Hyderabad office stock doubles in 10 years: CBRE

Hyderabad continues to remain one of the most affordable residential markets for buyers in both, premium/luxury segment, as well as high-end/mid-end segments, according to a report by CBRE South Asia Pvt Ltd.

The report, titled ‘The Comeback of Hyderabad – India’s Original IT Hub Rises Again’, added that office demand witnessed 108 per cent year-on-year (YoY) growth in 2016 and organised retail stock witnessed 11 per cent CAGR growth from 2011-2016. Retail stock is likely to touch 10 million sq ft by 2018. Logistics and warehousing demand witnessed 93 per cent YoY growth in 2016, driven by e-commerce, FMCG and pharmaceutical sectors. The Hyderabad metropolitan region offers the best quality of living among cities in India and is a leader in the Human Development Index, the report added.

The real estate market outlook for Hyderabad looks positive, backed by a stable political environment, growing occupier demand, improving infrastructure and the availability of a large skill pool. With the advent of technology majors, the city’s commercial office demand is expected to remain strong and will enjoy upward momentum with approximately 11 million sq ft of fresh supply expected by 2019. Residential buyers remain focused on investing in new projects in locations such as Manikonda, Kukatpally, Nanakramguda and Kondapur. Launches in the premium/luxury segment are limited to central Hyderabad, with fewer small-scale launches expected in the coming years.

Commenting on the report, Anshuman Magazine, chairman, India and south-east Asia, CBRE, said, “Hyderabad’s buoyant economy and resilient growth, have propelled the city to become a leading realty hotspot in India. Being the second-largest urban agglomeration, Hyderabad’s large talent pool is driving the city’s robust infrastructure to become the technology hub of our nation. There has been resurgent investment activity, attracting funds from both, domestic and multi-national corporates, putting the city well ahead of the curve among metropolitans, strengthening Hyderabad’s realty market.”

Total organised retail space in Hyderabad city stood at 2.9 million sq ft, the majority of which was concentrated in western and central Hyderabad. High streets will continue to see sustained growth in rents due to limited supply, particularly those in popular locations such as Himayat Nagar, Banjara Hills, and Jubilee Hills.

The logistics sector will be driven by demand from e-commerce, FMCG, electronics manufacturing, pharmaceuticals and agro-based industries. Industrial warehousing is also expected to witness a boost, with the Telangana State Industrial Project Approval and Self-Certification System (TS-IPASS) Bill, which has provided for speedy processing and clearance of various licenses and certificates, through a single-window system.

Hyderabad real estate overview

Office market in Hyderabad

Hyderabad has been transformed into one of the preferred IT destinations for MNCs and R&D centres.
The city’s overall commercial stock stood at approximately 56 million sq ft as of 2017, which is the least in comparison to the other southern commercial hubs of Bengaluru (143 million sq ft) and Chennai (63 million sq ft), indicating the city’s strong development potential.
Over 4.5 million sq ft leased till Q3 17; Hyderabad commands the lowest rentals across top markets in the south.

Residential market in Hyderabad

Ample social infrastructure and organised retail, have supported Hyderabad’s emergence as an attractive residential destination.

In addition to the concentration of residential markets in central Hyderabad, there has been a spillover of demand in new locations of east Hyderabad such as LB Nagar, Nacharam and Malakpet. The advent of the IT sector, has resulted in the growth of the city towards the western locations of Madhapur, HITEC City, Kondapur and Gachibowli.

Industrial activity in north Hyderabad micro-markets has also led to residential activity in these locations.

Retail market in Hyderabad

The total organised retail space in Hyderabad city stood at 2.9 million sq ft, the majority of which is concentrated in western and central Hyderabad.
Retail stock is likely to touch 10 million sq ft by 2018.
Organised retail witnessed four per cent CAGR from 2011- H12017.
Hyderabad is expected to see the completion of around 3.7 million sq ft of new supply over the next years.

Warehousing and logistics market in Hyderabad

Total absorption in the logistics space stood at 1.23 million sq ft in 2017.
Over the past decade, Hyderabad has emerged as a major hub for the bio-technology and pharmaceutical industries, resulting in increased demand for warehousing space.
The numerous national highways passing through Hyderabad make it a central point for warehousing activity.
Rents along the northern and southern corridors are expected to register an increase of about five per cent, in the coming years.

Initially called ‘India’s Silicon Valley’ at the cusp the 21st century, the establishment of Hyderabad Information Technology and Engineering Consultancy City (HITEC City) in 1998 in the western part of the city, had led to its IT boom. Despite a brief period of political instability, Hyderabad’s real estate sector has grown in the past two years, coupled with the inherent strengths of the city – including its status as a prominent IT hub, strong institutional base, supportive government policies, large-scale infrastructure initiatives and significant demographic dividend.

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