Commercial Property Growth in NCR

Commercial Property Growth in NCR

Finally, we hear some good news from Commercial Real Estate in NCR. There is a renewed interest from End Users & Investors in Commercial Projects in NCR. Post Covid strong demand for office & retail space is being witnessed in NCR. The occupancy rates are increasing, and the rental yields are getting stabilized. Investors are able to reap some good capital appreciation in various micro-markets in NCR. All this is possible because of the revived economic activities post covid & increased demand both for offices & retail spaces.

Indian Real Estate Sector has shown a remarkable growth recently. Emerging as a top choice of Investors, it is expected to grow to a market value of  US $1 Trillion up from  US$ 200 Billion in 202, and contribute 13% of the country’s GDP by 2030 as per a report by The Financial Express. Investors in Real Estate have always believed that commercial real estate is a rewarding investment choice as it offers high ROI & additional Income Opportunities.

According to the research report published by Cushman & Wakefield, a leading International Property Consultant. Excerpts from the report are shared below. There is a staggering 55% growth recorded in Delhi NCR in gross office leasing was recorded which reached 3.18 msf y-o-y. This is the second-highest leasing since the pandemic and was led by professional and e-commerce segments, followed by healthcare and pharma. Also Flexible spaces have seen renewed interest by occupiers including large enterprises.

Talking about Retail spaces, New leases, and store openings of 0.25 msf in Delhi NCR was recorded in Q1 2022, highlighted with store relocations and churn activity. Retailer churn drove the majority of leasing activity in this quarter. Food& beverage along with Fashion Retainers were the key movers & shakers in this quarter.

Flexible workspaces are attracting new attention from users with healthy occupancy levels. Both coworking and managed workspaces are highly regarded by users, including large corporations. 

 Gurgaon led the lease this quarter with a 63% share and the core market within 

 Gurgaon accounted for a significant 40% share of the total lease. The Noida Expressway is another prominent micro-market, accounting for 21% of the total market share. One-third of quarterly leases include large-scale transactions (over 100,000 square feet) through the Gurgaon and Noida micro-markets, and some tenants also retain solid options for future expansion plans. I am. Employee well-being remains a top priority for companies driving leasing momentum in well-managed, high-quality buildings.

New leases, including occupant expansions and consolidations, accounted for 91%  of quarterly leases. Pre-Commitments formed 7% of quarterly leasing. The net absorption of Q1 was recorded at 1.3 msf, a slight decrease of 7% compared to Q-o-Q.

Strong demand fundamentals with large space take-up by even newage firms is likely to keep Delhi NCR’s office space on a strong footing in the quarters ahead. 

Healthy supply addition in Q1; vacancy levels decline marginally The city recorded a supply addition of 1.6 msf during the quarter, largely across the micro-markets of Noida. The majority of this supply addition was in Noida Expressway. Despite the high additional supply, overall vacancy level declined by 10 basis points q-o-q as demand remained strong. Core markets continued to have tight vacancy levels, largely in single digits, which declined during Q1 on the back of strong demand.

City-level market rents stabilized as demand has picked pace with improved occupier confidence. Strong pipeline of upcoming supply, accelerated execution in select projects in the city More than half of the supply pipeline of 20 – 25 msf scheduled for completion over the next 3 years is likely to be added in key micro-markets of Golf Course Extension Road Gurgaon, Dwarka Expressway and Noida Expressway.