Demand for office space is rising in Hyderabad, led by expansion plans by information technology and IT enabled services (IT/ITeS), banking, financial sector and insurance (BFSI) players and co-working space operators, amid sturdy business confidence.
By end-2019, net office space absorption in the city is expected to reach nearly Bengaluru’s levels. Office space absorption has gone up to 5.8 million square feet in the first half of 2019, from 1.5 million sq ft in the same period of 2018. This has pushed Hyderabad’s share in the overall office space market to around 27%, from 8% in the same period last year, according to data from industry tracker JLL India.
Net absorption is expected to breach 11 million sq ft by end-2019.
Samantak Das, chief economist and head of research and REIS, JLL India said that it has been observed that there is strong pre-commitments from the occupiers in the range of 150,000 sq ft to 500,000 sq ft. This is a strong indication about the positive outlook of the city, which is now catering to global companies as well as new age co-working operators. The trend is likely to continue and Hyderabad will be one of the growth centres in the region.
The city is expected to see record high pre-leasing activity, making a strong case for its continued growth momentum as IT/ITeS and co-working players plan ahead.
Among large pre-leasing transactions that closed in the first half, WeWork has taken up 250,000 lakh sq ft in Gachibowli, Global Data has leased 180,000 sq ft in Hi tech city and Simpliwork has rented 300,000 sq ft in Gachibowli. Bijay Agarwal, MD, Salarpuria Sattva said that leasing has been very aggressive in Hyderabad in the past one year. Salarpuria Sattva is to add an additional 3.5 million sq ft next year.
The real estate developer, which is building over 13 million sq ft of commercial space in Hyderabad, has leased large spaces to firms including Microsoft, JP Morgan, Intel and Oracle in recent years.
Completion of new projects is also expected to touch 13 million sq ft in 2019. The city saw new supply of 5.5 million sq ft in the first half of 2018, which was 23% of the overall new supply across the top seven cities, according to JLL data.
Overall, the office space market grew 21% year-on-year in the first half of 2019. Net absorption across the top seven cities touched nearly 22 million sq ft, indicating optimism among occupiers, mainly led by IT/ITeS companies (37% of overall leasing) and co-working players (15% of overall leasing).
Source: ET Realty