The demand for office space in Hyderabad was the highest across India in Q3 of 2021 – during the period of July-September. The Q2 performance of Hyderabad’s commercial real-estate sector had been an average one, but as more of the population received vaccination jabs and more of the workforce were inoculated against the Covid-19 virus, the employers started to prepare to get its employees back to working from their organization’s workspace. As a result, Hyderabad has scored big in O3 2021 in terms of commercial space thanks to its ability to match supply-demand better than other metropolitan cities of India.
In Q3 2021, Hyderabad displaced Bengaluru from the top spot as the country’s hottest commercial real-estate destination in terms of workspace demand. Hyderabad’s pliability to maintain supply-demand dynamics is what has propelled it to become India’s top commercial real-estate destination in 2021. Hyderabad surpasses the Indian Silicon Valley city of Bengaluru by having the largest share of commercial leasing volume at an approx. 25,00,000 sq. ft. The capital of Karnataka, Bengaluru still remains the city with the largest leasing volume on a Year-to-Date basis.
India’s top 6 metros in terms of commercial leasing – Hyderabad, Bengaluru, Pune, Delhi NCR, Chennai & Mumbai accounted for around 1,03,00.000 sq. ft. of office space consumption in Q3 2021. This is the highest number that has been recorded since Q1 of 2020 before the coronavirus pandemic hit the country. The significant trend that emerged is IT & ITeS organizations & companies had the greatest number of leased properties for workspaces and as such the cities of Hyderabad, Bengaluru & Pune contributed to nearly 2/3rd of the office space absorption in Q3 2021.
Bengaluru & Hyderabad are projected to emerge as Asia’s first & third fastest growing cities over the next 3 years, while Bengaluru had always been the hottest commercial real estate destination, the growth registered by Hyderabad sees it catching up to Bengaluru soon and it also possesses a benefit in potential compared to other metros of India.
Hyderabad’s growth in the commercial real-estate has been due to several factors:
Infrastructure Focus – There has been a renewed focus by the government of Telangana to improve & make Hyderabad’s infrastructure world-class with wider roads, better public transport, better electricity & water supply etc.
Availability of Talent – Hyderabad has very good availability of talent and skilled professionals, many employees from all over the country do not mind moving to Hyderabad for their profession as it is one of the easiest cities to live in.
Ease of Living – The city of Hyderabad has relatively lower cost of living amongst India’s top 10 metropolitan cities, cheaper rent, electricity, availability of water supply etc. make Hyderabad a favourable destination for working professionals & organizations alike.
Advantageous State Policies – The state government of Telangana has introduced numerous policies for the benefit of the growth of commercial real-estate in Hyderabad to encourage more & more multi-nationals to setup campus here and also to push for growth of start-ups in the city.
Some of the largest global tech giants like Google, & Facebook have set-up their India headquarters in Hyderabad which has resulted in impressive economic growth of the city’s commercial space. The goal of creating multiple integrated projects by the state government is to boost the real-estate momentum of Hyderabad. Banking, Financial Services & Insurance (BFSI) organizations & flexible workspace sectors contribute to about 60% of the leasing space demand.
Areas like Raidurg & Hi-Tec City garnered the highest amount of leasing of commercial space in Hyderabad for Q3 2021. The central deccan city also had the highest workspace supply in India for Q3 2021 with an approx. supply of 32,00,000 sq. ft. & the top 6 cities of India registered a total of 1,08,00,000 sq. ft. commercial space supply in Q3 2021, the highest since Q2 2020. Pune was the city with the next highest commercial space supply for Q3 2021 followed by Chennai, Mumbai, Delhi NCR & Bengaluru respectively.
With upcoming supply of workspaces being pre-committed, the market expectations indicate towards lower vacancy numbers during the end of 2021 going into the new-year 2022. The commercial real-estate market is witnessing multiple enquires for upcoming Grade A projects by occupiers evaluating their real estate strategy.