For the first time since 2004, Noida has recorded a high vacancy level of 26.2% for its top-end office space in the first quarter of 2007.

Commercial space in Delhi’s suburb of Noida isn’t filling up as fast as it did previously, bucking the trend in the National Capital Region. Rampant building has created an oversupply in the market. For the first time since 2004, Noida has recorded a high vacancy level of 26.2% for its Grade A commercial buildings, or top-end office space, in the first quarter of 2007. This is a sharp jump from the vacancy level of 6% in the fourth quarter of 2006, which is pretty much fully occupied in real-estate terms.

The high vacancy levels are mostly because large amounts of supply of office space is being added to the existing stock. During the first quarter of 2007, around 1.2 mn sq. ft of space was added to the existing supply of 2.86 mn sq. ft in Noida.
In the first quarter of 2007 (alone), four commercial buildings were added to Noida. Some real-estate developers are also withholding space as they prefer to lease the development to a single tenant rather than multiple tenants.

Meanwhile, some potential tenants say they are still facing trouble finding the right space, even though vacancy rates have increased. It could be true that developers are not leasing out space to multiple tenants.

As a result, Noida also did not see any change in the rental value from the previous quarter. The rental values remained static at Rs45 per sq. ft per month. By contrast, Gurgaon, which is much larger than Noida, recorded very low vacancy levels of 1.47%. The demand in Gurgaon continues to be driven by the expansion plans of existing tenants and is expected to remain strong over the next six months.

It is more or less the same in Delhi, where the vacancy levels for Grade A commercial property were very low, mostly because of the limited supply, made worse by a municipal drive last year to clear the city of unauthorized offices in residential areas. Grade A commercial property in Delhi’s central business district continued to be fully occupied for the fourth consecutive quarter. Even Grade B buildings in the district recorded low vacancy levels of about 3% during the quarter.

The secondary business district, outside central Delhi, recorded a marginal decline in the vacancy level from 4.9% in the fourth quarter of 2006 to 4.2% in the first quarter of 2007. The weighted average gross rental value in both the districts increased by 13%, compared with the previous quarter.

Rental values in places such as Gurgaon are expected to increase by 25-30% during the year, a slower increase from the 75-80% increase witnessed last year. A 75% increase in rental value is not likely to happen now because of the low base effect and an expected robust supply. But even a 25% increase is good when you compare it to global rates. Rentals last year moved from Rs55-65 per sq. ft per month to Rs100-110 per sq. ft per month for buildings not used by IT companies. Buildings used by IT companies tend to be single company-occupied. To get the same level of increase as seen previously, the rents will have to rise to as high as Rs200-220 per sq. ft per month.
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  • Oldest post of Noida Forum,just read
  • Hi Gents,
    Does anyone know what is the current occupancy level of high end office space in Noida ? And comparison between office space in Expressway and Sector-62.

    thanks in advance

  • Interesting .... लगता है किसी और ही युग की बात है .... 4 years is a long time in RE

    By the way its from an era when noida was better than Ggn for both residential and commercials. Much better by miles. ✈

    Originally Posted by pgarg6868
    Oldest post of Noida Forum,just read