Track2Realty Exclusive: Moderation in new supply brought the vacancy down
During 2012, the new supply dropped by a whopping 40% y-o-y to 18 million sq ft, as across many cities, the slow adjustment of supply with the changing demand patterns took effect. Bangalore was the only exception to this, where the new supply rose by a whopping 35% y-o-y, as a number of developments which had been fast tracked in response to the sharp recovery in demand in the city since 2010, got completed during the period.
At the end of Q3 2012, the total vacant office space across the seven cities in the country stood at 80 million sq ft vis-a-vis 83 million sq ft at the beginning of the year.
In spite of the lower take-up, the rentals remained largely stable due to the progressively declining vacancy. The rentals increased only in select few sub-markets including Bangalore submarkets of PBD Outer Ring Road and PBD Whitefield and Kolkata CBD, among others, due to sustained demand in these markets.
North zone
Delhi NCR witnessed a drop in the cumulative take-up levels between January and September 2012. In Delhi NCR, the first three quarters of 2012 witnessed a total take-up of 3.75 million sq ft which was approximately 11% lower when compared to the same period in 2011.
Due to the moderation in demand and tough economic environment resulting in liquidity crunch at the developers’ end, the new supply dropped sharply in Delhi NCR. In Delhi NCR, approximately 3.4 million sq ft came on stream in the first three quarters of 2012, a drop of 41% from the same period a year ago. Rental values have remained stable across most micro markets in Delhi NCR.
The initiatives taken by the government in the form of slew of policy reforms announced, is expected to lift the business sentiment which in turn would stimulate office space demand in next three to six months.
Best performing micro markets:
– Delhi NCR: PBD locations continue to attract majority of office space demand. Out of Gurgaon and Noida, Gurgaon continues to be the preferred micro market due to its high quality infrastructure and proximity to international airport. Within Gurgaon, DLF Cyber City continues to be the most sought after location leading to decline in vacancy levels. In the past couple of years Sohna Road has emerged as the next go-to location due to high availability of quality space and competitive rentals.
Low performing markets:
– Continued migration to peripheral locations resulted in low demand for SBD markets. The slowdown in demand from IT sector has impacted the performance of peripheral markets as compared to earlier years.
Major Transactions:
|
Company Name |
Building Name |
Micro-market |
Location (CBD/ SBD/ Suburban/ Peripheral) |
Area leased (sq.ft.) |
|
AON Hewit |
DLF Center Court |
Gurgaon |
PBD |
178,000 |
|
Oracle |
Plot 8, 3C’s |
Noida |
PBD |
170,000 |
|
|
Signature Tower 2B |
Gurgaon |
PBD |
150,000 |
|
HCL |
SP Infocity |
Gurgaon |
PBD |
150,000 |
|
Infoedge |
NKG IT Park |
Noida |
PBD |
150,000 |
Source: Market Intelligence, DTZ Research
Emerging Markets: Sohna Road in Gurgaon and Sec 127, 132, 135 and 144
Development pipeline 2013: There is a continuous re-alignment, though to a limited extent, of new supply to the changing demand factors and other macro-indicators. The delivery timelines of new projects continue to be revised. The latest development schedule indicates the following development pipeline for Delhi NCR:
|
Name of the Project |
Developer |
Location |
City |
Built up Area (In sq ft) |
| Unitech Infospace – Ph I | Unitech Group | Sohna Road | Gurgaon | 1000000 |
| Unitech Commercial Centre (Ph I) (3 Towers) | Unitech Group | Sector 71 NH8 | Gurgaon | 500000 |
| Unitech Info Space – Block 5 | Unitech Group | B-2, Sector-62 | Noida | 438099 |
| Logix Galaxia (Ph I Tower A) | Logix | Sector 140A (SEZ) | Noida | 400000 |
| Unitech Info Space – Block 4 | Unitech Group | B-2, Sector-62 | Noida | 376125 |
| Courtyard | Unitech Group | Nirvana Country | Gurgaon | 200000 |
Source: DTZ Research
…..to be continued
