Hyderabad, as a city, has much to offer, both in terms of business and leisure. Right from being a hub of coaching classes to being the home of the second biggest tech hub of India. The real estate demand for commercial office spaces stands as testimony to the growth Hyderabad has seen since the past half-decade. The unprecedented pandemic of COVID-19 brought an abrupt halt to economic performance across the globe and Hyderabad was not left out. However, the commercial real estate market being the resilient one that it is, has managed to stay afloat even in these trying times. From Q4 2019 to Q4 2020, the demand and supply of commercial real estate have seen a manifold increase in Hyderabad.
Hyderabad attracts an investment flow of around INR 2 lakh crore and INR 67000 crore investment in developing its urban infrastructure. As per Savills Research, Hyderabad has steadily risen to a position among the top three office markets of the country. In terms of office leasing volumes, it has progressed from being a distant sixth to its current position in a span of just three years (from 2016). In 2019, there was a transaction activity of 9.5 million sq. ft., just behind Bengaluru and the National Capital Region (NCR).
Investor-friendly policies in the form of government support, infrastructure growth matching urban agglomeration expansion along conducive demographics that have helped create an abundant and skilled talent pool are some of the many factors that have contributed to a rise in commercial leasing activity. Over the past two decades, the large influx of MNCs has also made the city a prime choice for setting up a business home base. Many MNCs prefer to have their outsourcing hubs and back offices in the city.
Let us quickly look at how the city’s demand and supply of CRE has been across the years –
The city finds itself in the elite club of India’s commercial real estate markets. It will continue to be one of the most preferred office destinations among tech, shared spaces, and pharma occupiers. A look at the overall take-up by sector (June 2020) places IT at 53%, co-working at 15%, and healthcare at 10% when it comes to commercial real estate. Increased focus on healthcare will amp up those numbers even more.
Hyderabad has a substantial pipeline of under-construction projects, which is estimated at 15-20 million sq. ft. over the next 15 to 18 months. Keeping the post-pandemic resets in mind, the supply that has increased will soon be met with increasing demand. With how India’s revival is predicted by the IMF, the Hyderabad CRE market will be among the ranked finishers in the race.