APPD Market Report Article


February 22, 2024

Dr Samantak Das, Head of Research, India


INR 151


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.

Robust yearly supply of 5.53 million sq ft added in 2023

  • New completions were recorded at 1.13 million sq ft during the quarter, with additions in Gurgaon and Delhi SBD. 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%.
  • 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.

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.

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