Rise in Demand for Office Spaces in Hyderabad and Its Implications

From being just another Tier-II city, Hyderabad has emerged as one of India’s fastest growing real estate markets over the last few years. In fact, the City of Pearls — as it’s famously known as — is beating other top-tier cities like Delhi, Chennai, and Bengaluru in corporate real estate growth. A key factor driving the growth in demand for office spaces in Hyderabad is the IT boom the city has been witnessing. The city is becoming the second biggest IT hub in country as large multinational firms continue to amplify their presence in the state. Development of infrastructural facilities and the launch of Metro Rail services have improved connectivity and ease of transport, boosting the investment opportunities in Hyderabad.

Demand for Office Spaces in Hyderabad Hit an All-Time High

Economic Times has reported a survey by a renowned consultancy firm which demonstrates the rising demand for office spaces in Hyderabad. The survey found that the demand for office spaces in the city is right now at an all-time high since 2011, with close to 5.6 million sq ft of office space already leased during the year 2017, nearly up by thirty-seven percent from a year ago.

In another report by Telengana Today, a top real estate consultancy company cited that most of the 5.6 million sq ft of office space absorption were by Banking, Financial Services and Insurance (BFSI), IT/ ITeS corporate, research, consulting, and multinational analytics companies. Some of the heavy-weight corporations that recently expanded their operations in the city include Amazon, Apple, and Google. Apart from office space absorption, the city of Hyderabad is also witnessing an increase in rental values in its IT, SEZ, and extended IT Corridor, the report quoted.

The same report also mentioned that while the first half of 2017 wasn’t impressive for the city’s commercial and office market, it was mainly because of a dip in the supply of both residential and commercial units. Even then, the demand for quality spaces was much higher compared to the supplied volume.

As occupier interest continues to grow at an exponential rate, depressed supplies, and low vacancy levels are some challenging factors for the Hyderabad property market. While this indicates a strong rental sale, it is also likely to cause a surge in property prices. Seamless and timely completion of projects can stabilize supply and low vacancy levels.

With the demand for office spaces and commercial projects on the rise, Hyderabad will also attract a lot of new buyers for its residential projects. Apart from this, this huge scale of demand increase forebodes well for many other industries as large-scale influx of white-collar workers will also happen. Retail, white goods, healthcare, entertainment, and home and office décor are some of the industries to greatly benefit. This, along with the large-scale infrastructure developments happening in the city are likely to cement Hyderabad’s position among the top real estate markets in the country.

Hyderabad is Poised for Further Growth Momentum

An article published in the Hans India also cited the Industry Minister of the Telangana, K. Tarakarama Rao declaring that the demand for office spaces in Hyderabad has surpassed Chennai, Delhi, Bengaluru, and other metro cities in the last two years. According to him, the city, due to its geographical location, is right now the most attractive place to set up businesses. The state-of-the-art infrastructure facilities that Hyderabad offers, has helped the city to emerge as one of the most sought-after destinations in India, Rao added.

K. Tarakarama Rao also stated that the launch of Metro Rail services in Hyderabad, and the proposed Monorail service in the city’s IT Corridor, have heightened investor interests significantly. The first phase of the Hyderabad Metro Rail has been tremendously successful, with more than one lakh people using the service on a daily basis. The remaining three corridors of the Metro Rail will be completed in the next one year, Rao assured.

The western and south-western neighbourhoods of Hyderabad, especially the Hitec City and its surrounding areas, have grown rapidly in the past few years, and hence, these localities are nearing saturation on the commercial space front. This is why investors and industrialists are increasingly moving towards the eastern part of the city around Uppal and Adibatla, which have now emerged as the newest and hottest destinations facing increased demands for office and commercial spaces in recent times.

Hyderabad’s real estate market is undergoing changes that are signalling steady growth and it isn’t showing any signs of slowing down.