The Delhi NCR Market is driving the global economic growth and Gurugram is the preferred outsourcing hub. The city has an aggressive expansion plan over the coming years. According to JLL, 820 lease transactions were witnessed in Grade A building in 2013 and the number increase to 1300 in 2017.
The overall leasing activity has experienced a growth while the net absorption has remained stable for the past few years. It represents a more rationalized space uptake through consolidation and a shift in workplace strategy. "The demand is largely due to pushing to the services sector especially the segments like banking, insurance, IT," says Sachin Pant, CEO, Innovest.
According to Pant, "There has been a reduction in size but that is largely because of consolidation of office space requirements. Though the trend does not project reduction in demand there has been a rationalization. Majority of overseas companies and large MNCs are trying to consolidate their office requirements. Many are also moving towards the lower rental corridors. For example in Gurugram Cyber City used to be the most happening place for office requirements. In the last three years, a shift has happened from Cyber City to the Sohna corridor. Talking about Cyber City the rentals are in the range of 100-120 sq. ft. per month and Sohna corridor offers 40-50 sq. ft. therefore, people are consolidating their office requirements. Companies prefer to move to a bigger space Vs scattered offices and of course, lower rental is an added attraction."
Taking Gurugram into consideration, real estate players are exploring different parts of the city. Brahma Center Development Pvt. Ltd. headquartered in New York, which owns the 12.206 acres of land at Sector 16 along the Delhi-Gurugram Expressway, is also coming up with their project Athena. It is a retail and commercial space spread across a leasable area of 1.3 million square feet having G+18 floors for Grade A office space and G+3 floors for retail. Strategically located on the expressway, it offers great connectivity from Sohna road, Delhi, and the airport as well.
Pant further said that Sohna road in the last 3-4 years has started offering Grade A offices which were not there earlier. Taking the example of DLF Cyber City in Grade A offices, the rentals are Rs. 100-120 per sq. ft. but the Golf Course road offers Rs. 175-200 per sq. ft. However, there are very fewer properties along the golf course road.
Vineet Taing, President, Vatika Business Center said, "Sohna is one of the forthcoming destinations for commercial real estate especially serviced office spaces, co-working spaces, and virtual offices catering to the need of today's work culture. The new roads from Delhi and other connecting roads will make it apt for driving convenience. Apart from this, it also offers green environment."
Talking about India from a real estate point of view, offices locations offer good yields in the range of 7-9% whereas residential property does not give such a high yield. Moreover, individuals, ultra HNIs and HNIs used to invest in residential properties largely looking at capital returns which have again taken a back seat. Now there is a shift from residential to office or retail rather more of office because they offer you rental yields which are in the range of 7-9 %, and capital appreciation.
Adding to this Taing says, "People prefer commercial properties compared to residential due to better returns from office assets and fixed income generated by such kind of investments. There has been a boost in the demand from corporates, therefore; commercial office space vacancy has reduced by 50% over the past few years. Office space absorption is very strong and pre-leasing too is at an all-time high today which guarantees higher returns. This indicates sustained demand and occupiers' interest in commercial spaces. Vatika Business Center is also expanding by offering seats across Delhi, Faridabad, Mumbai, and Pune this quarter.
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