Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Colliers Quarterly Noida Q1 2017

34 views

Published on

The technology sector and manufacturing should
continue to be the leading demand drivers. We
expect transaction volume to remain healthy
underpinned by demand mainly from research,
development, and back end support divisions of
technology companies and occupiers looking to
relocate from older buildings in Delhi. We may also
see a spill-over of demand to NOIDA due to rising
rents and low vacancy in southern Indian cities. We
expect rents to remain stable despite high vacancy.

Published in: Real Estate
  • Be the first to comment

  • Be the first to like this

Colliers Quarterly Noida Q1 2017

  1. 1. Low rents likely to support demand Parul Bhargava Senior Analyst | NOIDA The technology sector and manufacturing should continue to be the leading demand drivers. We expect transaction volume to remain healthy underpinned by demand mainly from research, development, and back end support divisions of technology companies and occupiers looking to relocate from older buildings in Delhi. We may also see a spill-over of demand to NOIDA due to rising rents and low vacancy in southern Indian cities. We expect rents to remain stable despite high vacancy. Forecast at a glance Demand We expect absorption to remain healthy along NOIDA Expressway due to the availability of large floor plates at affordable rents Supply Around 2.2 million sq ft (204,460 sq m) supply is scheduled for completion in 2017; we anticipate deferment of completion dates due to vacancy Vacancy rate We expect city wise vacancy level to remain stable at 43- 45% in the short to medium term Rent Rents are likely to remain stable in the short term as occupiers remain in a strong negotiating position amid huge supply scheduled for completion. Price Capital values are likely to remain stable in the short term due to lacklustre demand from retail investors after the demonetisation move NOIDA Expressway likely to remain preferred choice of tenants Leasing momentum in NOIDA in Q1 2017 remained relatively subdued with overall transaction volume reaching 0.4 million sq ft (37,161 sq m), down by 11% on a q-o-q basis. Technology firms continued to be the leading driver of demand and contributed around 36% of the overall transaction volume in Q1 2017. Co working and Business Centre operators expanded their footprint in the city and constituted 15% of the demand followed by Media companies and Engineering firms which contributed 13% each. BFSI and manufacturing firms catered to the rest of the demand. Expressway continued to dominate the gross leasing with nearly 70% share of total office sector demand in Q1 2017. The leasing activity in institutional sectors such as Sector 62 and nearby industrial sectors (57 to 60 and 63 to 65) was adversely impacted by traffic congestion due to ongoing metro rail construction in Q1 2017. However, in our opinion, the leasing demand should revive by the end of the year as once the metro is operational; the connectivity of this area is likely to improve significantly. Rental Values Micromarkets Rental Values1 q-o-q Change y-o-y Change Commercial Sectors2 70 - 110 0% 0% Institutional Sectors (Non IT)3 80 - 100 0% 0% Institutional Sectors (IT)3 40 - 60 0% -5% Industrial Sector (IT)4 35 - 50 0% -6% Source Colliers International India Research 1 Indicative Grade A rentals in INR per sq ft per month 2 Sector 18 (hotels, shopping centres, banks, cinemas) 3 Sector 16 A,62, 125,126,127,132,135,136,142,143,144,153,154 (Educational & healthcare facilities, Information technology services & Government offices) 4 Sector 1-9,57-60, 63-65 (factories, warehouses and IT services) Colliers Quarterly NOIDA | SECTOR 13 April 2017
  2. 2. 2 Colliers Quarterly | 13 April 2017 | NOIDA | Sector | Colliers International In Q1 2017 a few shared office operators such as Awfis and Vatika also expanded their footprint in NOIDA by taking 30,000 sq ft (2,787 sq m) and 26,000 sq ft (2,415 sq m) on NOIDA expressway to cater to the demand from SMEs (small and medium-sized enterprises) and start-up companies. In Q1 2017, the real estate developer Supertech tied up with the coworking company Scootr to develop a 30,000 sq ft (2,787 sq m) coworking space centre in its Supernova project in Sector 94. In our opinion, the market may see more such strategic alliances between the shared office operators and developers in the coming quarters. The affordable rents, excellent metro connectivity and availability of office space are likely to attract more coworking operators to the city. Gross Office Absorption in million sq ft Source: Colliers International India Research Vacancy likely to surge amid significant supply scheduled for completion in 2017 The lack of strata sales in projects under construction after the currency demonetisation by the government has weighed on market sentiment. Amid high vacancy, developers have deferred the completion of projects under construction and refrained from launching new projects. Although around 2.2 million sq ft (204,460 sq m) of new supply is scheduled for completion by Q4 2017, we expect most of the supply will be deferred to next year, as developers are likely to remain cautious in adding more new speculative supply amid high vacancy. Major buildings scheduled for completion in 2017 include Wave One in Sector 18 with an area of over 1.0 million sq ft (92,903 sq m), Brookfield Tower 0.35 million sq ft/ 32,516 sq m and KLJ NOIDA One Tower B (0.2 million sq ft/ 18,587 sq m) and I Thum Tower B (0.65 million sq ft/ 60,387 sq m). Overall rents to remain stable amid high supply pipeline In Q1 2017, rents remained stable across all NOIDA's micromarkets. Overall rents are likely to remain stable despite high vacancy levels as the average rents are already low especially in Grade B developments. Despite high vacancy levels, tenants looking for higher quality and well-maintained building may find their options limited in NOIDA. Thus, in our opinion, Grade A buildings will continue to command a premium over market average rents; while any increase in rents is unlikely. Rental and Capital Value Trend (INR) Source: Colliers International India Research Note: The above graph represents average Grade A rents per sq ft per month and average capital values on per sq ft basis Phase 3 of the Delhi Metro which will connect Botanical Garden-Kalindi Kunj to Jankpuri West is expected to become operational by Q2 2017. The upcoming metro matrix should significantly reduce the travel time for commuters travelling from NOIDA to Delhi Airport and Gurugram (Gurgaon) and Delhi. The improved connectivity with Delhi airport should give a significant boost to the office sector in the coming quarters. In addition, an underpass is being constructed along the Mahamaya Flyover-Kalindi Kunj route to connect Sectors 94, 95 and125 with the Master Plan III road. This project aims to decongest the Mahamaya Flyover linking Delhi with NOIDA. 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 2010 2011 2012 2013 2014 2015 2016 2017F InMillionSq.Ft Q1 Q2 Q3 Q4 0 2000 4000 6000 8000 10000 12000 14000 16000 0 10 20 30 40 50 60 70 80 90 100 Q12009 Q12010 Q12011 Q12012 Q12013 Q12014 Q12015 Q12016 Q12017 Q12018F Q12019F Q12020F Rental Values Capital Values
  3. 3. 3 Colliers Quarterly | 13 April 2017 | NOIDA | Sector | Colliers International Colliers View We expect leasing to remain concentrated on NOIDA Expressway, as relocations from older buildings in Jasola and Okhla are likely to push tenants to evaluate options in this micromarket. On account of their affordable rents, Industrial Sectors in NOIDA should continue to witness demand from the manufacturing sector and domestic technology companies while media companies will remain concentrated in Sector 16A. In line with our earlier forecast, we expect rents to remain stable in most of the micromarkets in coming quarters. Increasing supply-side competition should keep the office sector tilted in favour of occupiers. MAJOR TRANSACTIONS IN Q1 2017 CLIENT BUILDING NAME AREA (SQ FT) LOCATION LEASE/SALE NTT Data Oxygen Business Park 100,000 NOIDA Expressway Lease Technip World Trade Tower 50,000 Sector 16 Lease Live Media Assotech Business Cresterra 50,000 NOIDA Expressway Lease Awfis Lotus Boulevard 30,000 NOIDA Expressway Lease JC Penny World Trade Tower 25,000 Sector 16 Lease Source: Colliers International India Research KEY UNDER CONSTRUCTION PROJECTS BUILDING NAME DEVELOPER AREA (SQ FT) LOCATION POSSESSION Wave One Wave Infratech Pvt Ltd. 1,000,000 Sector 18 2017 KLJ NOIDA One - Tower B KLJ Group 200,000 Sector 62 2017 Source: Colliers International India Research Notes: 1. Office Market: Institutional sectors include Sec 16 A, 62, 125,126,127,132,135,136,142,143,144,153 and 154, Industrial Sectors include Sector 1-9, 57-60 and 63-65 while Sector 18 is the most developed commercial sector. 2. Rents/Capital Value: Market average of indicative asking price for Grade A office space. 3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter. 4. All the figures are based on market information as on 25th March 2017 Copyright © 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. For more information: Surabhi Arora Senior Associate Director | Research Tel: +91 124 456 7500 Surabhi.arora@colliers.com Vaibhav Mahurkar Director | Office Services Vaibhav.Mahurkar@colliers.com Gopeshwar Srivastava Associate Director | Office Services Gopeshwar.srivastava@colliers.com Suite no. 6, Ground Floor Quest Offices, Pvt. Ltd., Logix Techno Park, Plot No. 5, Sector 127 NOIDA - 201 301 India

×