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Gurgaon | Office April 2015:Absorption dips marginally by 6% QoQ but solid pipeline for 2Q.
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1 Research & Forecast Report | April 2015 | Colliers International
Absorption dips marginally by 6% QoQ but solid pipeline for 2QGurgaon commercial real estate market remained active in the first quarter of 2015. The citys office absorption was recorded at approximately 1.12 million sq ft, which is about 6% lower than that of the previous quarter. IT/ITeS and BFSI with 47% and 25% share, respectively were the prime contributors to this demand. Apart from this, media and entertainment, manufacturing, pharma, FMCG and engineering sectors also leased large office spaces during the quarter. A few notable transactions this quarter were the 0.12 million sq ft office lease by Ernst & Young in Unitech Cyber Park located at Sector 39, 0.10 million sq ft by Arvato in JMD Megapolis located at Sector 48 and 0.08 million sq ft by Boston Consulting in Bestech Business Park located on Sohna Road.
At the end of the quarter, the total available office supply stood at 16 million sq ft. Areas with the highest available supply were Golf Course Road Ext / Sohna Road (30%), Manesar (25%), National Highway 8 (15%), Udyog Vihar and Industrial Sectors (14%) and Golf Course Road (9%). The city witnessed the completion of three small projects this quarter, namely, Spaze Palazo (0.25 million sq ft) by Spaze Group at Sector 69, JMD Empire (0.18 million sq ft) by JMD Group at Golf Course Extension Road and Legends Heights (0.25 million sq ft) by ILD at National Highway 8. Given the large vacant stock, developers continued to refrain from adding speculative supply. Only Earth Group in collaboration with AMB Group launched Earth SKY GATE at Sector 88. It is a mixed-use development project of about 1.5 million sq ft, which will have retail, commercial, bank space and restaurant components.
Research & Forecast Report
Gurgaon | OfficeApril 2015
Rental Values
*Indicative Grade A rents in INR per SF per month
MICRO MARKETS RENTALVALUE*% CHANGE
QoQ YoY
MG Road 100 - 145 0% 7%
DLF Cyber City (IT) 90 - 100 0% 20%
Golf Course Road 55 - 80 0% 17%
Institutional Sectors (Sec 44, 32, 18)
55 - 95 0% 20%
Golf Course Road Ext./Sohna Road
55 - 80 0% 17%
National Highway 8 50 - 150 0% 14%
Udyog Vihar & Industrial Sectors
30 - 45 0% -12%
Manesar 40 - 45 0% 4%
City Office Barometer
INDICATORS 1Q 2015 2Q 2015 F
Vacancy
Absorption
Construction
Rental Value
Capital Value
2 Research & Forecast Report | April 2015 | Colliers International
Rents and capital values in Gurgaon remained stable in 1Q 2015 across all the micro markets due to the large available supply and low absorption witnessed during the quarter.
On the infrastructure front, the new state Government has scrapped the decision to terminate the Kundli-Manesar-Palwal (KMP) Expressway project, and instead has injected fresh funds to the tune of INR 1,200 crores for completion of the project. Th is project will be taken over by the Ministry of Transport from Haryana Industrial and Infrastructure Development Corporation (HSIIDC).
Colliers View
With the number of RFPs fl oating in the market, we anticipate an increase in offi ce absorption in the near future. Th e Udyog Vihar and Institutional sectors will continue to remain the most preferred offi ce locations due to location advantages and competitive rents. Rents are expected to remain on the same levels due to the high vacancy levels and robust under-construction developments in the pipeline, especially in micro markets, such as the Southern Peripheral Road and Golf Course Extension Road, in the coming quarters.
Top 5 Transactions of the Quarter
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Ernst & Young Unitech Cyber Park 125,000 Sector 39 Lease
Boston Consulting Bestech Business Park 80,000 Sohna Road Lease
Nagarro Tower of Arc 70,000 Udyog Vihar Lease
HSBC Plot No. 80 67,000 Udyog Vihar Lease
TCS Vatika Business Park 62,000 Sohna Road Lease
Quarter Wise Absorption
Average Rental And Capital Value Trend
100
140
120
8,000
10,000
14,000
12,000
6,000
4,000
2,000
0
80
60
40
20
0
0.40
0.80
1.20
1.60
2.00
0.00
1Q 2
013
2Q 2
013
3Q 2
013
4Q 2
013
1Q 2
014
2Q 2
014
3Q 2
014
4Q 2
014
1Q 2
015
Mill
ion
Sq.
ftRe
ntal
Val
ues
INR
Per
SF
Per
Mon
th
Capt
ial V
alue
s IN
R P
er S
F
Key Under Construction Projects
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
Business Club AIPL 700,000 Golf Course Extension Road 2015
Parsvnath IT Park Technicia Parsvnath Developers 695,000 Sohna Road 2015
Unitech Infospace, Gurgaon Phase 2 Building 7
Unitech 450,000 NH-8 2015
Notes:
1. Offi ce Market: Th e prime business locations in Gurgaon are MG Road, Golf Course Road, Cyber City and Udyog Vihar. Manesar on the outskirts of Gurgaon is also emerging as
the citys new offi ce destination.
2. Rents/Capital Value: Market average of indicative asking price for Grade A offi ce space.
3. Available Supply: Total Grade A offi ce space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the fi gures in the report is based on market information as on 25th March 2015.
Forecast
1Q 2
008
1Q 2
009
1Q 2
010
1Q 2
011
1Q 2
012
1Q 2
013
1Q 2
014
1Q 2
015
1Q 2
016F
1Q 2
017F
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Primary Authors:
Surabhi Arora Associate Director | Research +91 124 456 7500surabhi.arora@colliers.com
Sachin Sharma Manager | Research
Amit Oberoi I National DirectorValuation & Advisory Services & Research
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Colliers InternationalTechnopolis Building, 1st Floor, DLF Golf Course Road, Sector 54, Gurgaon - 122 002TEL +91 124 456 7500
502
2015
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