FreepikThe Refurbishment Imperative for Indian Commercial Real Estate
With core assets scarce, investors use deep refurbishment and ESG upgrades to engineer returns and transform ageing office stock
November 3, 2025Real Estate
Written by Jorge Aguinaga
In India's robust commercial real estate market, a pronounced scarcity of investable core assets is forcing a major strategic pivot, especially as prime, stabilised properties are in short supply with many now held by real estate investment trusts (REITs).
Investors are therefore shifting their focus to core-plus, a strategy centred on deep refurbishment and ESG-compliant upgrades which is emerging as the most credible path to yield enhancement and sustainable value creation.
This modern core-plus strategy is far from a simple cosmetic touch-up, but is instead a "major surgery" designed to fundamentally transform an asset.
The playbook involves acquiring buildings that are not necessarily Grade-A themselves but are situated in premium locations, requiring the investor to commit the necessary capital for deep upgrades while holding the property.
The transformation is comprehensive, often involving stripping the building down, upgrading its mechanical and electrical (M&E) systems, and adding the integrated amenities now required for the modern workspace, such as cafes.
Even buildings 15-20 years old, which were built before modern green certifications were standard, can be upgraded to qualify for Grade-A operational certifications, a move that not only meets occupier demands but also unlocks significant new financial advantages.
The results were dramatic, as values more than doubled and rentals "almost doubled," leading to the upgraded asset being leased to 98-99%.
Most impressively, the refurbishment was so successful that it attracted clients to move from the prime district of BKC into Equinox, a building that was previously considered a "dead space".
This case study is a blueprint for a market-wide opportunity, particularly as there are still 600 million square feet of Grade-A office space in private hands beyond the REITs.
A significant portion of this inventory is now 10 years or older, and owners are fully aware that without significant upgrades to create a sustainable, relevant ecosystem, their assets will become irrelevant in the market.
This vast pool of ageing, well-located real estate truly represents the new greenfield for India's savvy commercial real estate investors.
High returns are actively engineered through a combination of higher leverage, capturing multiple rental cycles, and refinancing with cheaper green bonds post-upgrade.
Upgrading the vast pool of ageing Grade-A space has become a market-wide imperative to avoid obsolescence in a market that demands premium quality.
These strategic insights were shared during the panel discussion on "Commercial Real Estate Strategies - Investment Outlook for Core, Core-Plus & Alternative Assets".
The session was moderated by Shobhit Agarwal, MD & CEO at ANAROCK Capital, and featured reflections from leading experts including Anshu Kapoor, President and Head at Nuvama; Manish Swaroop, CEO at Signature Global; Sunil Varrier, Chief Acquisition Officer at Table Space; and Vithal Suryavanshi, CEO- Commercial at Phoenix Mills.
Access the full takeaways and C-level insights in the exclusive India GRI 2025 Spotlight.
Key Takeaways:
- With core assets scarce, the primary strategy is now manufacturing new core products by deeply refurbishing well-located older buildings with ESG-compliant upgrades.
- High returns are actively engineered through a combination of higher leverage, capturing multiple rental cycles, and refinancing with cheaper green bonds post-upgrade.
- Upgrading the vast pool of ageing Grade-A space has become a market-wide imperative to avoid obsolescence in a market that demands premium quality.
In India's robust commercial real estate market, a pronounced scarcity of investable core assets is forcing a major strategic pivot, especially as prime, stabilised properties are in short supply with many now held by real estate investment trusts (REITs).
Investors are therefore shifting their focus to core-plus, a strategy centred on deep refurbishment and ESG-compliant upgrades which is emerging as the most credible path to yield enhancement and sustainable value creation.
This modern core-plus strategy is far from a simple cosmetic touch-up, but is instead a "major surgery" designed to fundamentally transform an asset.
The playbook involves acquiring buildings that are not necessarily Grade-A themselves but are situated in premium locations, requiring the investor to commit the necessary capital for deep upgrades while holding the property.
The transformation is comprehensive, often involving stripping the building down, upgrading its mechanical and electrical (M&E) systems, and adding the integrated amenities now required for the modern workspace, such as cafes.
The critical role of ESG-compliant upgrades
Environmental compliance is a critical component of this value-add strategy, allowing investors to acquire assets and transform them to be fully ESG-compliant.Even buildings 15-20 years old, which were built before modern green certifications were standard, can be upgraded to qualify for Grade-A operational certifications, a move that not only meets occupier demands but also unlocks significant new financial advantages.
Panelists during India GRI 2025 agree that robust demand, driven by GCCs, continues to outstrip the supply of quality Grade A assets, keeping vacancies low and fundamentals strong. (GRI Institute)
Engineering high returns from value-add assets
The returns on these strategies are compelling, with stabilised assets being underwritten to achieve a gross 18-20% internal rate of return (IRR) on a three- to five-year basis, an outcome achieved through a few key levers:- First is the strategic use of higher leverage, where private funds can take on 60-70%, unlike more regulated REITs.
- Second, the investment thesis is built around capturing at least two rental pop-ups during the holding period.
- Finally, a sophisticated form of yield compression is at play, as by upgrading an asset to be green-compliant, investors can then refinance their standard loans into green loans. This option, which was not widely available just years ago, directly brings down the cost of capital and enhances overall returns.
The Mumbai transformation case study
This core-plus strategy is not just theoretical but has been decisively proven in the market, with a classic example being the transformation of the Equinox asset in Mumbai where the property underwent a "massive transformation" after its acquisition.The results were dramatic, as values more than doubled and rentals "almost doubled," leading to the upgraded asset being leased to 98-99%.
Most impressively, the refurbishment was so successful that it attracted clients to move from the prime district of BKC into Equinox, a building that was previously considered a "dead space".
This case study is a blueprint for a market-wide opportunity, particularly as there are still 600 million square feet of Grade-A office space in private hands beyond the REITs.
A significant portion of this inventory is now 10 years or older, and owners are fully aware that without significant upgrades to create a sustainable, relevant ecosystem, their assets will become irrelevant in the market.
This vast pool of ageing, well-located real estate truly represents the new greenfield for India's savvy commercial real estate investors.
Strategic takeaways
With core assets scarce, the primary strategy is now manufacturing new core products by deeply refurbishing well-located older buildings with ESG-compliant upgrades.High returns are actively engineered through a combination of higher leverage, capturing multiple rental cycles, and refinancing with cheaper green bonds post-upgrade.
Upgrading the vast pool of ageing Grade-A space has become a market-wide imperative to avoid obsolescence in a market that demands premium quality.
These strategic insights were shared during the panel discussion on "Commercial Real Estate Strategies - Investment Outlook for Core, Core-Plus & Alternative Assets".
The session was moderated by Shobhit Agarwal, MD & CEO at ANAROCK Capital, and featured reflections from leading experts including Anshu Kapoor, President and Head at Nuvama; Manish Swaroop, CEO at Signature Global; Sunil Varrier, Chief Acquisition Officer at Table Space; and Vithal Suryavanshi, CEO- Commercial at Phoenix Mills.
Access the full takeaways and C-level insights in the exclusive India GRI 2025 Spotlight.