IT sector drives leasing activity in Hyderabad: CBRE

Office space absorption during final quarter of 2022 stood at 8.2 million square feet

Hyderabad: As Information Technology (IT) companies rethink the widely acclaimed work-from-home approach and have begun calling employees back to the office, firms in Hyderabad have started to acquire office spaces on lease to accommodate employees in major centres.

Owing to that, the IT sector turned into a prime driver of overall leasing activity in the city, according to a report by CBRE South Asia. Hyderabad’s office space absorption during the final quarter (October – December) of 2022 stood at 8.2 million square feet (sft) with technology corporates accounting for 35 per cent followed by banking and finance (14 per cent), and engineering and technology (12 per cent). On the other hand, supply stood at 3.8 million sq ft in the same period.

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The IT sector drove leasing with a share of 48 per cent, followed by non-IT (27 per cent), and SEZ (25 per cent). The share of small-sized deals was high, the report highlighted. Three companies – Netcracker Technology, IDFC First Bank, and UrbanDesk – made key transactions during October – December of 2022.

While Netcracker Technology leased 2,00,000 sft in DivyaSree Tech Ridge P2 (Phase 2), IDFC First Bank leased 1,80,000 sft in Aurobindo Galaxy, and UrbanDesk leased 1,30,000 in Gowra Palladium (Phase – 1), the CBRE report said.

As per the report findings, the office sector in India witnessed gross absorption of 56.6 million sft during 2022, registering a growth of 40 per cent (Y-o-Y), marking the second-highest leasing activity ever after it touched the peak in 2019 with 65 million sft. Supply crossed 50 million sft during 2022, taking the total office stock in the country to over 827 million sft.

As per the report, Hyderabad along with Bangalore, Delhi-NCR and Mumbai, accounted for nearly 75 per cent of the yearly leasing activity.

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The technology sector would continue to drive leasing activity in 2023. The share of leasing by sectors such as BFSI, flexible spaces, engineering, and manufacturing is also expected to increase annually. Global corporates would remain committed to India, attracted by its cost and scale advantages and diversity of talent pool.”

He added that Hyderabad, Bengaluru, and Delhi-NCR would remain the biggest demand drivers, while sustained leasing activity is also expected in Mumbai, Chennai, Pune, and Kolkata.

Select tier-II and tier-III markets also are expected to continue to attract attention from corporates preferring to locate closer to their talent pool.