven cities offers an estimated INR 45,000 crore (approximately USD 5.3 billion) opportunity in 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 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’.

The report observes that the definition of retrofits has undergone a shift across the entire paradigm of property attributes. This comes as no surprise amid the soaring demands from tenants for 'quality' assets as they move on from 'commodity' assets. This shift will keep investors and landlords on their toes as they seek to create higher quality, low-carbon, sustainable, and resilient buildings in a bid to remain relevant and adhere to evolving emission and benchmarking mandates.

“India's commercial real estate sector is at a pivotal moment, with an estimated INR 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 around 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.

Successfully upgraded assets stand to benefit significantly, with potential rental premiums of 15-30% compared to non-retrofitted buildings. In some prime locations, such as Mumbai's SBD BKC and Western Suburbs, these premiums could soar even higher, reaching an impressive 40-50%.

“Upgrading older buildings is not just about modernization; it's a strategic imperative in today's competitive real estate landscape. Our analysis reveals that four key markets - Bengaluru, Delhi NCR, Mumbai, and Hyderabad - represent 81% of the total retrofitting investment opportunity, mirroring their 75% share of national occupier activity. By addressing the 'brown discount*' and 'age risk' through targeted improvements, we can transform properties facing obsolescence into valuable assets,” said Aditya Desai, COO - Project & Development Services and Head - Investor Solutions, India, JLL

^{*Brown Discount: Refers to the potential devaluation of older buildings that haven't been retrofitted or maintained to modern environmental, required compliance and efficiency standards}

Retrofitting our cities:

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 INR 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%.

Chennai: ~76% of Chennai's office stock is primed for upgrades with the city presenting INR 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: INR 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 INR 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: INR 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: INR 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 INR 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%.

JLL is India’s premier and largest professional services firm specialising in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of over 16,000 professionals. The Firm provides investors, developers, local corporates, and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visit jll.co.in