Hyderabad office market zooms
Net absorption and new completions likely to increase in the next two quarters
Hyderabad: Hyderabad continues its growth momentum quarter-on-quarter in the office space. The city led the charts among the top seven cities in the country both in terms of office net absorption and new completions during the fourth quarter of 2020.
The city’s office market has shown sustained recovery with net absorption increasing continuously over the last three quarters. In the fourth quarter of 2020, the office net absorption stood at 2.83 million sq ft, a jump of 83 per cent over the previous quarter, of the total 8.27 million sq ft of absorption recorded in the top seven cities.
New completions in the city during the fourth quarter stood at 3.72 million sq ft, of the total 12.78 million sq ft recorded across the major cities of India, reveals latest research by JLL.
“In sync with net absorption, HITEC City and Gachibowli accounted for all of the new completions. New completions as well as net absorption are expected to further increase in the next two quarters as major projects, which have been fully pre-committed, are expected to get operational,” said Sandip Patnaik, MD and head, Telangana and AP, JLL.
Favoured market
Hyderabad has gradually emerged as one of major destinations in the country in the IT/ITeS sector, providing stiff competition to Bengaluru. The advantages offered by the city, such as good infrastructure and conducive business environment, are both persuasive as well as competitive.
Meanwhile, proactive government measures, such as the Look East Policy and the Growth In Dispersion (GRID) policy, as well as infrastructure initiatives such as metro rail connectivity would further strengthen the city, augmenting its growth potential in the forthcoming period.
According to Piyush Gupta, MD, Capital Markets & Investment Services, Colliers International India, “As technology companies in India continue to work remotely, markets such as Hyderabad are continuing to witness enquiries from global technology companies looking to set up their global in-house centres.”
Vestian Global Workplace Services research shows that the total office space absorption in Hyderabad was recorded at 6.4 million sq ft in 2020. Despite the tight economic environment, the city continued to be one of the favoured office markets of the country, accounting for 18 per cent share of the total absorption in 2020. The office markets in west Hyderabad, comprising Madhapur, Gachibowli and other peripheral markets, accounted for over 90 per cent of the absorption.
Steady supply
New supply of office space continued to hold steady, despite labour migration posing some concern in the initial period of the pandemic outbreak. A large quantum of new supply was slated to come online during the year and while the Covid-19 crisis led to the postponement of a fair amount of construction completions, the total new supply of 9.8 million sq ft that entered the city’s market was still an adequate figure, given the constricted conditions.
With the ongoing vaccination drive and the quantum of upcoming office supply enthusing confidence, there is a strong possibility of the market reviving sooner than expected.
Vestian stated, “We envisage an increasing demand for managed offices in the city that are primarily catered to by co-working players. With companies increasingly looking at a hybrid model of working that combines remote work and office time, a managed office is most likely to suit such customised requirements.”
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