DELHI: The National Capital Region (NCR) is one of the most sought after office destinations in the country. Availability of skilled manpower and developed infrastructure drew a number of corporates to this market. The NCR office market has evolved largely from mixed use type of commercial developments in Connaught Place to state-of-the-art office buildings in Gurgaon and Noida. Traditionally, office space demand was driven by government departments and private companies looking for a presence in the central part of the city for good connectivity. However, post the IT/ITeS boom in India a steep upsurge in office space demand was observed. Secondary
and Peripheral Business Districts emerged to accommodate the fast paced growth in office demand. Multinational companies entered the NCR market with specific requirements in terms of type and size of office spaces. Developers were able to grab this opportunity and a bulk of commercial projects was launched. Nearly 39mn.sq.ft. of incremental office space entered the NCR market in the preceding five years, making it the largest office market in terms of stock. The NCR office market showed steady absorption levels in H1 FY13 followed by a dip in H2 FY13. The city’s office market clocked absorption of approximately 5.8
mn.sq.ft. during FY13, falling short by 25% compared to FY12. Impending uncertainties over the global economic scenario have lent a cautious outlook to the market and office space demand has been restrained in FY13 compared to FY12 in most major cities of the country, NCR being no exception. While the NCR market has a well-diversified office occupier base, the IT/ITeS sector contributes to about 42% of the total office demand. Hence, a slowdown in the IT/ITeS industry has adversely impacted demand.
Transaction activity remained subdued due to prevailing cautious sentiments. Leasing activity by the IT/ITeS sector which is a big driver industry has shown a downward
trend in the NCR office market, resulting in reduced office space take ups during Q4 FY13. According to Knight Frank Research, 1.07 mn.sq.ft. of offices 1.07 mn.sq.ft. of office space was transacted in Q4 FY13, thus showing a fall of 11% compared to the same quarter last year. It is observed that the transaction activity is
subdued in the final quarter of the financial year as office expansion activity tends to be concentrated in the first half. Hence absorption numbers show a 24% fall in Q4 FY13 from the preceding quarter.