Delhi to see over 23m sq ft of new office supply until 2025

Over two-thirds of the new supply will come from the Gurugram submarkets. 

According to a report by Cushman and Wakefield, Delhi NCR recorded a healthy office leasing of 3.6 msf during Q4, although this reflects a marginal 6% decline on a q-o-q basis. Total gross leasing volume (GLV) recorded in 2022 of 14.0 msf was 42% higher than that in 2021, exhibiting the strong post Covid demand momentum and healthy market sentiment. 

The share of fresh leases continue to capture the majority of the leases with a 97% share of the leasing activity followed by 2% pre commitments in Q4 2022. 

Here’s more from Cushman and Wakefield:

IT-BPM led the quarter’s leasing with a 30% share, followed by professional services with 17% share and engineering & manufacturing with a 12% share in the gross leasing volume (GL). Flexible workspace operators (7% of GLV) continued to scout for space in the Gurgaon CBD and Noida PBD. 

Gurugram accounted for 58% share in the quarter’s leasing, led by sub-markets such as Golf Course Extension Road, Cyber City, and NH8–Prime; Noida accounted for 38% share of the leasing activity. Delhi NCR recorded net absorption of 2.5 msf during the quarter, a growth of 45% on a q-o-q basis and 84% higher as compared to the same period last year, thereby indicating a healthy rise in occupancy rate. Year 2022 witnessed net absorption of approx. 7.1 msf, which was 159% higher than that of 2021.

Healthy supply addition in 2022 compared to last year; future supply to remain healthy 

Delhi NCR witnessed a total supply of 1.55 msf in Q4 2022, and an annual supply of 7.6 msf (21% higher than 2021). Majority of the fourth quarter supply was seen in Gurugram in markets such as NH 8 prime, Golf course Extension road and Udyog Vihar. Some projects slated for completion during the quarter have been deferred to next year due to delays in obtaining occupation certificates. 

About 23.4 msf of new supply is expected during 2023-2025 and about 69% of that is coming in Gurugram submarkets such as Golf course Extension Road, NH-8 Prime and Non-Prime; 30% of future supply coming in Noida across locations like Noida Expressway and Noida city 1 region. 

Vacancy drops owing to strong demand; rents largely remain stable 

Overall vacancy rate declined marginally by one percentage point on a qoq basis and over 2% when compared to the same period last year. City level rentals remained largely unchanged in the quarter.