Covid notwithstanding, Hyderabad office market transaction volume touches 0.56 mn sq mtrs

Annual office completions have fallen 47% year-over-year (YOY) to 0.43 mn sq m (4.6 mn sq ft).

By Newsmeter Network  Published on  24 Jan 2022 7:23 AM GMT
Covid notwithstanding, Hyderabad office market transaction volume touches 0.56 mn sq mtrs

Hyderabad: Covid notwithstanding, 2021 has been a year of stabilization for the Hyderabad office market with transaction volumes matching the previous year's annual total at 0.56 million square meters (6.0 mn sq ft).

According to Knight and Frank India Real Estate Residential and Office Market 2021, annual office completions have fallen 47% year-over-year (YOY) to 0.43 mn sq m (4.6 mn sq ft).

The limited supply has however helped keep the vacancy level at 12.2% at the end of 2021.

Traditionally anchored by the Information Technology (IT) sector, the market has nurtured a diverse tenant base that has supported demand during H2 2021 in a challenging environment where the IT sector deferred its expansion plans

According to the report, the manufacturing sector was the mainstay of the market during the second half (H2) of 2021 accounting for 35% of the space transacted during the period. This was primarily due to a 1.5 mn sq ft lease signed by computer hardware major Qualcomm in Raheja Commerzone at Raidurg. This is a very encouraging sign for the Hyderabad market as the city continues to successfully attract the largest hardware manufacturers operating in the country such as Dell, Intel, and Hewlett Packard.

While the IT sector players deferred their expansion plans and accounted for an 18% share in transactions during H2 2021, it was instrumental in pushing up the volumes generated by managed office/co-working players during the period.

Following its robust performance in H1 2021, the co-working sector maintained its momentum and accounted for 21% of the space taken up during H2 2021. Smartworks and Tablespace were the most active players among the co-working pack during the period. An estimated 9,600 seats were taken up within such managed office premises by enterprises during H2 2021.

HITEC City continues to be the nerve center of the Hyderabad office market with 52% of the office space transacted being located here. 74% of the leases signed during H2 2021 occurred in four Suburban Business District (SBD) properties of Raheja Commerzone, Divyasree, Raheja Mindspace, and Phoenix Avance Hub.

Rent structure increased marginally by 0.5% YoY in 2021. Q4 2021 was the strongest quarter in terms of transactions with 0.21 mn sq m (2.3 mn sq ft) transacted during the year despite some momentum being lost towards the end of the quarter due to the emergence of the Omicron variant.

Many IT sector players who had announced their return to the office, deferred their plans to the subsequent quarter. However, given the substantial hiring that has occurred in the sector since the onset of the pandemic, it is a matter of time before its share in transactions reverts to its longer-term average.

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