In the run-up to the G20 summit scheduled this September, the exercise to revamp Delhi’s popular retail and office destination, Connaught Place (CP), began last month. The upscale market is an attractive place for food and beverage establishments but not so much for companies, which are moving to NCR towns such as Gurugram and Noida due to the availability of large floor plates, affordable rentals and modern amenities including ample parking there.
Real estate experts and traders in the CP market said commercial office space leasing has gone down drastically in the area over the last few years on account of high rentals and the absence of parking and A-grade office infrastructure, while the rents have shot up by 150 percent over the last decade.
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The last major renovation of CP was during the time of Commonwealth Games in 2010 with an estimated expenditure of around Rs 1 crore.
The revamp
The New Delhi Municipal Council (NDMC) last month signed a pact with the State Bank of India and Indian National Trust for Art and Cultural Heritage (INTACH) to revamp the CP market.
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Satish Upadhyay, Vice-Chairman of NDMC, said that the cost of the redevelopment work is Rs 3.19 crore and the deadline to complete it is June 30, 2023.
“CP market is the face of Delhi and G20 delegates from various countries will come so we want to beautify the market before this. The revamp will include improvement of façade and pathways and minor repair works of buildings,” Upadhyay said.
An INTACH official said the revamp will focus on enhancing the look of the market but no structural changes will be made.
The revamp will focus on conservation and restoration, including repairs and exterior painting of all buildings in the outer and inner circles and radial roads of Connaught Place.
“Apart from exterior painting, repair works such as plasters coming off the walls will be taken up along with building wear and tear work,” the INTACH official said.
The state of commercial office space leasing
Commercial office space leasing has gone down drastically in the area over the last few years, according to real estate experts and traders of the micro market. A lack of large floor plates, higher rents, scarcity of vehicle parking and absence of A-grade office infrastructure buildings are some of the driving factors behind the exodus of corporate offices from CP, they said.
Vibhor Jain, Managing Director (North India), Cushman & Wakefield, a real estate consultancy firm, said the trend of corporate offices moving to NCR towns from CP and other micro markets started when Gurugram was being developed in early 2000, when there was also a sealing drive in Delhi in which a lot of industrial areas got shut down, shrinking office space availability.
Availability of commercial space is still a big challenge in Delhi.
“Now the companies are looking for quality and newer buildings having more amenities, latest equipment like high-speed lifts, double laced glasses and larger floor plates etc. These kinds of buildings are not much in CP and the few ones available charge double or triple the prices,” Jain told Moneycontrol.
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Jain said that DLF Centre, Parsvanath building at 27 Kasturba Gandhi Marg, DLF Capitol Point, Hindustan Times House on KG Marg and Birla Towers are some of the grade A-buildings in CP.
Apart from restaurants and eating joints, CP also saw the opening of retail stores of some international fashion brands, including United Colours of Benetton, Marks and Spencer and H&M among others, over the last decade.
The average area leased by brands in CP ranges from 800 square feet to 1,000 sq ft for normal stores, which goes up to 1,400 sq ft for food and beverage establishments.
Atul Bhargava, president of New Delhi Traders Association, said, “There is hardly any large space available in CP for big companies. The situation of parking is also not good. NDMC parking in inner and outer circles is very expensive. Any company would want basic amenities such as ample parking and good infrastructure before setting up offices here."
He said there is “no ease of doing business” in CP as traders and companies that have offices here cannot even get their buildings repaired as most of these are heritage buildings, and they have to take permission from Heritage Conservation Committee, which is not easily granted.
Jagmeet Ahluwalia, a commercial real estate broker active in the region, said that some companies only have a token presence in CP because of the central business district’s proximity to various government offices and ministries.
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“Only those companies that do not require a large space and have regular dealings with ministries and other government offices prefer to stay in CP. While scores of companies, which do not have much work with the government departments have moved to places like Noida and Gurugram,” he said.
How have rentals fared?
High streets markets of CP and Khan Market are considered among the country’s costliest markets in terms of rentals.
According to Cushman & Wakefield, current retail rentals in the high street market of CP range between Rs 1,000 and Rs 1,050 per square foot. In Khan Market, which is known for boutique shops, high-end restaurants, and gourmet food stores, rentals range from Rs 1,450 to Rs 1,500 per sq ft.
Since 2010 the rentals in CP have risen around 78 percent from Rs 590 to Rs 600 per sq ft. The current office rentals there range from Rs 280 to 285 per sq ft going up to Rs 370 per sq ft in A-grade buildings. The office rentals in A-grade buildings such as DLF Centre ranges between Rs 350 and Rs 370 per sq ft, in DLF Capitol Point it is Rs 350-Rs 360 per sq ft while in Hindustan Times House rentals range from Rs 280 to Rs 290 per sq ft.
On the other hand, office rentals in Gurugram’s DLF Cybercity range between Rs 115 and Rs 125 per sq ft, while they are Rs 90 to Rs 130 per sq ft at MG Road and between Rs 55 and Rs 110 per sq ft in Noida.
“In Gurugram office rentals are in the range of Rs 120-130 per sq ft but as soon as you enter Delhi they go up. For instance, Aerocity, which is very close to Gurugram but falls in Delhi, has office rentals in the range of Rs 200 per sq ft while in Connaught Place it is around Rs 300 per sq ft. So if you need a larger office you have to look at Gurugram or Noida,” Jain said, adding that CP rentals will continue to go up at the same pace.
The occupancy rate in CP is over 85 percent, most of it being food and beverage establishments and retail fashion brands.
Real estate broker Ahluwalia said that office space rentals are much cheaper in Gurugram than Rs 300 per sqft in Delhi’s central business district.
Evolution of Connaught Place as a high street
CP was designed by Robert Tor Russel, the chief architect of the Public Works Department of the British Raj.
It was initially designed as what is today termed a small office home office (SOHO) – where commercial establishments are on the lower floors and homes on the first floor – which evolved with time.
Jain from Cushman & Wakefield said that eventually the law was changed to allow people to get their residential space in CP converted into an office or a commercial space by paying a fee.
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At present, most of the residential units have been converted into commercial spaces such as restaurants, offices etc and residents have moved to other bigger places.
“The moment a market becomes a chaotic retail place; it is no longer a great place to live from a residential point of view. There are very few families living in CP and Khan Market, which was also built on the same concept,” he said.
Real estate experts said that repurposing is not possible in CP but the market may see a change in the brand mix such as the introduction of entertainment brands.
“Largely it will remain a mix of food and beverages and retail brands. There is no land and large floor plates available for offices of corporate companies here. The market does not seem viable for corporate offices due to limited availability,” Jain said.
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