With the enhanced market environment and the initiative of Telangana's Government to make Hyderabad more noticeable resulted in a steep increase in real estate leasing.

Sustainable Leasing Activity in Hyderabad

During the first half (H1) of 2020, Hyderabad accounted for almost 12% of office space transactions in India. The services industry has continued to drive office space with a 53 percent share owing to the leading IT market. Other essential sources of demand were financial services, healthcare, flexi-space providers, consultancy, and research industries.

The H1 in 2020 recorded 1.7 million sq ft of lease operation. Hyderabad currently has vacancies of over 10%. Seeking attention on demand in 2019, weighted average rentals across micro-markets are currently up to 5-10% compared with H1-2019.

The demand for medium-term office space is predicted to reach faster than it has fallen. When the tide turns, Hyderabad will be the major beneficiary, as businesses will look for talent, climate and a good quality real estate supply, all available in the city.

With the advent of hub-and-spoke real estate policies, the Government's drive to spread projects equally across the city would result in an increase in demand for space on the historically underdeveloped markets.

Trends in Supply and Absorption

The total city's office stock stood at around 61 million sq ft at the end of the first half of 2020. In the past few years, the market in Hyderabad has undergone a surplus in premium buildings. When the quality of the supply was limited, the Hyderabad market is expected to move slowly and gradually to the tenant-driven market from a landlord-driven market. Landlords, especially for major occupants in the post-pandemic period, are assumed to be more versatile.

In the six biggest cities, the national absorption of offices in H1 2020 was 13.7 million sq.ft, compared with the same 32 million sq.ft in the same month last year. Likewise, in H1 2020, the supply rise was 13.5 million square feet compared to H1 2019, which was 26.6 million square feet.

By: Shailaja K