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Delhi NCR gross office leasing at 2 mn sq.ft. in H1 2021: Savills India

The National Capital Region (NCR) witnessed gross office absorption of 2.0 mn sq.ft. in H1 2021, a decline of 38 pc as compared to the same period previous year, according to global property consultancy firm Savills India’s latest report titled – India Market Watch Office – H1 2021.

Key Highlights of H1 2021

 Delhi NCR saw an additional supply of 4.0 mn sq.ft. recording a decline of 12% compared to H1 2020

 Noida Expressway and Golf Course Extension road in Gurugram noted significant completion contributing 90% of the total new supply in H1 2021.

 Golf Course Extension Road witnessed notable completions with 1.35 mn sq.ft compared to 280,000 sq.ft. in H1 2020. Meanwhile, Delhi also saw rise in new supply by 33% YOY at 350,000 sq.ft.

 The vacancy rate increased to 22.5% at the end of H1 2021

 The average rental values in Delhi NCR have declined by approximately 3% YOY

 Of the total leasing by technology occupiers, about 52% of take-up was concentrated in Noida Expressway and Golf Course extension road micro market

 Delhi NCR’s demand in H1 2021 is mainly driven by occupiers in the Technology and Engineering & Manufacturing sectors, which constituted 47% and 15% share, respectively

 BFSI demand share dropped drastically to 7% from 19% compared to H1 2020

 Co-working/flexible workspace remained bearish and constituted only 4%

Outlook

 Office leasing is likely to be at similar level as 2020, and therefore expected at approximately 4.5 mn sq.ft. for the year 2021

 On the supply side, Delhi NCR has a strong pipeline of around 7.7 mn sq.ft. in H2 2021, of which over 50% is likely to be completed in Noida, and the remaining in Gurugram.

 Technology, BFSI, consulting and manufacturing occupiers are likely to lead the demand in 2021.

 Overall stock in Delhi NCR is expected to stand at 134.7 mn sq.ft. at the end of 2021

Shweta Sawhney, MD ,Delhi NCR, Savills India, said,” The first quarter of 2021 saw market activity pick up but net absorption for H1 2021 remained muted compared to the same period last year. We expect market to remain active in the second half of the year with more than 2.5 mn sq.ft of active requirements across Noida and Gurugram, driven primarily by relocations and part expansions. Occupiers continue to review their overall portfolio strategy to align with post pandemic priorities of portfolio optimisation and growth. With technology sector remaining robust with increasing outsourcing from the US markets, demand is likely to pick up towards end of fourth quarter and will help to fast track the real estate commercial market recovery.”