Delhi NCR to see 9.3m sq ft of new office space in 2022

This supply pipeline will largely be in the Gurgaon and Noida submarkets.

Noida had 0.35 million sq ft of new office space supply completed during 4Q21. Only one project, KP Tower C, was completed in Noida with no pre-leasing recorded. In Delhi NCR, for the full-year 2021, new supply additions stood at 8.51 million sq ft, increasing by 56% y-o-y.

In 2022, JLL says a supply of 9.3 million sq ft is expected, largely across the Gurgaon and Noida submarkets. Over the course of the next five years, superior grade office buildings by established developers are lined up to add quality office stock to the Delhi NCR office market.

Here’s more from JLL:

Delhi NCR recorded a net absorption of 1.61 million sq ft in 4Q21, a 15% increase q-o-q. Gurgaon led the demand with a 72% share of the net absorption as it recorded some large prominent transactions. Noida had a share of 21% while Delhi had a mere 6% share.

The majority of leasing activity was led by IT/ITeS (23%), e-commerce (17%) and manufacturing (15%) segments. Gross leasing activity was much higher as there were many renewal deals as well as pre-commitments. However, as the number of COVID-19 cases started increasing towards the end of 2021, return to work plans for corporates may see some delay as they keep a close eye on the events in 2022.

Rents remain stable

Rents remained stable across Delhi NCR and landlords continued to be accommodative to occupier’ requirements and support deal closures. With the recovery in demand in 2021, there is the likelihood of some rental growth in key corridors in 2022, if the third wave is contained and does not affect the recovery of the office market.

There is a trend of flight-to-quality by occupiers looking at healthy, well-managed buildings; and therefore, rents of such office assets are expected to remain resilient in the coming quarters.

Outlook: COVID-19 concerns may disrupt activity in the short term

Both occupiers and landlords are likely to continue with their cautious approach and will ‘wait and see’ to observe how the market pans out over the next quarter or so. However, it is expected that in 2022, net absorption will continue to build on its recovery given the large supply pipeline, improving economic parameters and better understanding of the pandemic.

Gurgaon and Noida are expected to have both a robust supply pipeline as well as active demand from occupiers and, therefore, will continue to be the preferred office destinations in Delhi NCR. Flex space operators are also expected to expand their footprint, driven by demand for managed office spaces.

Note: Delhi Office refers to Delhi NCR's overall Grade A office market.