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HomeOPINIONUpward trend predicted for office market in Delhi

Upward trend predicted for office market in Delhi

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According to JLL’s latest Asia Pacific office markets sentiment survey, Mumbai and Delhi city will see increased leasing activity along with other cities like Beijing, Auckland, Tokyo, Hong Kong, etc. The JLL office markets sentiment survey aimed to capture, measure and track the sentiment as well as outlook in the next 12-15 months for key office leasing markets around the Asia Pacific region.

This survey considers the central business district (CBD) and main secondary business district (SBD) in both cities and the results do not reflect trends in areas adjoining Delhi, i.e. Gurgaon, Noida etc. and in case of Mumbai, areas like Navi Mumbai and Thane.

As per the data (2Q2015), tenant activity is expected to be slightly expansionary in Mumbai and Delhi city (excluding Noida and Gurgaon) unlike Sydney, Singapore and Shanghai that would not see any expansionary movement. The survey reinforces the difference between these two Indian cities figuring on the survey, i.e. their fundamental nature. Delhi city (excluding Noida and Gurgaon) has often seen more strata-sales annually than Mumbai and will continue to be a very landlord-driven market in the next 12-15 months, like many other global cities: Auckland, Beijing, Tokyo, Hong Kong, Bangkok, etc.

Mumbai (city and suburbs), on the other hand, has seen more lease transactions and will continue to be tenant-driven in the next 12-15 months similar to Sydney, Singapore, Shanghai, etc. There are traits common to each city figuring under these two types of markets. A city that is landlord-driven indicates a market with limited supply of office space, rising rents, strong demand and no incentives for tenants. On the other hand, a tenant-driven market indicates oversupply of office space, falling rents, weak demand and big incentives available to tenants. Mumbai (city and suburbs) happens to be a tenant-driven market. Rents in the CBD and SBD-Bandra Kurla complex (BKC) have fallen in the last financial year.

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However, average city-level rents are forecasted to rise here unlike Singapore, Seoul and Sydney where rents would decrease or Delhi, Beijing, Jakarta, etc. where the rents will remain stable. Delhi city (excluding Noida and Gurgaon) is a landlord-driven market mainly due to limited grade-A supply and is looking bullish. The sentiment here is positive. This will result in increased demand for office space and rentals are, thus, expected to rise.

Mumbai’s (city and suburbs) market, on the other hand, is bearish. The sentiment is positive here though as the market will tilt from being tenant-oriented to being a landlord-oriented market after 12-15 months. Absorption is likely to increase steadily over the next few quarters. The survey also mentions that sectors, which will be most active across the surveyed cities, are: technology, banking, pharmaceutical, real estate-construction, transport, consumer goods and professional services. As market sentiments continue to change, there is a need to keep tracking them. What reflects in the survey today could be very different two months later.

Sub-markets Gross RentsQ-o-Q ChangeY-o-Y Change 
(INR psf pm) 
SBD Central1661.22%1.22% 
SBD BKC221-0.90%-4.33% 
SBD North1070.00%1.90% 
Western Suburbs832.47%3.75% 
Eastern Suburbs821.30%2.50% 
Delhi City Office MarketsGross Rents 2Q15
(INR/sq ft/month)
q-o-q growthy-o-y growthCapital Value 2Q15
(INR/sq ft)
q-o-q growthy-o-y growth

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Anuj Puri
Anuj Puri
Chairman at ANAROCK Property Consultants Private Limited, Over 27 years of experience in multi-disciplinary advisory and transactions ranging from real estate to social development projects. Expertise in planning, undertaking demand assessment studies and transaction services including marketing strategies based on technical real estate market analysis, feasibility studies, program requirement derivation and fund and investor sourcing.


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