APPD Market Report Article

Delhi

December 1, 2021

0.0%

INR 143.5

Rents
Rising

Net absorption records a jump of 131% q-o-q in 3Q21

  • Delhi NCR recorded net absorption of 1.41 million sq ft in 3Q21, an increase of 131% q-o-q and 615% y-o-y. The office market bounced back strongly, backed by solid pre-commitment in new completions as well as strong demand from the manufacturing and IT/ITES sectors.
  • Total leasing volumes were much higher than the net absorption at 2.6 million sq ft as there were some prominent renewal deals totalling around 1.1 million sq ft. The major transactions in 3Q21 included Smartworks at World Trade Tower in Noida, Pepsico at TRIL Centre and Lummus Technology at AIPL Business Club in Gurgaon.

Completions in 3Q21 total 2.9 million sq ft

  • Six projects with a cumulative area of 2.9 million sq ft were completed across Gurgaon and Noida. These had an average pre-commitment of 39%. The projects included Capital Business Park Tower A, Vatika One On One Block 2,3,4 and 5 and M3M IFC Tower 2 in Gurgaon. In Noida, completed buildings included Noida One Tower A, ATS Bouquet Tower A, B & C and Candor TechSpace Tower 11.
  • The net absorption could not keep pace with new completions as occupiers were still cautiously evaluating their real estate portfolios and optimising costs to ensure business continuity. As a result, vacancy levels rose by 50 bps q-o-q. In 4Q21, and supply of 1.59 million sq ft is lined up for completion, largely in Gurgaon.

Rents remain stable

  • Office rents remain stable across Delhi NCR in 3Q21. However, landlords continued to accommodate occupier demands to support deal closures.
  • Strong market fundamentals and a quality supply pipeline will act as a catalyst to draw investor attention across the office market in Delhi NCR, especially for well-leased assets.

Outlook: Office market expected to rebound strongly

  • With a strong vaccination drive and announcements of the gradual return to the office by some IT companies, demand for office space is expected to see better traction compared to 1H21. It will be backed by office occupier strategies for both consolidation/relocation and expansion.
  • A robust supply pipeline of 8 million sq ft is projected in 2022, majorly in the suburban markets of Gurgaon and Noida. IT/ITES is expected to continue to be a major contributor in office leasing. Flex space operators are also expanding their footprint as the demand from corporates has increased for managed spaces.

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

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