Hyderabad shows robust growth in residential, office space: Knight Frank

Hyderabad: Despite Covid times, Hyderabad showed strong fundamentals in real estate, displaying continued growth in both residential and office space. The city’s residential and office asset classes have shown resilience in their performances, outperforming its counterparts across categories. Knight Frank India shows that Hyderabad has registered a sales growth of 142 per cent to 24,312 […]

Hyderabad: Despite Covid times, Hyderabad showed strong fundamentals in real estate, displaying continued growth in both residential and office space. The city’s residential and office asset classes have shown resilience in their performances, outperforming its counterparts across categories.

Knight Frank India shows that Hyderabad has registered a sales growth of 142 per cent to 24,312 units in 2021. The year also proved to be the best year since 2011 in terms of annual sales volume, while the new home launches increased by 179 per cent year-on-year (YoY) to 35,736 housing units.

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On the office market front, 2021 has been a year of stabilisation for the Hyderabad office market with transaction volumes matching the previous year’s annual total at 6 million sq ft. And new office completions stood at 4.6 million sq ft during the period.

Residential sector in H2 2021

Research shows 12,344 housing units were sold in Hyderabad in the second half of the year 2021, showing 135 per cent YoY increase, making it highest in the country. With a share of 48 per cent of overall home sales, the mid segment of Rs 50 lakhs to Rs 1 crore constituted the bulk of home sales in H2 2021.

Hyderabad is the only market in India that has not seen a single year of price decline since the first half of 2013. The residential prices increased by 5 per cent YoY in H2 2021.

19,024 units were launched in H2 2021, which translated to a 126 per cent growth YoY. Around 64 per cent of the total home units were launched in West Hyderabad. Locations such as Kokapet, Peerancheru, Gopanapalle and Nalagandla saw the most activity.

West Hyderabad also accounted for 60 per cent of the total sales during H2 2021 with homebuyers preferring to be close to the office hubs of HITEC City, Gachibowli and Nanakramguda.

Samson Arthur, senior branch director – Hyderabad, Knight Frank India, told Telangana Today, “Sentiment and sales in residential space show that the fourth quarter did really well. Demand side looks very good. There will be growth in the residential side. Newer pockets and geographies in Hyderabad are opening up in the outskirts of Hyderabad, which gives options in all price points. Residential, warehousing, data centres, retail, co-living and education sectors will see significant demand.”

Residential demand is firmly entrenched in the ready-to-move-in properties and has caused the average age of inventory in Hyderabad to reduce from 11.5 quarters in H2 2020 to 7.6 quarters in H2 2021.

“While worries on overbuilding and consequent overburdening the infrastructure exist due to the relaxation in FSI restrictions, sentiments in the residential market remain buoyant for the near to medium-term,” he added.

Office space performance

The fourth quarter of 2021 witnessed office space transactions of 2.3 million sq ft. Rents have grown marginally by 0.5 per cent YoY in 2021. Office space transactions of 4.4 mn sq ft were recorded in H2 2021, translating to a growth of 16 per cent YoY. Manufacturing sector accounted for 35 per cent of the space transacted during the period.

“IT, managed office space and BFSI led the demand and office consumption in the city. Last year saw companies such as Goldman Sachs taking large office space in Hyderabad,” he added.

HITEC City continues to be the hub of the Hyderabad office market, accounting for 52 per cent of the overall transaction volume in H2 2021. While the IT sector players deferred their expansion plans and accounted for an 18 per cent share in transactions during H2 2021, it was instrumental in pushing up the volumes generated by managed office/ co-working players during the period. Vacancy stood at 12.2 per cent at the end of 2021.

The flex space sector maintained its momentum and accounted for 21 per cent of the space taken up during H2 2021. Also, an estimated 9,600 seats were taken up within managed office premises by enterprises during H2 2021.

Arthur noted, given the substantial hiring that has occurred in the sector since the onset of pandemic, it is a matter of time before its share in transactions reverts to its longer-term average.

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