As occupiers are revaluating office portfolios with significant focus on competitive pricing, the Golf Course Extension Road (GCER) and the Southern Peripheral Road (SPR) with sub dollar office rentals and availability of quality office space have emerged as micro markets of choice, according to a report by Savills India.
The report titled – Dollar-Edge Rental Office Markets in India – states that post lockdown where hybrid work model is fast becoming a norm across sectors, these micro markets fit most of the shortlisting criteria of cost-conscious organisations in search of office spaces for relocation or expansion.
As of Q1 2022, GCER and SPR provided rental arbitrage of approximately 74% as compared to premium locations such as Aerocity, which are closer to the Delhi International Airport. In fact, all other key micro-markets of Delhi-NCR, including MG Road and DLF Cybercity, have surpassed the one dollar monthly rental mark.
Savills India forecasts real estate growth of GCER and SPR in the coming years owing to the enabling factors, including rapid infrastructure development, a sizeable IT SEZ mix in the supply of Grade A office buildings and affordable property prices as compared to nearly established areas.
Key Highlights from the report:
* The micro market currently offers high quality office space of about 15 mn sq.ft., with an estimated supply addition and leasing of 6.3 mn sq.ft and 5.1 mn sq.ft respectively in the next 3 years.
* Responding to an estimated 60% of the demand in GCER and SPR from companies in the IT-BPM segment, developers have consciously built buildings specifically for such tenants. More than 50% of the buildings delivered between 2019-2021 are categorised as IT or SEZ buildings.
* The monthly co-working rentals per seat vary from INR 7,000-10,000 on GCER and SPR while it is upwards to INR 20,000 at Cyber City.
* Pharma and healthcare, consulting and manufacturing contributed to around 13% of the leasing activity in 2021 as opposed to mere 1% in 2020 in these micro markets.
* Global Capability Centres (GCC), MNCs including Cargill, Stryker, Grupo, Bimbo and many others have taken up office spaces in the recent years in these micro markets.
* The upcoming stretch of Delhi Mumbai Infrastructure Corridor (DMIC) and extension of metro services will fast-track the further development of the locality in all real estate aspects, including retail and entertainment zones.
NOIDA Expressway Micro Market
The report further notes that affordable real estate price points compared to premier locations in Delhi and infrastructure development coupled with sub-dollar office rentals have attracted occupiers and boosted the real estate value of NOIDA Expressway. Key micro markets of Delhi NCR, including Saket, Jasola and NOIDA Sector 16A/B and 18, have all surpassed the one dollar monthly rental mark, whereas NOIDA Expressway has always remained a sub-dollar market.
NOIDA Expressway has far greater upside potential in terms of urban development as compared to central areas of NOIDA. In fact, in 2021, NOIDA Expressway accounted for 19% of the overall office leasing activity in the entire Delhi-NCR region. Upcoming infrastructure projects such as the international airport at Jewar, metro service extension and multi-modal logistics and transport hubs as well as data centres will further supplement the economic activity in the area.
The micro market currently offers high quality office space of 31.1 mn sq.ft. and an estimated supply addition and leasing of 9.0 mn sq.ft and 5.0 mn sq.ft respectively spanning over the next 3 years is expected. NOIDA Expressway is not only on the radar of occupiers, but also residents trying to take advantage of the wide array of affordable housing options the locality has on offer. Average property prices in the locality are 40-50% lower than nearby established areas like Jasola.
Savills India forecasts NOIDA Expressway to further gain prominence in the coming years owing to the affordability of real estate products including office and residential. Demand from cost conscious occupiers especially from IT-BPM, availability of affordable housing options, gaining prominence of data centres in the vicinity of Greater NOIDA, and infrastructure upgrade are critical factors which will further accelerate the growth of the real estate market of NOIDA Expressway in the mid to long term.
Shweta Sawhney, Managing Director, Delhi NCR, Savills India, said “Anticipated infrastructure upgrade, high traction in office and residential real estate and significant upside potential have strengthened the micro market of GCER, SPR and NOIDA Expressway to a large extent. Despite the pandemic and its adverse impact, these micro markets have witnessed newer developments, space take ups and are expected to witness supply infusion in the years to come. The ensuing demand from IT-BPM occupiers has shaped the demand across residential and other real estate classes also. Overall, we estimate that the real estate market of GCER, SPR and NOIDA Expressway will consolidate its momentum and drive major real estate activity across Delhi NCR in the near future.”