Projects need HVAC upgrades, improve air quality and smart features
The retrofitting of around 100 million sq ft of office space is expected to generate a business worth Rs.9,000 crore (US$1.2 billion) in top six Indian cities as per Colliers’ latest report, ‘Revitalizing outdated buildings: A requisite to avoid redundancy’.
The upgradation of buildings will make them more investible, which investors and developers can then bundle into a REIT, said the report. Currently, investors are betting on under-construction buildings due to a lack of readily investible assets.
“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,” said Ramesh Nair, Chief Executive Officer for India & Managing Director, Market Development, at Colliers India.
“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%,” Nair said in a release on 24 Sept 2021 from Gurugram.
The report highlighted that Occupiers’ needs and preferences are changing. This makes it imperative for outdated office buildings to be upgraded. Occupiers are increasingly exploring smart buildings with modern amenities that improve operational efficiency and enable collaboration.
Moreover, COVID-19 has brought the health and safety of employees to the centre stage. As employees gradually return to the workplace, workspaces will need to meet the expectations of the new normal, it said.
According to Colliers, CBDs of the top Indian cities such as Nariman Point in Mumbai, Connaught Place in Delhi, and MG Road in Bengaluru are iconic. They have played an enormous role in the growth of these cities. However, about 60% of the total CBD stock of the top six towns require upgradation. Tapping into this potential will be a good investment opportunity for developers and investors.
Bengaluru, Delhi-NCR and Mumbai together account for about 75% of the total stock ready for upgradation. Mumbai has the highest potential, with 28 million sq ft of obsolete inventory. In the NCR, Delhi leads for upgradation in the CBD, Nehru Place and Okhla micro-markets 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,” said Argenio Antao, Chief Operating Officer, India.
Upgrading these buildings with modern amenities, designs and building technology will not only attract massive investment opportunities but also command higher rentals and global companies, said the report. Occupiers will also be inclined towards upgraded buildings further led by the prominence of location, robust public transport, and low new supply in these markets. #tenders #projects #investment /fiinews.com
