Hyderabad witnessed 8.8 million sqft office space transactions in 2023

Hyderabad: As the city is set to grow while giving stiff competition to other metros in south India like Bengaluru and Chennai, the Hyderabad office leasing market experienced a significant 32 per cent Year on Year (YoY) growth, with a total of 8.8 million sq ft transactions in 2023.

London headquartered leading independent, global property consultancy Knight Frank India's latest report, India Real Estate - Residential and Office Market Report, cited that substantial take-up by Global Capability Centers (GCCs), especially those outsourcing their IT and back office operations to the city, played a pivotal role in influencing an overall surge of 32 per cent in annual transacted volume growth in the office market of Hyderabad.

Office leasing activities by GCCs increased by 52 per cent YoY to 4.1 mn sq ft during 2023. The city recorded office transaction volume of 8.8 mn sq ft in the year 2023 from 6.7 mn sq ft in 2022. The new office supply in the city was recorded at 6.5 mn sq ft. The average transacted rent remained stable with an increment of 1per cent to  Rs 65.5/sq ft/ month.

Additionally, the ongoing recovery in the IT sector has further contributed to the volume growth. HITEC City continued to stand out as the primary hub in the Hyderabad office market within the Suburban Business District (SBD) zone.

Offshore units of multinational corporations, recognised as GCCs leased 4.1 mn sq ft in 2023 accounting for 46 per cent of the leased office spaces during the year, from 2.7 mn sq ft recorded in 2022 which accounted for 40 per cent of the leased office spaces.

Third party IT services primarily engaged in outsourcing services to clients abroad, constituted 28 per cent of total transactions during 2023. Transaction volumes increased sharply from 1.6 mn sq ft in 2022 to 2.5 mn sq ft during this period, reflecting a substantial increase in the presence and activity of these players in the market.

The average transacted rental range was recorded highest at Rs  68-75 per sq ft per month in Suburban Business District comprising HITEC City, Kondapur, Manikonda, Kukatpally, Raidurg.

“Hyderabad continues to thrive as one of the fastest-growing cities in the country, attracting attention for its outstanding quality of life, strong infrastructure, and a consistent influx of top-tier talent and corporate entities. Notably, it boasts some of the best office parks with consistently steady rentals, further enhancing its appeal for occupiers,” said Knight Frank India’s, National Director- Occupier Strategy and Solutions, Joseph Thilak.

Knight Frank’s report also said that homebuyers prioritising on lifestyle upgrades and showing preference for amenity-rich communities, led to the surge in annual sales by 6 per cent YoY  in Hyderabad. This brings the sales volume of 32, 880 units in 2023.

Since 2021, there has been a discernible trend in Hyderabad's residential sales, with homebuyers consistently pursuing upgrades to their living spaces. In 2023, annual sales rose by 6 per cent YoY, reaching an all-time high of 32,880 units where almost half of the transactions were in the premium ticket segment of  Rs 1 crore and above.

Reflecting the changing preferences, developers launched a total of 46,985 units in 2023. Notably, 43 per cent of these launches were for homes valued over Rs 1 crore.