Gurugram, 12 February, 2019 –  In 2018, the National Capital Region (NCR) recorded the highest leasing volume in the past eight years. The overall absorption of the region was 10.1 million sq ft in 2018, a 27.3% YoY increase. In Q4 2018, the NCR witnessed three major pre-commitments in Gurugram totaling 435,000 sq ft. These are likely to be absorbed in 2019. Across NCR, demand came primarily from the IT-ITeS sector, accounting for 24.1% of total leasing. This was followed by Banking, Finance and Insurance Services (BFSI) sector with 16.7% and engineering and manufacturing which accounted for about 15.1% of total leasing. Overall, the absorption for NCR in Q4, 2018 remained at 2.2 million sq ft.  

“The NCR office market is likely to retain its position as the second most active market across the country with respect to gross absorption. Flexible workspace/Coworking segment contributed almost 12% and stood the fourth largest contributor in the overall/gross leasing activity in NCR. We anticipate the share of Flexible workspace to go up significantly in 2019 as well. Despite rise in vacancy levels by end of the year owing to infusion of supply, rents are expected to rise led by demand in key business districts and premium buildings in cities of Gurugram and NOIDA. We foresee cost-conscious occupiers with large space requirements to expand in locations such as NOIDA Expressway and Golf Course Extension Road since these micro markets/districts offer rents up to 50% lower than in the secondary and established business districts”, says Vineet Anand, Director, Office Services (NCR) at Colliers International India.

Delhi

Delhi’s office market recorded gross absorption of 770,000 sq ft in 2018, representing an annual reduction of 41.4% owing to limited availability in quality developments. The Aerocity micromarket remained a favourite amongst the corporate occupiers. In 2018, Aerocity accounted for 29.3% of the overall leasing followed by the Central Business District (CBD) with 13.6%. The Secondary Business Districts (SBD) such as Saket, Nehru place and Jasola together represented 19.6% of the office space take-up.

In 2018, the leasing activity was led by occupiers in the engineering & manufacturing sector, accounting for 24% of gross absorption, followed by the BFSI sector representing 21%. Flexible workspace operators leased 9.3% of space in 2018, which is 7.4 pps higher than in 2017.

In the last two quarters of 2018, an additional 400,000 sq ft of supply was released into the market. Looking at future development plans from 2019-2021, Delhi is planned to see 3.9 million sq ft of office supply, increasing the existing office stock by 26.4%.

Gurugram

In 2018, Gurugram witnessed gross absorption of 5.4 million sq ft, an increase of 19.8% YoY. The Cyber City micromarket emerged as the most preferred location, constituting 21.7% of overall leasing activity, followed by Golf Course Extension Road (GCER) and Golf Course Road at 15.8% and 12.1%, respectively.

On the supply front, the city witnessed 1.4 million sq ft of new supply, which is the lowest since 2009. This can be attributed to the fact that the developers are going slow on completing new projects in the wake of persistently high vacancy rates. Gurugram has a supply pipeline 24.6 million sq ft during 2019-2021, which should increase the city-wide Grade A office stock by 30.9%.

NOIDA

NOIDA’s office market witnessed record leasing activity in 2018 at 3.9 million sq ft, registering a significant increase of 86.2% YoY. The IT-ITeS sector continues to be the largest occupier accounting 28% of overall absorption, followed by the engineering & manufacturing sector at 24% and the BFSI sector with 13% of the overall leasing in 2018.

In 2018, the NOIDA’s Grade A office market saw new completions of 1.5 million sq ft increasing the city-wide stock by 5.2%. However, being motivated by the increased corporate demand, we project developers will look at completing their ongoing projects amounting to 14.4 million sq ft by the end of year 2021.

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