Delhi-NCR commercial real estate alert! Gurugram, Noida become business hotspots - Here is what investors should know

Commercial real estate in the National Capital Region promises growth and continues to perform more than any other real estate asset class. Delhi NCR's commercial real estate market continues to be popular among investors and buyers. Till Q1’2020, the commercial realty space was on a growth trajectory but in Q2’2020 owing to the COVID-19 crisis the sentiment remained muted but the market will again witness an uptick in the sentiments by Q4’ 2020.

Several areas of Gurugram and Noida, have turned into business hotspots. Gurugram has been a premium location for commercial office spaces in NCR for almost a decade now owing to its proximity to the national capital, apart from innumerable industries and business houses already located in the vicinity. Demand for office spaces in Noida has also been on a high growth trajectory after commercial space saturated in Delhi and availability dwindled in the national capital.

As per 360 Realtors-Commercial research, NCR was the runner-up for the leasing activity in India. Micro-markets like NH-8, Golf Course Road, SPR in Gurugram have turned out to be the most lucrative options for leasing activities. The lower rent, new supply and infrastructure development have boosted the demand in NOIDA key sectors such as Sec-16, Sec-62 and Noida Expressway.

“Commercial Realty market is witnessing an upward trend and more and more buyers and investors are showing their interest in it because commercial asset class has performed much better than the residential sector over the last few years. While the residential market for Delhi NCR has largely remained subdued in the last few years, commercial space leasing and investment has gained traction, especially in the last financial year. Demand was largely driven by BFSI, FMCG, wellness & healthcare, consulting, head-offices of big corporates/MNCs,” said, Ajay Rakheja, National Head, 360 Realtors-Commercial.

In the wake of the pandemic, several factors will continue to affect development. Planning for office expansion or new leasing became a secondary preference due to cost optimization, social distancing, and hygiene norms. Also, the market is witnessing rising demand for Grade-B & Grade-C.

Stating further, Ajay Rakheja, said, “Investors and buyers need to be cautious right now and should focus on some key parameters such as ‘Location', which is very critical and should also look at the demand-supply trend of last two quarters in that location. Office spaces in the CBD are always going to remain in demand but in the wake of the pandemic, when many corporates are revisiting their real estate costing, few of the companies have shifted their workplace to suburban locations, as long as they are well-connected and public transport is present. At all costs, investors and lessees should avoid the properties in isolated locations as they are much harder to lease out and avoid properties that are having vacancy over 70 %.

The third quarter is witnessing momentum in the NCR market. Industries/ Businesses started their physical operations which have accelerated the demand of leasing and investment, according to our estimates the growth in the commercial market will take a V curve and return to normalcy by Q4’2020.