Delhi records robust annual office supply of nearly 6m sq ft in 2023

Over 1m sq ft was added in Q4 alone. 

New office completions in Delhi were recorded at 1.13 million sq ft during Q4, with additions in Gurgaon and Delhi SBD. 

According to JLL, supply during the full year 2023 was 5.53 million sq ft, headlined by Noida and Gurgaon, with nearly half of it in Noida, followed by Gurgaon, which had a share of 40%.

Here’s more from JLL:

Grade A office stock reached 149 million sq ft, solidifying Delhi NCR’s position as a prime office space destination. In 4Q23, net absorption surpassed new completions, leading vacancy to decline by 90 bps q-o-q to 25.7%. Strong supply additions of 39.5 million sq ft are expected between 2024 and 2028 in Delhi NCR.

Net absorption for 2023 touches 7.24 million sq ft

Delhi NCR recorded a net absorption of 7.24 million sq ft for full year 2023, backed by strong leasing volume in the last quarter of the year. It is second only to the net absorption figure in 2019, showcasing strong office market fundamentals. Gurgaon accounted for the largest share of Delhi NCR 2023’s net absorption with a share of 57%, followed by Noida with 33%.

The quarterly net absorption of 2.22 million sq ft in 4Q was up by 31% q-o-q with some large transactions being recorded. Gross leasing volume (GLV) for the quarter stood at 3.80 million sq ft, taking the GLV for the full year to 13.90 million sq ft. The year 2023 stood out both in terms of robust demand and quality completions, with some recording healthy pre-commitments.

Rents move up in 4Q23

Rents inched up during the quarter in all the submarkets in Delhi NCR, rising by 1.1% q-o-q and 2.2% y-o-y. Rents strengthened in quality office buildings and institutionally-owned projects. It is expected that they will further increase in core markets and low-vacancy corridors.

With the flight-to-quality trend continuing, rent premiums are commanded by office projects with green certifications and ESG features. Rents are also increasing in new phases of completed projects where the demand is high. As demand is created for traditional as well as flex office space, rents are expected to strengthen further.

Outlook: Delhi NCR office market to remain at the forefront in 2024

Demand is expected to remain strong in 2024, as Delhi NCR has a robust quality supply and a strong ecosystem for sustained growth. The influx of quality supply by developers and institutional players such as DLF, Hines, Godrej Fund Management, Max Estates and Tata Realty and Infrastructure is anticipated to contribute to the sustained growth of the office market.

Office demand in 2024 is expected to exceed that of the previous year. The robust demand is anticipated to be led by segments like IT/ITeS, Manufacturing, Flex, Consulting and GCCs. Pre-commitment levels are expected to be healthy for quality projects and assets by institutional landlords.

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