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.
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’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 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%.
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’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.
About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is a top tier global real estate services and investment management company operating in 69 countries with a workforce of more than 13,000 professionals. Colliers is the fastest-growing publicly listed global real estate services and investment management company, with 2017 corporate revenues of $2.3 billion ($2.7 billion including affiliates). With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide, and through its investment management services platform, has more than $25 billion of assets under management from the world’s most respected institutional real estate investors.
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