Trends Shaping NCR's Office Market in Future

Avatar By: Vineet Kaushik

NCR has about 9.0 million square feet of the latest supply planned to be developed over the subsequent five years. 70% of the upcoming supply is in Gurugram's micro-markets like golf links Extension Road and Sohna Road. NOIDA accounts for less than 30% of the forthcoming collection, primarily focused at NOIDA Expressway.

National Capital Region (NCR) is the second-largest office market in. The NCR office area has offered 20% of the annual nationwide leasing volume for the past five years and the area is expected to retain the dominance and office demand in the next five years. Previous expansion in economic activities, significant infrastructure outlay, and impending Grade A supply support will generated strong demand for commercial office space in the forthcoming years.

A few key trends are expected to frame the NCR office market in prospect:

Robust Metro Network

By the end of 2020 most of the business districts in NCR will be connected by metro rail. Completing Delhi Metro's phase 4 means all the office locations of Gurugram and Noida will have access to the metro within 1.8 miles. In Corporate Real Estate (CRE), the "Walk to Work" concept has been increasing rapidly, as accessibility is a pretty important factor in making decisions by the occupiers. So, a robust metro network is one of the significant factors for office demand in NCR.

Fig 1 Delhi Metro

Demand to Follow Grade A Supply for Upcoming Years

As large occupiers are more strategic in their land fulfilments, pre-committing space for future needs and optimizing their land portfolios. Recently, large occupiers like Gartner, Bank of America, Boston Consulting Group, and Google have pre-committed office space in upcoming Grade A properties. This trend is predicted to continue with demand following the Grade A supply within the forthcoming years in preferred micro-markets.

Flexible workspaces to stay in vogue; aggressive growth to follow.

The flexible workspace segment within the NCR has been growing since 2015. Presently, flexible operators manage about 1.0 million square feet (0.09 million sqm) of office space within NCR. Flexible workspaces are no longer considered as disruptors but rather as an integral part of modern-day office space. Thanks to the shortage of Grade A office spaces for smaller occupiers, flexible workspaces began to appear first within the Delhi CBD around 2015-16. Since 2017, the main target of operators has changed towards the larger markets of Gurugram and NOIDA. Players like WeWork, Go works, and Cowrks have recently leased large floor plates at strategic locations.

Fig 2 Co-working Spaces

SEZs to be an attraction for technology occupiers

NCR has about 9.0 million square feet of the latest supply planned to be developed over the subsequent five years. 70% of the upcoming supply is in Gurugram's micro-markets like golf links Extension Road and Sohna Road. NOIDA accounts for less than 30% of the forthcoming collection, primarily focused at NOIDA Expressway. Consistent with estimates, only 6.0 million square feet (0.6 million sqm) will probably be completed by 2020. To confine against rent increases in their existing services, IT/ITeS occupiers are looking to position, stabilize and expand in Gurugram will consider getting a fair deal in office space strategically located within the state-of-the-art SEZ campuses on golf links Extension Road.

Fig 3 SEZ Area

Gurugram to stay the prominent office market in NCR.

Gurugram has been grabbing about 60% of the entire regional office demand over the past five years. The town has become the favourite corporate office destination and has been experiencing demand from companies expanding. In Q1 2018, Gurgaon recorded 1 million square feet of gross absorption, accounted for about 26% of the PAN India absorption.

NOIDA to rework into a reasonable commercial hub

Out of the general leasing volume within the NCR over the past five years, NOIDA accounted for roughly 29% of the total demand. Notwithstanding the standard image, the town is also gearing up to host many MNCs in upcoming years. The city witnessed 1.0 million square feet of absorption in Q1 2018, almost double that Q1 2017 demand.

Fig 4 Noida World Trade Tower

Redevelopment – a facelift for Delhi's land market

NBCC's first project is in Nauroji Nagar, supplying about 3.3 million square feet of Grade an area, which is already at a complicated stage of construction. Thanks to its prime south location within the city, the primary e-auction witnessed considerable success with bids from public-sector units like Energy Efficiency Services, Power Finance Corporation, and Hindustan Petroleum Corporation Ltd. The aggregate area sold was about 0.28 million square feet of office space. The typical sales price was about Rs 38,000 per square foot, 8 to10% above Delhi's CBD. The second tranche of the e-auction is planned to be supervised by the top of 2018.

 

Source: https://www.colliers.com/en-in

NCR has about 9.0 million square feet of the latest supply planned to be developed over the subsequent five years. 70% of the upcoming supply is in Gurugram's micro-markets like golf links Extension Road and Sohna Road. NOIDA accounts for less than 30% of the forthcoming collection, primarily focused at NOIDA Expressway.

National Capital Region (NCR) is the second-largest office market in. The NCR office area has offered 20% of the annual nationwide leasing volume for the past five years and the area is expected to retain the dominance and office demand in the next five years. Previous expansion in economic activities, significant infrastructure outlay, and impending Grade A supply support will generated strong demand for commercial office space in the forthcoming years.

A few key trends are expected to frame the NCR office market in prospect:

Robust Metro Network

By the end of 2020 most of the business districts in NCR will be connected by metro rail. Completing Delhi Metro's phase 4 means all the office locations of Gurugram and Noida will have access to the metro within 1.8 miles. In Corporate Real Estate (CRE), the "Walk to Work" concept has been increasing rapidly, as accessibility is a pretty important factor in making decisions by the occupiers. So, a robust metro network is one of the significant factors for office demand in NCR.

Fig 1 Delhi Metro

Demand to Follow Grade A Supply for Upcoming Years

As large occupiers are more strategic in their land fulfilments, pre-committing space for future needs and optimizing their land portfolios. Recently, large occupiers like Gartner, Bank of America, Boston Consulting Group, and Google have pre-committed office space in upcoming Grade A properties. This trend is predicted to continue with demand following the Grade A supply within the forthcoming years in preferred micro-markets.

Flexible workspaces to stay in vogue; aggressive growth to follow.

The flexible workspace segment within the NCR has been growing since 2015. Presently, flexible operators manage about 1.0 million square feet (0.09 million sqm) of office space within NCR. Flexible workspaces are no longer considered as disruptors but rather as an integral part of modern-day office space. Thanks to the shortage of Grade A office spaces for smaller occupiers, flexible workspaces began to appear first within the Delhi CBD around 2015-16. Since 2017, the main target of operators has changed towards the larger markets of Gurugram and NOIDA. Players like WeWork, Go works, and Cowrks have recently leased large floor plates at strategic locations.

Fig 2 Co-working Spaces

SEZs to be an attraction for technology occupiers

NCR has about 9.0 million square feet of the latest supply planned to be developed over the subsequent five years. 70% of the upcoming supply is in Gurugram's micro-markets like golf links Extension Road and Sohna Road. NOIDA accounts for less than 30% of the forthcoming collection, primarily focused at NOIDA Expressway. Consistent with estimates, only 6.0 million square feet (0.6 million sqm) will probably be completed by 2020. To confine against rent increases in their existing services, IT/ITeS occupiers are looking to position, stabilize and expand in Gurugram will consider getting a fair deal in office space strategically located within the state-of-the-art SEZ campuses on golf links Extension Road.

Fig 3 SEZ Area

Gurugram to stay the prominent office market in NCR.

Gurugram has been grabbing about 60% of the entire regional office demand over the past five years. The town has become the favourite corporate office destination and has been experiencing demand from companies expanding. In Q1 2018, Gurgaon recorded 1 million square feet of gross absorption, accounted for about 26% of the PAN India absorption.

NOIDA to rework into a reasonable commercial hub

Out of the general leasing volume within the NCR over the past five years, NOIDA accounted for roughly 29% of the total demand. Notwithstanding the standard image, the town is also gearing up to host many MNCs in upcoming years. The city witnessed 1.0 million square feet of absorption in Q1 2018, almost double that Q1 2017 demand.

Fig 4 Noida World Trade Tower

Redevelopment – a facelift for Delhi's land market

NBCC's first project is in Nauroji Nagar, supplying about 3.3 million square feet of Grade an area, which is already at a complicated stage of construction. Thanks to its prime south location within the city, the primary e-auction witnessed considerable success with bids from public-sector units like Energy Efficiency Services, Power Finance Corporation, and Hindustan Petroleum Corporation Ltd. The aggregate area sold was about 0.28 million square feet of office space. The typical sales price was about Rs 38,000 per square foot, 8 to10% above Delhi's CBD. The second tranche of the e-auction is planned to be supervised by the top of 2018.

 

Source: https://www.colliers.com/en-in

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