gurgaon office market overview jan 2015
TRANSCRIPT
1 Research & Forecast Report | January 2015 | Colliers International
Absorption dipped by 13% YoY in 2014 but good prospects for 2015 Gurgaon remained the most active and preferred market in 2014 among corporate occupiers in the NCR region. The satellite city shared about 67% of overall absorption in NCR. Gurgaon recorded leasing volumes of 4.73 million sq ft in 2014, which is approximately 13% less than the previous year’s absorption of 5.47 million sq ft. IT/ITeS was the primary contributor of this demand, followed by the BFSI and logistics sectors. The share of the IT/ITeS sector has further increased to 62% of the total absorption this year. Last year, IT/ITeS accounted for only 53% of the total absorption.
Due to its connectivity advantages and affordable rents, NH8 remained the most preferred location and accounted for 31% of the total absorption followed by Institutional Sectors (16%) and Udyog Vihar (14%).
With the overall cautious market sentiments during the year, developers had deferred constructing new office space. As a result, new supply in 2014 was 3.2 million sq ft, down from 4.53 million sq ft in 2013. The city is expected to see completion of about 3.5 million sq ft of new office space in 2015 as developers are expected to focus on completing their existing projects, especially those with ready structures.
More than 16.8 million sq ft of office space is available for lease in the Gurgaon market, of which about 37% is located in the Golf Course Road Extension and Sohna Road, followed by NH8 (19%), Udyog Vihar (18%) and Golf Course Road (12%). Vacancy is expected to remain stable in 2015 as developers will remain cautious in adding more speculative
Research & Forecast Report
Gurgaon | OfficeJanuary 2015
Rental Values
*Indicative Grade A rents in INR per sq ft per month
MICRO MARKETS RENTALVALUE*
% CHANGEQoQ YoY
MG Road 90 - 140 2% -2%
DLF Cyber City (IT) 85 - 90 4% 11%
Golf Course Road 85 - 140 0% 0%
Institutional Sectors (Sec 44, 32, 18) 55 - 95 0% 0%
Golf Course Road Ext./Sohna Road 55 - 75 4% 15%
National Highway 8 50 - 150 5% 14%
Udyog Vihar & Industrial Sectors 35 - 50 0% -11%
Manesar 40 - 42 9% 0%
City Office Barometer
INDICATORS 2014 2015
Vacancy
Absorption
Construction
Rental Value
Capital Value
2 Research & Forecast Report | January 2015 | Colliers International
supply in view of current vacancy levels.
Office rents witnessed an average increase of about 6% YoY across the micro-markets. A few locations, such as Institutional Sectors, Golf Course Road, Sohna Road and National Highway 8 recorded increases in the range of 10 to 15%, while Udyog Vihar and Industrial Sector witnessed an annual decrease of about 11%.
The city lacks basic infrastructure and has not witnessed any improvement in 2014 either. However, a few projects, such as the Rapid Metro project by DLF and the Subhash Chowk Flyover, have picked up pace and are expected to be completed by 2016. Gurgaon District Administration has revised the circle rate in its five zones, Gurgaon, Manesar, Sohna, Farukhnagar and Pataudi, on an average by 15%.
Trends to watch for in 2015:
Gurgaon will remain the preferred office destination in NCR. The leasing profile will be dominated by corporate offices of large IT/ITeS companies. As business confidence in the economy picks up, we expect these tenants to commit to large office spaces, especially in Special Economic Zones. Supply demand equilibrium will keep rents in check in peripheral locations; however, rents in micro-markets like Cyber City, Udyog Vihar and NH8 will continue to strengthen further. Golf Course Road and its Extension Road are positioning themselves as significant future development destinations with large upcoming supply. However, the development of Golf Course Road and Golf Course Extension Road will be tied to Metro projects and 16 lane highway which are set to serve this market by 2016.
Top 5 Transactions of 2014
Key Under Construction Projects
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Aricent Unitech Infospace 550,000 Sector 21, Dundahera Lease
TCS Hines Skyview Tower 450,000 National Highway 8 Lease
WNS DLF Silokhera 145,000 National Highway 8 Lease
Accenture Unitech Infospace 120,986 Sector 21, Dundahera Lease
Copal Partners Independent Building - Plot 267 120,000 Udyog Vihar Lease
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
Business Club AIPL Group 700,000 Golf Course Extension Road 2015
Parsvnath IT Park Technicia Parsvnath Developers 695,000 Sohna Road 2015
Unitech Infospace, Phase 2 Building 7 Unitech Developers 450,000 National Highway 8 2015
Average Rental And Capital Value Trend
100
120
140
8,000
10,000
14,000
12,000
6,000
4,000
2,000
0
80
60
40
20
0
Source: Colliers International
Notes:
1. Office Market: The prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is also emerging as
the city’s new office destination.
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 Trends6
5
4
3
2
1
02010 2011 2012 2013 2014 2015F 2016F
2008
2009
2010
2011
2012
2013
2014
2015
2016
Rent
al V
alue
s IN
R Pe
r sq
ft P
er M
onth
Capi
tal V
alue
s IN
R Pe
r sq
ft
About Colliers International
colliers.com
63 countries on 6 continentsUnited States: 146 Canada: 44 Latin America: 25
186 EMEA: 84
$2.1billion in annual revenue
1.46billion square feet under management
15,800professionals
Primary Authors:
Surabhi Arora Associate Director | Research +91 124 456 [email protected]
Sachin Sharma Assistant Manager | Research
Amit Oberoi I National DirectorValuation & Advisory Services & Research
For O�ce Services:
Vikas KaliaNational Director | O�ce [email protected]
Colliers InternationalTechnopolis Building, 1st Floor, DLF Golf Course Road,Sector 54 | Gurgaon - 122002 | India
485