Delhi (NCR) Office Market Snapshot 2013 Report
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HIGHLIGHTS • In 2013, Delhi NCR witnessed approximately 8.31 MN SF of commercial space lease absorption 22% up from previous year. • Within Delhi NCR, 70% of the space was leased in Gurgaon, 23% in NOIDA and the remaining 7% in Delhi. • A number of large deals included developer’s committing to hard options to accommodating new and existing occupier expected growth requirements. • In 2014, sentiment will remains cautious, despite robust absorption in 2013. • Gurgaon is expected to witness a lot of lease renewals in 2014 and 2015.
Transcript of Delhi (NCR) Office Market Snapshot 2013 Report
Delhi - NCR O�ce MarketSnapshot 2013
1 Delhi - NCR O�ce Market Snapshot 2013 | Colliers International
Delhi - NCR Office Market Snapshot 2013
Highlights
In 2013, Delhi NCR witnessed approximately 8.31 MN SF of commercial space lease absorption. Unlike other major Indian cities, the cumulative new o�ce space leases were 22% more than the previous year. A number of large deals included developer’s committing to hard options to accommodating new and existing occupier expected growth requirements. Despite better absorption rates, there was almost no new commercial project launches from the major developers, who preferred to start residential projects over commercial developments.
Demand
Within Delhi NCR, 70% of the space was leased in Gurgaon, 23% in NOIDA and the remaining 7% in Delhi. Most tenants were cost conscious and looked at ways to reduce their potential occupan-cy costs. �us in other markets, relocation and consolidation were the primary demand generators for o�ce space. Compared to the previous years, most landlords were willing to provide greater incentives to occupiers. �e average ticket size of the deals was approximately 34,000 SF around 30% more than the last year �gure of approx. 26,000 SF
Approximately 26% of the total absorption of more than 31 MN SF across top 6 cities was contributed by NCR. IT/ITeS remained the major occupiers, contributing 50% of the total absorption. �is was followed by Engineering and BFSI, together accounting for 25% of the total absorption.
Quarter-on-Quarter Absorption
Top 10 Transactions of the Year
Industry Wise Absorption
Client Building Name Area (In SF)Developer / Landlord Location Transaction Quarter
Accenture
Aon Hewitt
Samsung Engineering
Cairn Energy
American Express
Fiserv
TCS
ZS Associates
Equant Solutions
Convergys
Infospace IT SEZ
Unitech Infospace
Plot No. 2A
DLF Atria
Building No. 5
DLF IT Park
Green Bouleward
DLF Worldtech Silokra
DLF Cybercity
Bestech Towers
Unitech Ltd.
Unitech Ltd.
Individual
DLF Ltd.
DLF Ltd.
DLF Ltd.
The 3C Company
DLF Ltd.
DLF Ltd.
Bestech Ltd.
1Q
3Q
3Q
2Q
1Q
1Q
2Q
4Q
4Q
2Q
Sector 21, Gurgaon
Sohna Road, Gurgaon
Sector 126, NOIDA
NH-8, Gurgaon
Cyber City, Gurgaon
Sector 62, NOIDA
Sector 62, NOIDA
NH-8, Gurgaon
Cyber City, Gurgaon
Sohna Road, Gurgaon
810,000
800,000
500,000
204,000
200,000
200,000
150,000
132,000
125,125
227,320
IN M
N SF 1.65 1.64
2.71
2.31
AVERAGE ABSORPTION
Telecom 3%
Manufacturing5%
IT/ITeS 52%
1
BFSI11%
3
Engineering 14% 2
Others 15%
0.0
0.6
1.2
1.8
2.4
3.0
4Q3Q2Q1Q
2
Supply & Vacancy
New o�ce inventory was close to 6.44 MN SF during 2013. Of the total new space added to the stock in 2013, only 12% was located in Delhi and the remainder was evenly split between peripheral micro markets of NOIDA and Gurgaon. �e current overall vacancy is 19%, which is marginally higher than that recorded at the same time in 2012 (18.5%).
Rental & Capital Values
�ere was a marginal 3% Year-on-Year decrease in rentals in Delhi, while Gurgaon and NOIDA witnessed stable rental values during 2013 baring few micro markets such as Cyber city in Gurgaon and sector 18 in NOIDA which witnessed an increase of 7% and 2.5% respectively, on Year-on-Year basis.
2014 Prognosis
�e sentiment remains cautious, despite robust absorption in 2013. �ere is limited new stock that will be ready for �t outs in 2014 and we expect much of it to be deferred to the year after. On the other hand Delhi corporates are expanding and opening o�ces in Delhi due to availability of trained human resources, proximity to the central government and reasonably priced real estate. Due to the above, average rental values in Delhi NCR will remain stable and vacancy rate will fall marginally. Gurgaon is expected to witness a lot of lease renewals in 2014 and 2015, as companies that set up o�ces in 2004 - 06 (the “�rst wave” of occupiers) approach the end of their lease terms. �ese compa-nies face a substantial di�erential between their current contractual rentals and the prevailing market rentals at which the new lease is likely to be signed. �ese companies will need to choose between staying in their current location at higher rentals and relocating to peripheral micro-markets o�ering cheaper rentals. Gurgaon will thus witness further segmentation of micro-markets in cost terms in 2014.
As most of the new supply is expected in NOIDA, the rental values will be under downward pressure. Locations such as the NOIDA Expressway may buck the trend as corporate prefer to locate along this stretch which o�ers superior infrastructure and quality of buildings.
Unless circle rates are rationalized, the sale market in Delhi will remain stressed. As in 2013, sales volume of commercial space in Delhi will remain low.
New Supply, Absorption & Vacancy
Average Rentals Trends & Forecast
New Supply (In MN SF) Absorption (In MN SF) Vacancy (In %)
Delhi - NCR O�ce Market Snapshot 2013 | Colliers International
Delhi Gurgaon NOIDA
0
2
4
6
8
10
12
2015 F2014 F20132012201120100
3%
6%
9%
12%
15%
18%
21%
0
60
120
180
240
300
2015 F2014 F201320122011201020092008
FORECAST
Copyright © 2013 Colliers International.
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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Primary Authors:
Surabhi AroraAssociate Director | Research
[email protected]+91 124 456 7500
George McKaySouth Asia Director I Office & Integrated [email protected]
Vikas KaliaNational Director I Office [email protected]
Ajay RakhejaDirector I Office [email protected]
Amit Oberoi National Director I Valuation & Advisory Services & Research
Sachin SharmaAssistant Manager I Research
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