The commercial office space market in Delhi NCR had one of the best years in recent past. A total of over 12 million sq ft was transacted within Delhi NCR in 2019, more than double of 2018 uptake (around 5-6 million sq ft).
In spite of the global slow down, gloomy GDP and other economic numbers we witnessed an extremely robust commercial real estate market. Investors and companies seem to have become completely oblivious of the somber economic data as they seem undeterred and committed to finding quality office space, by devouring every inch of Grade A commercial real estate in the most thriving office space markets of India, in spite of continuous northward movement in commercial property rentals and prices.
Developers are working hard to keep up with the demand for Delhi NCR office space, from building ground-up developments in areas like Gurgaon and Noida and taking on redevelopment or adaptive reuse projects in neighborhoods like, south ext, Connaught Place, Preet vihar etc. Though main Delhi locations did not see any major transaction due to lack of fresh supply however, vacancy in all micro markets including Connaught place has diminished significantly. Having said that, rentals remain subdued with a marginal uptick in main Delhi business districts. On the other hand, both Gurgaon and Noida, really did come off the age this year with state of the art grade A office space supply with projects like the Vatika One on One, Gateway Towers, Delhi ONE, DLF Cyberpark, TATA trillium, Parsvanath 27 etc. Both the satellite towns really did push the envelope this year with a mind boggling absorption of around 7 million sq ft between the two. Gurgaon ending up gobbling up around 5 million sq ft and Noida was not too far behind with around 3 million sq ft.
Noida and Gurgaon both continued a northward journey. Significant areas being, Golf course extension road gaining over (15%) and Noida sector 16 (Rajnigandha chowk area) (over 20%) by the end of Q4 closing still looking quite strong. Most of the main Delhi micro markets, also remained stable, mainly because of a restrictive supply, however, we personally feel, this could change soon, unless the old buildings undergo redevelopment and modernize to meet the millennial office space aspirations. Overall average rentals for Delhi NCR office markets were around 75-80/sq ft with in Gugaon grade A commercial office space averaging around 85/sq ft, Delhi at 125/sq ft and Noida/Greater Noida Markets stood at approx 55/sq ft.
Major Contributing sectors and tenants:
Again, leading the pack was IT and IT enabled services (5 million sq ft approx.) followed by flex space providers, (2.5 million sq ft) consulting, insurance, manufacturing, logistics, finance, education, Etail, etc. Even though IT is again the front runner, its overall share has come down by 15% as recorded in year 2018, on the other hand co working (flex space) sector rose nearly 22% in 2019. Google with 650,000 sq ft in One on One, E&Y 400,000 sq ft in DLF cyberpark, Qualcom 300,000 sq ft at candor SEZ, Metlife 300,000 sq ft at Oxygen SEZ, Indiamart 200,000 at Assotech business cresterra.
If there is no major economic set back in the world economy in general, we expect the Delhi commercial office space market to remain quite sound for the rest of 2020 going forward, developers sitting on FSI can expect inventory to be lapped up in a jiffy at premium, if they are committed to delivering quality product. Overall, the office space market looks fairly young and healthy with no signs of waning out anytime soon.
Here is a list of 100 biggest office transactions to close in 2019, hope this gives a sense of where the smart money and overall office market is headed.
If you are looking for a deeper market insight, feel free to give us a call or write with your specific office space needs at email@example.com
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