With readily available grade A office space, Noida is all set to become the next hot spot in this segment. Due to low vacancy levels in other parts of the National Capital Region (NCR), companies are increasingly turning to Noida. According to a Jones Lang Lasalle Meghraj (JLLM) report on the NCR office market, while net absorption (calculated as space absorbed less space vacated) in the central business district (CBD) and the secondary business district (SBD) was zero, in Gurgaon it touched a low of 8,535 sq ft, Noida witnessed the highest net absorption at 249,389 sq ft in the second quarter of 2007.“Noida’s proximity to south Delhi and its cost-effectiveness makes it attractive to corporates,” said Abhishek Kiran Gupta, senior manager for strategic consulting and research at JLLM. For the first time, in the second quarter, the SBD registered a higher quarter-on-quarter growth in rental than the CBD. Explaining this, Gupta said, “the CBD has no supply available. Either grade B buildings will have to be refurbished to grade A, or three-four storeyed buildings need to be redeveloped into multi-storeyed structures. But unlike Mumbai, this has not begun in Delhi yet. At the same time, a lot of quality grade A supply has come into the SBD, particularly at Jasola, at an attractive rate. Because of the low base effect, the percentage rise was higher in the SBD.”While no fresh supply came into the SBD during the first half of the year, about 1.24 million sq ft is expected to come in during the second half of 2007. But don’t expect rentals to stabilise or fall. “Most developers here have sold space to investors, and the latter are holding on to their properties, driving rentals up. Only if the market slows down will investors change their strategy,” said Gupta. In Gurgaon, too, no new supply came into the market during the second quarter. While Gurgaon has an existing stock of 12.2 million sq ft, a high level of supply, about 11.2 million sq ft, is expected to be added between now and the end of 2008. Here, too, despite the high supply, JLLM expects rentals to continue rising “During 2006, rentals were rising by 30-40 per cent every quarter. That won’t happen anymore. Now rates will appreciate by 10-12 per cent every quarter,” he said.
