Retro fitting old CBD properties in India. The great real estate opportunity?

Image: indialine.com

In a discussion over some road side tea, this question was popped by a colleague. "What is so special about the office spaces in the CBD. Look at the old, decaying buildings but the rentals are still sky high", she asked.

Really, what is so special about the CBDs of NCR, Mumbai, Chennai, Kolkata et al? What makes them premium real estate compared to modern day satellite towns and SEZs with classy, glass and steel structures? Why are these old structures in the CBDs still in demand?

Well here is what we figured out.
1) Limited office space supply
2) An established communication, transport and business 'ecosystem'. (You know how the printers and photocopiers and courier services etc are just a stone's throw away? Not to forget the amazing variety of street food on offer!)
3) Well connected infrastructure
4) A prestigious and unique address that rings a bell immediately
There is a great opportunity then to refurbish old structures in the CBD, ensure that they are fundamentally strong and safe and churn out some premium, prestigious addresses for the corporate houses! Today, Central Business Districts have a lot of competition from modern, classy, A - Class office buildings which offer much more economic status to their resident companies. A similarly refurbished and fitted out office building in a CBD would do equally well we reckon.

There is a downside to all this though. We did some asking and found out that that its difficult to break even for a property owner after sorting out the legalities, compensations and fitting out expenses of that haggard old building which he owns in the CBD. So its slow and inevitable death of the CBDs after all? Time will tell. But it will take decades for sure.