Over the last few years Hyderabad has seen unprecedented growth in commercial leasing activities owing to infrastructural push from the Government, strong demand from occupiers and attractive rentals. The city has been a major location for global investors who are scouting for ready stock with high yield rates.
In 2019, Hyderabad emerged as the second most preferred sub-market for Commercial Real Estate (CRE) in India, following Bangalore. During January- September 2019, the city’s gross absorption rose to 84% y-o-y driven by a strong demand from IT- BPM, Consulting and Flexible Workspace operators. Fuelled by increased interest from large occupiers, the city witnessed a strong supply of 11.9 million sq ft till Q3 2019 , accounting for 35% of the total supply across the top seven cities during this period.
In 2020, Hyderabad will continue to remain in the race of claiming the top spot in CRE with strong growth momentum from occupiers and a steady supply infusion. During Q4 2019- Q1 2020, the total under construction supply in the city would be 14.6 million sq ft and micro- locations like Madhapur including HITEC city, Gachhibowli and Kokapet will be thriving with leasing activities and new supply.
Here’s a bird’s eye view of the three major office locations to watch out for in the coming years:
> HITEC city, is the most prominent office destination in Hyderabad holding around 40% of city's Grade A stock. In 2019, this micro market witnessed tapering vacancy levels owing to robust demand from technology occupiers. The cluster will continue to see increased pre- commitments in the coming year too. Prevailing rental values in this market ranges from INR 65-751 per sq ft per month. The location is expected to maintain a 9% y-o-y appreciation in the forthcoming years.
> Gachibowli is the adjacent micro market to HITEC city which has availability of stock and ranks high on accessibility. Gachibowli along with Kondapur and Kokapet will accommodate the spill- over demand from HITECH city. The location offers a competitive rent in the range of INR 55-65 per sq ft per month and expected to witness 5%-10% y-o-y appreciation in the next two years.
> The peripheral market of Uppal is currently at a nascent stage however the location willgain prominence in the long term as rents appreciates further in the established locations. Currently, the location offers a rent within the range of INR 25-351 per sq ft per month.
With several large-scale expansions lined up and proactive attempt of developers to complete construction to keep up with the demand, Hyderabad will certainly be a strong contender for the top spot in 2020.
