Technology clusters position Hyderabad among top Asia Pacific markets

Telangana government actively supports the industry by allotting land for the development of business parks and technology campuses, which will further boost the office space sector

Hyderabad: Hyderabad is one of the fastest growing technology hubs in Asia Pacific (APAC) that is reshaping the office space market. The city’s technology cluster HITEC City figures among the top 10 established sub-markets in the APAC region while the peripheral business district (comprising Uppal, Pocharam and Shamshabad) is listed among the top 10 upcoming sub-markets in the region.

With ample office space in new or outlying districts, Hyderabad, Bengaluru, Delhi NCR, Shenzhen, and Manila, are the top five markets in Asia Pacific based on property factors such as cluster-level office stock, supply pipeline, space availability, current rent, and future rent growth.

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Globally, clusters spread over Beijing, Shanghai, Shenzhen, Singapore, Hyderabad and Bengaluru make it to the top 10 established technology submarkets while clusters in Shanghai, Shenzhen, Sydney, Manila, Hyderabad, Bengaluru and Delhi NCR make it to the top 10 upcoming technology submarkets in APAC.

Telangana government actively supports the industry by allotting land for the development of business parks and technology campuses, which will further boost the office space sector, according to Canada-headquartered real estate services company Colliers International.

Ramesh Nair, CEO, India & MD, Market Development, Asia at Colliers, told Telangana Today, in an exclusive interview, “Hyderabad office market’s long-term fundamentals remain intact. The market is likely to see Grade-A office gross absorption of 6.5 million sq feet in 2021, led by technology companies and flexible workspace operators.”

The city is attracting several multinational companies and a large talent pool. Rents are 15 per cent to 20 per cent cheaper compared to Bengaluru, which offers a competitive advantage. Colliers estimates workspace per employee to be in the range of 100 to 120 square feet in Hyderabad.

Nair added, “Global companies continue to actively look at Hyderabad for campuses for their global in-house centres. Good infrastructure in the city, coupled with an extremely proactive and business-friendly government will encourage occupiers to expand here. Hyderabad has a robust supply pipeline with about 12 million sq feet of buildings in near-completion stage.”

Core clusters

Located in western Hyderabad, the Suburban Business District (SBD) is a major hub led by HITEC City, which houses over 90 per cent of the technology enterprises in Hyderabad.

The Off-SBD offers a strong pipeline of office space from major developers as well as land for built-to-suit facilities. This includes micro-markets of Gachibowli and Financial District and sees spill over demand from the SBD. This cluster has attracted educational and sports institutes, and large campus developments of prominent Indian companies such as ICICI, Wipro and Infosys, due to the availability of large tracts of land.

The peripheral business district (PBD) consists of two submarkets, Pocharam and Uppal in eastern Hyderabad, and Shamshabad in the south. It is an upcoming location for IT campuses, with adequate land and affordable rents. Shamshabad is close to the airport, while Pocharam and Uppal are well connected with the Outer Ring Road of Hyderabad, which augurs well for this cluster’s growth.

Demand drivers

Technology is one of the most important business sectors globally. And technology companies are now the major drivers of office leasing demand in APAC, possibly accounting for 20-25 per cent of demand for leased office space in the region over the next five years, Colliers research shows.

In 2020 alone, technology companies acquired about $10 billion of real estate in APAC, a five-fold increase from $2 billion in 2016. Between 2018 and 2020, transaction volumes averaged $8.7 billion, up 160 per cent over the preceding three-year period.

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