Hyderabad ready to beat Mumbai in commercial leasing in 2 years

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Come 2018, Hyderabad could well beat Mumbai and Gurgaon to grab the second slot in annual commercial leasing with 6.7 million square feet mopped up by firms to set up office along the city’s hi-tech corridor in the next few quarters. `Big brother’ Bengaluru’s annual figures hover around the 10-12 million sq ft range.

Increased demand in the city is fuelled by world-class infrastructure coupled with a wide road network, and uninterrupted power and water supply.

Hyderabad’s USP remains affordable pricing. Pegged at Rs 30 per sq ft two years ago, the rate of commercial space in the Madhapur-Gachibowli financial district belt has now soared to Rs 55 per sq ft. Yet, the rush for new and old companies-many of which have doubled operations-has left half a dozen Special Economic Zones (SEZ) and 20-odd IT parks packed.

 

“If you consider Madhapur, the growth in commercial rentals in three years has been in the 20-25% range.This is indicative of a strong demand in the western quadrant (comprises the IT corridor),” says Veer Babu, managing director (Hyderabad), Cushman & Wakefield, a global realtyservice provider.

 

Thus it is not surprising that developers–both local and outstation-are rushing in to park their money in this rapidly expanding market. From DLF and Bengaluru-based DivyaSree Developers to Hyderabad majors such as Phoenix Group, My Home Constructions and Gar Corp, all big players are mulling expansion in the city .”That’s primarily because Hyderabad, in comparison to other metros, still boasts of an affordable rate card when it comes to commercial leasing. Its strong social infrastructure is a bonus,” says Sandip Patnaik, managing director (Hyderabad), Jones Lang LaSalle, another major real estate services firm; he points to the thick crop of star hospitals, educational institutions and upscale retail spaces that have flooded the IT corridor.

Topping it up is the city’s big talent pool, says Gopikrishna Patibanda, managing director, Phoenix, which has leased out 2 lakh sqft over the last two quarters at an average price of Rs 54 per sqft. “Though there is an influx of fresh companies like Apple, it’s largely existing companies that are opening doors to enhance employee strength and pick up additional space. Be it big IT players (HCL, Cognizant, Tata, Wipro, Infosys) or pharmaceutical firms, everybody is scouting for more office space. Amazon too is hoping to ramp up growth in the next three to five years,” Patibanda says.

 

His claim is corroborated by sen ior members of the IT industry who peg the jump in employee headcount to 4.7 lakh from the current 4.3 lakh (approximately), in the next 12 months. “Expansion and growth are directly related to market sentiment.Currently , things are looking positive with the state government extending support to industry,” said Ramesh Loganathan, former president, Hyderabad Software Enterprises Association, an umbrella group representing the software industry in Hyderabad.

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