Hyderabad: Hyderabad emerged as the market leader in terms of office sector demand in Q3 2021 (July-September). It emerged as one of the resilient cities in terms of demand-supply dynamics by registering maximum share in leasing volume at 2.5 million sq ft (out of 10.3 million sq ft) surpassing Bengaluru, as occupiers focused on large block deals and even leasing entire buildings.
BFSI and flexible workplace sectors had the maximum share in leasing volume accounting for 66 per cent of the total demand in Hyderabad. Raidurg saw the maximum leasing traction accounting for 53 per cent of the demand, while HITEC City contributed 40 per cent.
The top six cities of India saw about 10.3 million sq ft of office gross absorption in Q3 2021, the highest volume recorded since Q1 2020. After a devastating pandemic second wave in the second quarter, the overall absorption numbers rose by 89 per cent quarter-on-quarter as occupiers planned for a gradual re-entry and closed deals that were on-hold, leveraging tenant favourable market dynamics.
IT sector driven cities Hyderabad, Bengaluru and Pune accounted for 62 per cent of gross absorption in Q3 2021. With the increased number of fully vaccinated employees returning to their workplaces coupled with fewer restrictions on mobility, the office market is showing strong signs of revival.
The quarter saw the highest supply in the country since Q2 2020 at 10.8 million sq feet in Q3 2021 with Hyderabad and Pune contributing the maximum share at 29 per cent (with 3.2 million sq ft) and 25 per cent (with 2.7 million sq ft), respectively.
The second wave did not have a major impact on the construction activity. Developers continued to focus on leasing existing stock and received occupancy certificates for buildings with pre-commitments.
“The quarter has brought in much-needed cheer for the market. Large deals made a comeback, led by demand from flexible workspace operators. Decision-making by occupiers has become quicker than in 2020. We can expect the optimism to strengthen over the upcoming quarters, provided there is no third wave. Occupiers who were exploring renewal options have begun looking for fresh space,” said Ramesh Nair, CEO, India & MD, Market Development, Asia, Colliers.
Pan-India, leasing share by flexible workspace operators rose in Q3 2021 owing to high demand from occupiers looking for managed spaces and short-term leases to tide over uncertain times. Share of flexible workspaces in leasing increased to 26 per cent in Q3 2021.
Leading flexible workspace operators focused on signing large block deals exceeding 1,00,000 sq ft in almost all major cities, seeing increased interest from corporates for managed spaces. Pune accounted for the highest share in flexible workspace, followed by Hyderabad.
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