Hyderabad is among the top three cities in the country that have witnessed excellent office space absorption in 2022. The city has observed an approximately 5.2 million SFT in the initial six months of 2022 and is still the pacemaker in India’s commercial leasing activities. Nearly 9.5 million SFT of ‘Grade A’ official space was introduced to Hyderabad’s existing commercial market, and this activity noted a growth of 12% in comparison to the previous year. This further outperformed the leasing activity before the pandemic and showed flawlessly recovered market conditions.
A few days back, the CIRIL Indian Commercial Real Estate Market Report (Jan-June, 2022) was released, which states that the IT-BPM sector is still the significant demand driver with a 50% share in leasing. This was followed by the manufacturing and engineering sectors and BFSI-banking, financial services, and insurance, at 10% and 20% of the leasing activities.
Apart from this, the gross leasing volume was majorly contributed by co-working operators, with a 15% share. The Madhapur and Gachibowli submarkets remained the first choice of occupiers and accounted for nearly 75% of overall leasing activity in the city. Discussing the rentals, the rental prices in most micro markets continued to be stable even after multiple occupiers were consolidating the commercial space requirements. This altogether signifies that there’s likely to be an appreciation in rental prices in the Madhapur submarket because of the unavailability of Grade A office spaces and the higher price quoted by the real estate developers. By the end of 2023, the Gachibowli submarket is expected to have nearly 11 million SFT of space, and, again, IT, ITes, and coworking space will continue to be the demand drivers.
see also – Hyderabad Hits New Highs in the Real Estate Market
Coming to Hyderabad’s retail market, the market witnessed the absorption of around 0.6 million SFT of space. In this space absorption, the apparel and fashion industry was involved in the highest leasing proposition, with 45%, followed by department stores, lifestyle brands, and footwear. Max, Style Union, and Max were the top space takers.
Back in 2021, a supply of 0.7 million SFT was added, and nearly 1.0 million SFT of new mall supply was adjourned to 2022. Rental prices remained unchanged in many of the micro-markets. However, still, appreciation was observed in some markets that involve Madhapur, Banjara Hills, Kukatpally, Himayatnagar, and Kondapur due to the unavailability of superior quality retail space and partiality for premium mall space.
The warehousing market in the city detected transactions of approximately 1.5 million SFT, with consumer durables being the demand drivers. The local manufacturing occupiers, like Pantancheru, Gundlapochampally, Edulanagulapally, etc., witnessed 80% of these transactions. Due to its proximity to the airport, Shamshbad has also come up as a preferred destination for the e-commerce industry. The report also stated that most locations adjoining Outer Ring Road had recorded an average growth rate of 15–25% in land value over the last six months.
