delhi office market overview jan 2015
TRANSCRIPT
1 Research & Forecast Report | January 2015 | Colliers International
Office demand doubled in 2014; Prospects look brightDelhi witnessed approximately 1.18 million sq ft of lease transactions during 2014, which is almost double the 2013 leasing of 0.6 million sq ft. The absorption was concentrated in the submarkets of Okhla (24%), CBD (19%), Jasola (17%), Saket (7%) and other locations such as Aero City, Vasant Kunj, Mohan Corporative.
The IT/ITeS sector continued to have the highest share in demand (44%), followed by BFSI (19%) and manufacturing (11%).
This year, about 1.0 million sq ft of new supply was added to the city’s Grade A commercial office space. Due to limited additional supply and improved absorption levels, the city vacancy has decreased marginally. The overall available stock was reduced marginally to the tune of 2.2 million sq ft from 2.7 million sq ft in 2013. The city will continue to have restrained new supply in the next three years as only a few projects are under construction in the city like Parsvnath’s The Parsvnath 27 KG Marg, Infinia by RPS Developers and NBCC Plaza; they are likely to add about 3.38 million sq ft by the end of 2017. Another project that was launched in 2014, Vegas by Pratham Group at Dwarka Sector 14, will add another 1.2 million sq ft to the city; however, the expected completion of this project is 2019.
Despite improved absorption, rents in Delhi remained stable on average, except Jasola, where rents rose by 2% YoY; Connaught Place witnessed a 1% fall in rents YoY. Capital values declined on average by 2% YoY across the micro-markets due to restricted sales transactions in the city.
Rental Values
*Indicative Grade A rents in INR per sq ft per month**Connaught Place***Netaji Subhash Place
MICRO MARKETS RENTALVALUE*
% CHANGEQoQ YoY
CBD** 185 - 450 4% -1%
Nehru Place 175 - 225 0% 0%
Saket 140 - 190 8% 0%
Jasola 95 - 130 7% 2%
NSP*** 65 - 75 0% 0%
Research & Forecast Report
Delhi | OfficeJanuary 2015
City Office Barometer
INDICATORS 2014 2015
Vacancy
Absorption
Construction
Rental Value
Capital Value
2 Research & Forecast Report | January 2015 | Colliers International
In 2014, the city did not witness any major infrastructure project completion; however, the state government has announced Phase III of the Barapullah Bridge, which will be built between the DND Flyway and Nizamuddin Bridge and will connect the INA market with Mayur Vihar. Apart from this, the government has also raised circle rates by 20% uniformly across the entire category A to H. These rates were last revised in November 2012, when they were hiked by more than 200%. The rationale for increasing circle rates is to reduce the gap between the “going market rate” at which transactions are occurring and the government prescribed minimum value for registration of properties. However, the rate increase cause few location having circle rates more than the market rates as the location categories formulated by the government cover large areas that do not account for the substantial variance in prices within each of the area categories. Sales transactions were reduced in the period after the last rate hike.
Trends to watch for in 2015:
The Delhi office market is now in recovery mode after the general elections. Improved tenant demand from the IT/ITeS and BFSI sectors has mitigated much of the vacancy risk. The expected completion of about 1.5 million sq ft of new Grade A office space in 2015 will help to maintain the supply and demand equilibrium in the market. As a result, we do not expect much change in current vacancy levels. Overall rents will remain stable; however, due to limited supply, quality buildings will continue to fetch premium above-market rates.
Source: Colliers International
Top 5 Transactions of 2014
Key Under Construction Projects
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Snapdeal Independent Building - A-28 115,000 Mohan Co-operative Lease
GodFrey Philips Omaxe Square 77,610 Jasola Lease
VFS Global Bharti World Mark 70,000 Aero City Lease
Moser Baer Okhla Phase 3 70,000 Okhla Lease
Mankind Pharmaceuticals DLF Prime Tower 54,000 Okhla Lease
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
NBCC Plaza NBCC 1,300,000 Kidwai Nagar 2016
RPS Infinia RPS Developer 1,000,000 Mathura Road 2015
NBCC Plaza NBCC 350,000 Okhla 2015
Average Rental And Capital Value Trend
250
300
30,000
35,000
40,000
25,000
20,000
15,000
10,000
5,000
0
200
150
100
50
0
Notes:
1. Office Market: The commercial areas in New Delhi can be broadly classified into the CBD (Connaught Place), SBD Nehru Place, Bhikaji Cama Place, Netaji Subhash Place, Jasola
and Saket .
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th December 2014.
Forecast
New Supply (In Mln sqft) Absorption(In Mln sqft)
New Supply And Absorption Trends2
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