JLL Report: Approx 30% of the Office buildings in the top three cities need refurbishment.

As per property consultancy JLL India, approximately 30% of office buildings in Mumbai, Delhi-NCR and Bengaluru are at least a decade old and require refurbishment that might cost over Rs 5,500 crore. The consultancy said in a report ‘Futureproofing 2.0 Upgrading commercial properties to build sustainable value’ after upgrading, rents might increase by up to 40%.

India has 592 million sq ft of current office space spanning seven major cities — Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Chennai and Hyderabad. Out of the total stock of offices, 379 million sq ft (64%) is clustered in Mumbai, NCR and Bengaluru.

“We see that although 64% of India’s Grade-A office space is clustered in its top-3 towns, 28% of those spaces are at least decade-old, without the latest facilities provided by new buildings. Upgrading these buildings offers an additional Rs 55 billion (Rs 5,500 crore) huge investment opportunity,” said JLL India CEO and Country Head Ramesh Nair. The older stock faces the possibility of comparatively higher occupant attrition and lower rentals, he added.

In Mumbai, Delhi-NCR and Bengaluru, more than 20 million sq ft of new office supply is created annually with greater productive capacity and improved human experience, bringing the older stock to the verge of stagnation, the report stated.

The consultant said there is a need to upgrade 34.5 million sq ft of office space in Bengaluru at an expense of about Rs 1,310 crore, 26.4 million sq ft in Delhi-NCR with Rs 1,560 crore expenditure and 43.8 million sq ft in Mumbai at about Rs 2,610 crore.

The refurbishment may also order higher rents for these buildings. Rents could increase 5-30% in Delhi-NCR, 4-25% in Bengaluru and 8-40% in Mumbai after these deteriorating commercial properties is upgraded.