, India

New Delhi office leasing volume up 17% to 9.9msf in 2021

67% of all leasing transactions during the year were in Gurugram.

Gross office leasing in New Delhi NCR increased 44% q-o-q to 3.58 msf in the fourth quarter of 2021. Overall leasing volume likewise rose 17% y-o-y to 9.9 msf for the whole year. 

According to Cushman & Wakefield, Gurugram took the lead in quarterly as well as annual leasing with 84% and 67% share, respectively, with core markets such as Cyber City, MG Road, NH8 – Prime and Golf Course Road witnessing great traction. 

Here’s more from Cushman & Wakefield:

Fresh leasing led the demand during the year with a 69% share, followed by term renewals and pre-commitments with respective shares of 17% and 14%. The share of fresh leasing in overall demand increased in both Q3 and Q4, signalling confidence of occupiers to carry on with their footprint expansion. 

E-commerce was the leading demand driver for office space with a 24% share in Q4 leasing as the segment recorded some large transactions in 2021. Engineering & Manufacturing and Professional Services were the other segments that led demand with respective shares of 16% and 11% in Q4. 

The quarter was also quite impressive from enterprise seats take-up in co-working spaces. With a 7% share of flexible workspaces in both quarterly and annual leasing volumes, seats take-up grew by 5X over that recorded in the previous quarter. Office demand in Q4 was led by large spaces being leased in investible-quality stock with superior maintenance and hygiene standards. 

Overall net absorption for Q4 increased by 77% q-o-q at 1.4 msf on the back of robust office demand. Delhi NCR recorded a 28% increase in net absorption on an annual basis. The current surge in cases owing to the Omicron variant might put a temporary halt on return to work for employees. However, leasing demand by corporates is likely to remain largely unperturbed due to overall strong market fundamentals. 

Limited addition of new supply in Q4; vacancy levels decline sharply 

Delhi NCR recorded supply addition of merely 0.13 msf during the quarter in the micro-market of Golf Course Extension Road. Some of the projects slated for completion during the quarter got deferred to next year due to delays in obtaining occupation certificates. 

Overall vacancy level declined by a significant 105 basis points q-o-q as demand for space remained strong. Core markets enjoy tight vacancy levels, mostly in single digits, although large stock of strata sold buildings across Gurugram and Noida kept the overall city vacancy rate high at 26.7% at end-2021. Landlords have gradually started to lessen their accommodative stance on rents and maintenance charges, particularly in core markets, as demand strengthens. 

Robust pipeline of upcoming supply 

The slow construction activity in the fourth quarter could also be attributed to a ban imposed on construction activity by National Green Tribunal for a brief while due to unhealthy levels of air pollution. This resulted in completion schedules getting pushed by a few months and as a result, strong supply addition is expected in coming quarters. 

Noida Expressway, Golf Course Extension Road and Cyber City are expected to receive over three-fourth of the new space addition in 2022. While a few of the key upcoming projects have healthy pre-commitments, new supply infusion will exert an upward pressure on the city’s overall vacancy. IT-BPM and professional services segments are likely to be important demand drivers for office space in the city in the coming quarters.

 

Follow the links for more news on

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!