Delhi NCR MarketBeat Reports

Delhi NCR office market witnessed gross leasing volume (GLV) of 2.93 MSF in Q1 2024, in line with the same period last year. Flexible workspaces led the first quarter’s demand with a 23% share. NCR recorded quarterly net absorption of 1.45 MSF, an 18% increase from the same period last year. A new supply of 2.8 MSF in Q1, in line with the new supply seen in Q4 2023, maintained a 5-quarter high volume. Gurugram led demand within NCR with a 73% share in prime sub-markets like Cybercity and NH-8 Prime, cumulatively representing 46% of overall GLV. The majority of supply addition was secured by Noida, with a 63% share across the Expressway region. The city saw rents increase by almost 2% q-o-q. 

Leasing volume in Delhi NCR saw a 28% decline in Q1-24 compared to same period last year. Fashion segment was a key driver of demand (~41% share). Delhi NCT (national capital territory) emerged as the primary market for main street leasing, capturing 69% share. Mall vacancy rate in Delhi NCR stood at 15.6% during Q1 2024. However, for the current year, we anticipate about 1.0 MSF of new mall supply that could help absorption volumes improve significantly. Mall rentals in Delhi NCR remained largely stable during the quarter while prime main streets witnessed rental growth on y-o-y basis.

In Q2 2024, Delhi NCR experienced robust supply representing growth of ~1.8 times more than Q1 2024. H1 2024 supply was 40-60% higher than the annual launches seen in 2022 and 2021. Gurugram led quarterly supply (69%) followed by Noida (31%). Noida saw a significant increase, 1.5x the average of the past five quarters. High-end and Luxury segments dominated with 53% market share, an increase of nearly 1.5 times the average launch of the past five quarters. Mid segment comprised 45% of quarterly supply. Capital values grew 3-4% q-o-q. Headline city-wide rentals grew 1-2% q-o-q.

Warehouse leasing in Delhi NCR has declined by 57% on a yearly basis attributed to limited execution of large deals in 2023. Warehousing demand dropped by 52% with engineering and manufacturing sector accounting for 56% of warehouse leasing for the year. Industrial leasing activity for 2023 witnessed a 8% dip from a good year of 2022, but was higher than last 5 year average. The industrial demand in the second half was entirely concentrated in Gurgaon, primarily Manesar (42%). Quoted rentals increased by 5-10% in NCR and quoted land values increased by 12-17% attributed to major land deals closed in 2023. The other submarkets of NCR grew by 5 – 15% on an annual basis.

The investment activity recorded in Q2 was INR 158.5 bn (USD 1.92 Bn) which was 63% higher than the previous quarter’s activity and 60% higher than the activity recorded in Q2-22.