Impact of Sustainability Attributes on the Performance of Prime Office Market in the National Capital Region of Delhi

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Impact of Sustainability Attributes on the
Performance of Prime Office Market in the
National Capital Region of Delhi
Anil Kashyap, Jim Berry and Terry
Grissom University of Ulster, UK

• Paper presented at 17th European Real Estate
  Society Conference, 23-26 June 2010 at Milan,
  Italy

25 June 2010
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Structure of the Paper

• Background to the research and case study
• Literature review
• Analysis framework
• Evidence from the case study
• Discussion of preliminary results
• Key conclusions

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Background

• With Indian economy growing strongly,
  requirements of housing, commercial and
  industrial infrastructure bound to rise.
• More than 367 Million Sq. Ft. of additional
  office space needed by 2012-13 ( Estimated by
  Ernst young)
• 4.7 million housing units would have to be
  completed by 2030 (Estimated by Deutsche Bank)
• Asian Development Bank estimates requirements of
  10 million units by 2030
• Indian Ministry of Tourism forecasted
  requirements of 2.9 and 6.6 Million hotel rooms
  to meet the tourism and business by 2010 and
  2020.
• Fast growing Medical tourism will become US2
  billion industry by 2012 and will require huge
  investment in Health Services sector.

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The National Capital Region, Delhi
Year 1981 1991 2001
NCR Population (million) / Growth() 19.88 27.36 (37.62) 26.64 (35.59)
Delhi Population (million) / Growth() 6.22 (53) 9.42 (51.45) 13.80 (47.02)

• National Capital Region Planning Board Act (1985)
• - preparation of a plan
• allocation of land uses
• economic base for growth
• infrastructure provisions

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NCR Regional Plan-2021
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NCR Region Growth

• Real estate in the National Capital Region of
  Delhi has experienced an unprecedented boom in
  development specifically in the industrial,
  information technology and retail sectors of the
  economy which in turn is creating a escalation in
  demand for residential and office space.
• The liberal policies of government, in relation
  to the streamlining of planning permissions and
  licence procedures for mega construction
  projects, have attracted foreign investments
  since the 1990s.
• As the traditional CBD in Delhi did not have
  sufficient space to accommodate modern office
  buildings, the emergence of multi-centred office
  developments in the sub-region has been a key
  driver in the real estate market.

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Sky line Case Study
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Sky line Case Study
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FDI in India
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Sustainability impact in Office Market

• Evidence on rental premiums and occupancy levels
  (Spivey and Florance, 2008 Eichholtz eta al,
  2009 Furest and McAllister, 2009)
• Kats (2003) suggest present value benefits of 37
  to 55 USD per sq ft as productivity gains from
  less sickness level and improved work outputs.
• Resulted from better ventilation, lighting and
  general environment within the buildings
• Haynes (2007) suggest that office productivity
  linked to office layout and office comfort.

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Modelling Framework

• The paper analyses the impact of sustainability
  attributes on the performance of office space
  based on a classification of key variables
  (property, design, energy efficiency in the
  National Capital Region of Delhi.
• Rent Alpha Beta (Property Variables) Beta
  (Accessibility) Beta (energy efficiency
  variables)
• This research examines how rental value is
  influenced by sustainability criteria in the
  office market and will be of benefit to players
  in the private (real estate providers) and the
  public sectors (planners and policy makers)

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Data Presentation
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Initial results
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(No Transcript)
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Key Conclusions

• Work in progress
• The impact of property, sustainability variables
  found significant on the rent
• Need to analyse sensitivity in relation of other
  variables using multivariate analysis
• Advice on how to make this analysis more robust
  and comprehensive..