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NCR Office Spaces Demand Growth Continues, Rents March Northwards

NCR, July 18, 2024: The Delhi NCR office market has experienced a significant uptick in rental rates, reflecting robust demand and the infusion of high-quality supply, according to a recent report by real estate consultancy firm Colliers. The report highlights a notable 4-8 percent year-on-year surge in rentals across India’s top office markets, with Delhi NCR witnessing an impressive 8% rise in workplace rents over the past three months.

However, as per Cushman & Wakefield, office rents in Delhi NCR increased by nearly 2% quarter-on-quarter in the first quarter of 2024. It was accompanied by a substantial annual rental growth of 5%. 

“This growth can be attributed to healthy leasing activity during the quarter, coupled with the introduction of quality new supply. Despite this rise, rental rates are expected to remain range-bound for the remainder of 2024 due to the anticipated influx of supply and elevated vacancy rates in certain submarkets,” says Nisheeth Thukral, Head of Leasing, Ambience Group.

Over the past few years, office rentals in Delhi NCR have been steadily rising, surpassing pre-pandemic levels by 2024. 

“The strong performance of India’s office market has been driven by healthy economic growth and renewed occupier confidence, with the nation’s top commercial real estate markets witnessing growth. The significant rise in housing prices over the past five years reflects robust demand driven by infrastructural developments and enhanced connectivity, underscoring the region’s potential for sustainable growth and investment opportunities.” says Harsh Gupta, CEO, Sundream Group.

This rental surge in the office market comes on the heels of a nearly 50% increase in average housing prices in Delhi NCR, reaching Rs 6,800 per square foot in the first half of 2024 (as reported by Anarock).

 The NCR real estate has witnessed big gains in the last couple of years. The robust demand along with the upcoming supply of Grade A office space is driving the increasing growth rate and rental appreciation across the Delhi-NCR market. With the country’s growing economy and the dominating prominence of Gurugram as a corporate and start-up hub due to the availability of Grade A spaces, this segment has immense potential. The aggressive expansion and constant leasing activity driven by sectors such as BFSI, technology, engineering, manufacturing, and healthcare is likely to further propel market growth.” says Sandeep Chhillar, Founder & Chairman of Landmark Group.

The share of pre-commitments has risen from an average of 9% over the past eight quarters to 25% in Q1-24, largely due to high demand for upcoming superior-grade projects. Gurugram continues to lead demand within NCR, securing a 73% share in demand, primarily in prime sub-markets such as Cyber City and NH-8 Prime, which together represent 46% of the overall gross leasing volume (GLV) of the city. Golf Course Road Extension and Golf Course Road follow. Noida contributes the remaining demand with a 23% share, mainly in the Sector 62 region and along the Noida Expressway. The scarcity of prime commercial spaces in sought-after business districts and established commercial hubs has led to bidding wars among tenants, pushing rents to record highs.

“Delhi NCR remains a key economic hub in India, driven by sectors such as information technology, finance, manufacturing, and services. As businesses expand and new enterprises emerge, the demand for commercial spaces, particularly office spaces, have surged, leading to upward pressure on rentals. Urbanisation and population growth in Delhi NCR have also fueled the demand for commercial real estate, including office spaces, retail outlets, and industrial facilities”. says Mr. Sanchit Bhutani, MD, Group 108.

The increasing urban population moving to the area for employment and business opportunities has intensified the need for commercial spaces, driving rents higher, especially in prime locations.

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