Faster office space absorption in Hyderabad

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The occupier demand is likely to strengthen in Hyderabad going forward with several new entrants in the IT sector.
Hyderabad’s office market remained resilient with about 5.0 million sq. ft. office space absorption till the third quarter, which is about 79% more than the same period last year, said property consultant Colliers International in their quarterly report.

Healthy demand from occupiers in Information Technology and Information Technology Enabled Services (IT-ITeS) segment took the gross leasing volume to 1.88 million sq. ft. in Q3 2016 totalling to about 5 million sq. ft. year till date ( YTD). The leasing in the third quarter of 2015 was 1.52 million sq. ft. while it was 3 million sq. ft. till September last year.

The segment also witnessed a spike in pre-commitments, and agreements to lease, mostly concentrated in the secondary business districts (SBD) mainly driven by the expansion strategy of the large occupiers.

“Of the total absorption in this quarter, SBD noted an evidently huge chunk of 96% clearly reinstating that it is the nerve centre of the entire office sector demand and supply dynamics of the city. We expect healthy demand momentum to continue for the rest of the year and anticipate entry of more new tenants. Also, expansion by tech companies will continue to drive rents upwards in SBD,” said Surabhi Arora, Senior Associate Director, Research.

The report also stated that the rents in SBD are expected to keep shooting up because as the available and expected future supply is anticipated to be taken up by interested occupiers across multiple sectors such as IT-ITeS, technology, etc.

The occupier demand is likely to strengthen in Hyderabad going forward with several new entrants in the IT sector such as data analytics companies, e-commerce companies and social networking platforms have identified the city as the next bright spot.

“With attractive government policies and a few investment grade projects set to become operational in Q4 2016 and 2017 we foresee an increase in overall city attractiveness in near future. Mainly SBD and adjoining belts such as Financial District, Gachibowli and Nanakramguda will be the beneficiaries of this rising demand,” said Arora.

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