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
Structure of the Paper
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Background to the research and case study
Literature review
Analysis framework
Evidence from the case study
Discussion of preliminary results
Key conclusions
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 US$2 billion industry by
2012 and will require huge investment in Health Services sector.
The National Capital Region, Delhi
Year
NCR Population (million) / Growth(%)
1981
19.88
1991
27.36 (37.62%)
2001
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
NCR Regional Plan-2021
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.
Sky line – Case Study
Sky line – Case Study
FDI in India
25000
19531
US $ m
20000
15000
10000
7722
6130
6051
5035
5000
4322
4029
0
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
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.
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)
Data Presentation
Initial results
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..