Delhi NCR Steals The Show

After getting battered by the pandemic, Delhi- NCR has emerged as a high growth destination for office real estate among top cities in the first half of 2022, with Gurgaon and Noida Expressway as the major growth drivers of office leasing.  

 Delhi-NCR recorded office space absorption of 5.6 mn sqft during H1 2022, a significant increase by 194% from H1 2021. Gurugram and NOIDA Expressway witnessed the maximum leasing in H1 2022. Gurugram contributed to around 64% in the overall absorption during H1 2022 in Delhi-NCR. NOIDA on the other hand had only 34% share, according to global property consultancy firm Savills India’s latest report titled – India Market Watch Office – H1 2022. 

Although the report reveals that IT-BPM sector dominated the market with approximately 29% share in the office leasing activity in H1 2022, the sector has witnessed a significant dip from H1 2021 with an overall share of 47% from this sector.  Sectors like e-commerce, media and telecom companies etc. contributed to around 20% in the total leasing in Delhi-NCR.  The biggest share in other sectors comes from the ecommerce industry which contributed to over 55% in the overall leasing. 

The city also witnessed an uptick in demand by the legal sector in H1 2022. The law firms which had negligible share in leasing in H1 2021 contributed to around 5% in leasing by other sectors.  Coworking deals with approximately 15% share, up from 4% share in H1 2021, stood third with respect to overall leasing activity in H1 2022. 

  Mid-size deals of 25,000-99,999 sqft were found to be predominant with 48% share in the overall demand generated for office space in H1 2022.  Large-size deals (100,000 sqft or above) and small-size deals ( <25,000 sqft)  contributed to 30% & 22% respectively. 

  The city, with 2.2 mn sqft, witnessed a significant dip of 44% Y-o-Y in terms of new supply.  Overall vacancy stood at 26.7% at the end of H1 2022.  Average rentals in the city have increased by 8%  Y-o-Y. MG Road & Gurugram micro markets reported the highest appreciation in rents with 20% and 15% Y-O-Y respectively.   

The year 2022 is expected to witness an overall demand of 10.0 mn sqft, thus reaching close to the pre-pandemic level.  IT-BPM, coworking and other sectors like healthcare and legal are likely to be spearheading the market in 2022. With hybrid workplace model being accepted by many companies, the market is expected to witness maximum traction for small to mid-size deals in these sectors.  Vacancy levels could decrease further to 25% by the end of the year  The decreasing vacancy is expected to push the rentals slightly upwards in select pockets in the remaining months of the year 2022.  The city is expected to see around 3.4 mn sqft of supply in the market in H2 2022. Shweta Sawhney, MD, Delhi-NCR Savills India believes that with new companies emerging across sectors, the leasing momentum is expected to continue in 2022 as occupiers review their workplace strategies.