Delhi gross office leasing volume hits 3.7msf in Q4 

This is the highest recorded volume in 2023.

According to a report by Cushman and Wakefield, Delhi NCR saw gross leasing volume (GLV) of 3.7 msf during Q4, highest volume recorded in 2023. The GLV was ~10% higher on a q-o-q basis, and marginally lower than the healthy volumes recorded last year in the same quarter. 

“Bulk of this GLV consisted of fresh space take-up with a share of 83%, followed by pre-commitments that acquired 11% share,” the report added.

Here’s more from Cushman and Wakefield:

Interestingly, the flex space sector was the biggest consumer of space in the fourth quarter with a 24% share, piping the usually dominant IT-BPM sector that had a 23% share in leasing. Engineering & manufacturing (E&M) was closely following with a 22% share in leasing. 

Once again, prime markets of Gurgaon, in particular areas such as NH-8 Prime, SPR and Cybercity, accounted for a dominant 62% share. Noida secured 34% share during the quarter, contributed heavily by the Expressway and Sector-62 markets. In terms of net absorption, Delhi NCR recorded 1.6 msf during Q4-23, marking a 34% increase from Q3-23, but a 28% decrease compared to the strong Q4 2022. 

The annual gross leasing activity reached 13.6 msf which was merely 5% lower than the record volumes seen in 2022. The IT-BPM sector led the annual demand with a 27% share, followed by the Engineering & Manufacturing sector and Flexible Workspaces with 17% and 15% share, respectively. The annual net absorption for 2023 stood at 5.4 msf, nearly 24% lower than last year. 

Vacancy rates inch-up marginally in Q4 as heavy supply enter 

Delhi NCR market received an influx of approx. 2.9 msf during the quarter taking the total annual launches for 2023 to 4.9 msf. Owing to a heavy supply entering the city in Q4, which was nearly 1.2X higher than the average of past 6 quarters supply, vacancy rate have increased slightly by 50 basis points on a q-o-q basis. 

However, a notable drop of 1.2% can be observed when compared to Q4-22 vacancy. Prime submarkets such as Cyber city, NH8 Prime and Golf Course Road in Gurugram, Noida city 2 in Noida and Aerocity region in Delhi continue to boast of tight vacancies and steady demand. 

There is visibility of over 19 msf of supply coming-up from 2024 until 2026, with nearly 44% of that coming in prime submarkets of Gurgaon and Noida. This is likely to push vacancy rate higher, although a strong demand is anticipated to act as a counterforce to some extent. 

Rentals rise marginally in Q4 

During Q4-23, Delhi NCR witnessed an increase of 1% q-o-q and a notable annual rental growth of 4%. This growth in rentals may be attributed to a consistent leasing activity during the quarter as well as the year despite heavy supply entering. Also, given the influx of superior grade office supply in upcoming quarters, the rentals may witness a further uprise.