Hyderabad to witness 8 mn sq ft office space leasing in 2022

Hyderabad: Hyderabad, which has emerged as one of the top office markets in the country, is likely to witness 8 mn sq ft of office space absorption this year, comparable to the pre-pandemic leasing that the city has seen. The city is estimated to have pre-commitments of 1 mn sq ft in buildings nearing completion […]

Hyderabad: Hyderabad, which has emerged as one of the top office markets in the country, is likely to witness 8 mn sq ft of office space absorption this year, comparable to the pre-pandemic leasing that the city has seen.

The city is estimated to have pre-commitments of 1 mn sq ft in buildings nearing completion and has also seen large space enquiries by existing occupiers, according to Savills India.

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According to Sesha Sai, MD, Hyderabad, Savills India, “Proactive government policies, excellent infrastructure and talent availability have contributed towards the rise of the city. Like 2021, IT, BFSI and coworking segments will lead the office space demand in the city in 2022.”
IT, BFSI and coworking segments are likely to remain the mainstay of office space demand in the city. Coworking spaces are expected to thrive by reinventing and repositioning themselves.

Rentals are likely to remain range bound in the near term. However, arbitrage in premium buildings of the city as compared to similar premium buildings in other cities, is expected to drive the space uptake by global captive clients in Hyderabad.

Vacancy levels are expected to be in the rage of 15-20 per cent across the major suburban locations. Given the trend of employees returning to offices, adherence to pre-committed leases and overall uptick in business sentiment and leasing activity, developers are expected to infuse 10-12 mn sq ft of supply in the market in 2022, he noted.

Grade-A stock of commercial office space in the city is expected to reach close to 85 mn sq ft by the end of 2022. A major portion of incremental supply is expected to be in SBD-II which primarily consists of Gachibowli, Nanakramguda, Financial District and Manikonda.
The year 2021 witnessed transactions of 5.7 mn sq ft. Almost 70 per cent of the deals in the year were large-sized (1,00,000 sq ft or more) as compared to 63 per cent in 2020. Similar to 2020, over 90 per cent of the leasing activity was concentrated in Secondary Business District I (SBD-I).

The city witnessed completions of about 8.6 mn sq ft in 2021, a growth of 11 per cent as compared to the previous year. As incremental supply outpaced demand for office space in the city by more than 1.5 times.

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