Initially, Hyderabad overtook Bengaluru as India’s top commercial real estate (CRE) destination in terms of total demand for office space during the July-September quarter of this calendar year, as occupiers focused on big deals, especially from the BFSI segment and flexible workplaces. staff.
According to Colliers, after an average performance in the second quarter of 2021, Hyderabad has emerged as one of the most resilient cities in terms of supply and demand dynamics.
For the first time, Hyderabad had the maximum lease volume share at 2.5 million square feet (MSF), surpassing Bengaluru. However, on a year-to-date basis, Silicon Valley in India continues to be the market leader.
Overall, the top six cities in India reported around 10.3 MSF of total office uptake in Q3 2021, the highest volume recorded since Q1 2020. IT-ITeS-led cities in Hyderabad, Bengaluru and Pune accounted for 62 % of total absorption in the third quarter of 2021.
Managing Director of Colliers Office Services (South India) Arpit Mehrotra told FE that growth in Asia is as much driven by cities as countries. Bengaluru and Hyderabad should be the fastest growing cities in Asia and the third fastest growing, respectively, during 2022-24. While Bengaluru has always been the blue-eyed boy in CRE, Hyderabad has shown a huge amount of potential and has grown by leaps and bounds, particularly in the last decade.
“The renewed and planned focus on city infrastructure, talent availability, comparatively better costs, proactive state government and favorable government policies have all contributed to the growth story of CRE in Hyderabad.
The state aims to establish several integrated projects throughout the city to maintain its real estate momentum. In the past few years, tech giants like Apple, google browserand Facebook and Amazon It has entered this market which has led to tremendous economic development.”
In the Hyderabad market, BFSI and flexible workplace segments captured the maximum rental share of 66% of the total demand.
Rai Durg mini market saw maximum rental accounting for 53% of the total demand, while Hitec City contributed 40%.
Hyderabad was also the highest market in terms of office space supply during Q3 2021. This quarter saw the highest supply since Q2 2020 at 10.8 MSF in Q3 2021, with Hyderabad and Pune contributing the maximum share at 29% and 25%, respectively.
Going forward, Mehrotra said that despite the ongoing pandemic, Hyderabad has shown its resilience and is preparing for a growth recovery in the near future. He added, “Although vacancy levels showed an upward trend in the last quarter of the year, we do not expect a further increase in the number of vacancies by the end of 2021 given that most of the new incoming supply is pre-committed.”
“The vacancy may put some pressure on rents in the short term; however, we are seeing multiple inquiries for upcoming top-tier projects by occupants to assess their property strategy.