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Delhi NCR is one of the biggest commercial real estate markets in India with many Fortune 500 companies having their Indian headquarters here. There are many important sub-markets in the Delhi NCR region like Gurugram and Noida. The new upcoming international airport near Greater Noida, is expected to change the dynamics of the commercial property market in this region in the coming years. There were good levels of confidence among corporate occupiers in 2021 as they signed some large leasing deals in both, Gurugram and Noida, apart from making pre-commitments for new constructions.
Net absorption of Grade A office spaces in Delhi NCR in 2021, went up by 42% at 4.7 million sq ft (msf) as compared to 3.3 msf in 2020. The new completion of office buildings in Delhi NCR also increased by 57% at 8.5 msf in 2021 as against 5.4 msf in 2020, according to a report by JLL India. There will be significant net absorption of commercial spaces in the coming few quarters, increasing vaccinations prompt people to return to offices.
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Source: JLL India
The work-from-home mode ensured that vacancy levels in Delhi NCR’s commercial property market remained above 20% in 2021. The vacancy levels shot up to 27.24% level as an average throughout 2021, as compared to an average of 26% in 2020. The vacancy levels are expected to go down in the next few quarters, as employers are asking their employees to return to offices. The office rents remained almost the same at Rs 78.17 per sq ft per month throughout in 2021 as compared to Rs 78.6 per sq ft per month in 2020, according to the JLL India report.
Delhi NCR’s commercial space micro markets
The markets of Gurugram and Noida accounted for much of the net absorption and new completions of Grade A office projects. There were six large projects having a cumulative area of 2.9 msf that were completed in the third quarter itself in Gurugram and Noida. These six projects had an average of 39% pre-commitments from occupiers. The bulk of the leasing activities in the commercial property market of Delhi NCR was led by IT/ITeS, e-commerce and manufacturing sectors in 2021. While the majority of new supplies are coming up in Gurugram and Noida, some decent projects are coming up in Delhi as well. These include retail spaces and Grade A office buildings. Many of the new buildings are being constructed by international real estate companies.
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Scheduled completions in Delhi NCR’s commercial property market
There are some large buildings that are scheduled to be completed in 2022. These include ‘DLF Downtown Block 2’ in Gurugram having a gross leasable area (gla) of 0.70 msf, ‘KP Tower C’ in Noida having a gla of 0.35 msf and ‘One Qube’ in Gurugram having a gla of 0.54 msf.
Warehousing and logistics property market in Delhi NCR
Delhi NCR saw net absorption of 6.1 msf of warehousing and logistics space and 9.9 msf of new supply in 2021, according to a report by CBRE.
The 3PL sector accounted for 57% of the net absorptions in 2021, followed by the electronics sector at 13% and e-commerce sector at 11%, according to the CBRE report.
The sizeable deals in Delhi NCR’s warehousing and logistics space market were that of electronic and gadgets company Croma taking up 3 lakh sq ft on rent in the ‘Emporium Logistics Park, Phase 2’ located at Gurugram NH-8. Another prominent rental deal was of Somany Home Innovation taking up 2.88 lakh sq ft space in the ‘Realtech Park Phase 2’ located on Kundli-Murthal NH-1. Another sizeable leasing deal was signed by DB Schenker taking up 2.6 lakh sq ft space in ‘Independent Warehouse’ located in Gurugram at NH- 8, said the CBRE report.
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The 3PL and electronics industries are likely to do well in 2022 also and absorb good quality warehousing space in Delhi NCR. The thrust in future will be on technology-enabled warehousing spaces in Delhi NCR and the older warehouses will either be rendered useless or will command much lower rentals. There are many new completions of warehouse facilities scheduled at NH-1 and NH-8 in Gurugram and in Greater Noida.