Hyderabad absorbs a record 3.34 million sqft office space

Compared to same period last year, the increase in space absorption is five per cent. However, on a full year basis, it a fall of four per cent in 2017, said India Real Estate – July- December 2017 report brought out by consultancy Knight Frank.

By Author  |  Business Bureau  |  Published: 10th Jan 2018  9:10 pmUpdated: 11th Jan 2018  3:04 pm
GST

Hyderabad: Hyderabad witnessed office space transaction of 3.34 million sqft from July to December this year. This is a new record for the space absorbed in six months. Compared to same period last year, the increase in space absorption is five per cent. However, on a full year basis, it a fall of four per cent in 2017, said India Real Estate – July- December 2017 report brought out by consultancy Knight Frank.

The marginal fall in the transacted space in 2017 can be attributed to lack of quality supply. In the last six months, only 1.25 million sqft of office space was delivered. This is 48 per cent lower than what was supplied last year same period. The dip is because many projects are in pipeline.

With new completions unable to keep supply with the demand, the vacancy levels in the city have recorded a historic low of 5 per cent. Low vacancy is a challenge for Hyderabad as occupier interest continues, said Samson Arthur, director- Hyderabad, Knight Frank.

In a new trend in Hyderabad, companies have now started to make their own campus. IT and ITES segment has taken 75 per cent of the total space in the last six months and BFSI accounted for 21 per cent. Amazon and Google were among the major players who have taken up space in Hyderabad in 2017.

Manufacturing, which in six months ending December 2016 took up just 1 per cent of the transacted space, has this time taken 7 per cent. The average deal size was 43,88s sqft, eight per cent more than corresponding period last year. The July- December period has witnessed 76 deals (78 deals last year).

Rentals have moved up across the micro markets in the city. Quality space in Madhapur is fetching Rs 68 per sqft, Somajiguda Rs 60 per sqft and Kukatpally Rs 58 per sqft.

Fewer launches in residential market

In the past six months, 940 units were launched. In the previous six months there were 2,571 units. On an annual basis, the city used to see about 5000 launches but in 2017 it has seen about 3,500 units. This drop is attributed to the lack of systems and processes for implementation of Real Estate (Regulation and Development) Act, 2016. Telangana notified the RERA rules on July 31. As of December end, the chairman of the Authority was yet to be appointed. The website of the Authority was not yet functional. Offline registration of new projects was not happening, Arthur said.

Telangana stated that all projects that have received building permissions before 1 January 2017 will not be covered under RERA. As a result, most developers were concentrating on finishing their projects.

The quarters to sell unsold investory (QTS) were 5 quarters as against eight quarters in the second half of 2016. A lower QTS indicates a healthier market.