Hyderabad is one of the fastest growing technology hubs in India. The city has emerged as one of India’s fastest growing real estate markets due to aggressive government policies, better infrastructure and a large pool of talent. While the pandemic disrupted office leasing business across all markets, Hyderabad saw a rebound in leasing activity in other (…)
Published date – June 10, 2022, 11:07 pm
Hyderabad is one of the fastest growing technology hubs in India. The city has emerged as one of India’s fastest growing real estate markets due to aggressive government policies, better infrastructure and a large pool of talent. While the pandemic disrupted the office leasing business across all markets, the recovery in Hyderabad’s leasing activity in the second half of 2021 has been strong.
GRID Policy Affecting Commercial Realty Development:
Hyderabad’s Growth in Dispersion (GRID) policy aims to expand the IT industry to non-western regions. According to Knight Frank India Research, the office market remained stable in 2021, with transaction volumes equal to last year’s annual total of 6.0 million sq ft. In Q1 2022, Hyderabad made a promising start with office space transactions increasing by 72 per cent year-on-year to 1.6 million sq ft, while the average transaction rent remained stable at Rs 61.7 per sq ft per month.
The IT industry remains the leading office occupier, contributing 55 percent of all transactions. Technology players, non-bank financial services as well as international pharmaceutical companies remain the major occupiers of good quality office spaces (Grade A) in the city.
The commercial real estate market in Hyderabad is also undergoing a shift towards co-working spaces, which has bridged the gap between occupiers and developers. Co-working has now become popular as ‘managed office’ due to its flexibility in terms of cost, tenure and facilities. It has also become increasingly popular due to the new flexi and hybrid work culture in the post-pandemic era. New companies continue to enter the managed office co-working space market, with the goal of establishing their footprint in the city. Incumbents who have survived Covid are continuing to expand their portfolio, even as occupiers look to refocus on downsizing their office space.
Factors influencing the growth of commercial real estate market in Hyderabad:
Despite the postponement in office return in Q1 due to the impact of Omicron, Hyderabad occupancy levels remain strong, up from 88.2 per cent in Q1 2022, compared to 87.8 per cent in Q4 2021 and 85.6 per cent in Q3 2021. . The IT industry leads with 55 per cent share in the total transaction space, followed by BFSI (12 per cent).
While technology companies are adopting remote working practices to attract internationally distributed talent, the need for physical centers with digital infrastructure remains. Factors such as the existence of well-planned infrastructure and growing opportunities in the IT/ITeS sector and manufacturing industries have boosted Hyderabad’s appeal.
Additional factors such as good connectivity, supportive government policies and development of industrial and warehousing facilities have increased the demand for commercial properties in growth corridors such as Medchal, Shamshabad and Patancheru.
Supportive Government Policies:
Telangana has developed over the years and has become a preferred destination for global investment under the leadership of Chief Minister K. Chandrasekhar Rao.
The supportive industrial policies of the state government have played an important role in attracting investments and promoting the real estate market on a large scale. While transaction volumes have increased, rental levels have remained stable or increased over the past two quarters. Occupancy levels are expected to improve as IT businesses return to office; As demand increases, fares are also expected to increase. Overall, the commercial market outlook in Hyderabad remains strong and is expected to reach pre-pandemic levels.
-Samson Arthur
Senior Branch Director Hyderabad
Knight Frank India