Hyderabad records highest net absorption of office space in 2022: Report

Hyderabad: Hyderabad recorded the highest net absorption of office space amongst the top seven cities in the country in the first quarter (Q1) of 2022, according to JLL office market report.

Hyderabad absorbed 3.42 million square feet (mnsqft) of office space. The absorption is largely by pre-commitments in the new completions. In fact, new completions had a cumulative pre-commitment rate of 77%, the highest among all cities this quarter. Most of the upcoming supply is concentrated in the key office submarkets of Gachibowli and Hitec City.

Also, Hyderabad has the second-highest completion of office space (4.77mnsqft) driving the vacancy up marginally to 15.8%.

On a year-over-year (YoY) basis, average office rentals in the market of Hyderabad increased by 1.6%. According to the report, rents are likely to remain stable in the short to medium term; post that, as the market stabilises, steady growth in rentals is likely with premium Grade A supply becoming operational.

According to the report, net absorption is expected to record a healthy growth in 2022 with the likely completion of fully pre-leased assets in the next two quarters. However, vacancy is expected to remain stable or grow marginally in the short to medium term given the significant supply pipeline.

The market continues to remain firmly on the path to a sustained recovery as easing of COVID restrictions and low infection rates have allowed occupiers to plan their real estate strategies in a much more certain environment, the report said. Strong pre-commitments in new completions supported net absorption during the quarter despite the omicron wave in the early part of the quarter. Net absorption was similar to the previous quarter and the highest since the pandemic.

According to the report, in Q1 2022, India's top seven office markets combined to record net absorption of 11.55 mnsqft, which while being similar to the last quarter was still the highest since the onset of the pandemic in March 2020. This is a healthy sign despite the lingering effects of the third wave in January 2022, the report said. On a y-o-y comparison, net absorption was up by a significant 113%, clearly indicating the momentum that is now visible in the market, it said.