Hyderabad office rents jump 10% in 2025; third-party IT services drive 45% of leasing

Hyderabad: Office space demand and residential sales in Hyderabad have continued an upward trajectory in the first half of 2025, with notable trends in rental growth, leasing volumes and a marked shift towards premium housing.

According to data from Knight Frank India, both commercial and residential markets are showing signs of structural transformation, aligned with Hyderabad’s growing reputation as a national tech and investment hub.

Office rentals rise 10% as demand outpaces supply

Between January and June 2025, office rents in Hyderabad increased by 10 per cent, driven by rising demand and a significant drop in new supply. Transaction volumes in the office market rose 16 per cent, reaching 5.9 million square feet.

Despite heightened demand, new office supply saw a sharp 72 per cent year-on-year drop, with only 1.4 million square feet of fresh space delivered. As a result, vacancy rates declined to 14.4 per cent from 15.1 per cent in the first half of 2024.

District-level office rents grew even more sharply at 11 per cent, capturing 97 per cent of total leasing activity. HITEC City alone accounted for 61 per cent of leasing, maintaining the lowest vacancy rates in the city. Grade A properties in the Suburban Business District (SBD) commanded monthly rents between Rs 70-95 per square foot.

GCCs and IT services dominate office leasing

Third-party IT services led the leasing activity, occupying 45 per cent of total office space. Global Capability Centres (GCCs) followed closely at 40 per cent, marking a significant expansion from just 11 per cent share in H1 2024. This 396 per cent year-on-year growth translated to 2.6 million square feet of leased space by GCCs.

Hyderabad now ranks third nationally in GCC activity, behind Bengaluru and Chennai. Within this segment, electronics and pharmaceuticals accounted for 46 per cent of GCC deals, followed by healthcare services (28%) and BFSI (18%).

Leading the expansion were firms like Tata Consultancy Services (1.05 million sq ft), Infosys, HCL, and Wipro. Global brands such as Apple, Lloyds Bank, Johnson & Johnson, McDonald’s, Amazon, and Salesforce also expanded their footprints in the city.

Robust leasing activity across sectors “underlines Hyderabad’s enduring appeal as a global technology operations hub,” the report noted.

Premium homes lead residential market shift

On the residential front, Hyderabad reported sales of 19,048 units in H1 2025, a 3 per cent increase over the same period last year. But the shift in buyer preferences towards premium housing emerged as the more defining trend.

Properties priced above Rs 10 million made up 67 per cent of total residential sales, up from 62 per cent in H1 2024. The Rs 10-20 million bracket alone contributed 45 per cent of total sales, showing an 8 per cent year-on-year growth.

More notably, the Rs 20-50 million segment expanded from 15 per cent to 18 per cent of overall sales, registering a 23 per cent year-on-year surge.

“Hyderabad’s residential market is experiencing a fascinating evolution that mirrors the city’s broader economic transformation,” said Joseph Thilak, National Director, Occupier Strategy and Solutions (Hyderabad & Chennai), Knight Frank India.

“We’re seeing homebuyers increasingly prioritise quality over affordability, with properties above Rs 10 million now commanding 67 per cent of sales. This is a clear indication that buyers view their homes as lifestyle investments rather than mere shelter.”

Inventory builds up but value segments diverge

Despite rising sales, unsold inventory rose by 11 per cent year-on-year to 54,458 units in H1 2025. Analysts noted that this growth masks significant variation across pricing tiers, with stronger absorption in the premium and luxury segments.

Thilak said the Rs 20-50 million segment’s growth signals a demand for ‘bespoke living experiences with premium amenities and smart-home features.’ He also noted that ongoing regulatory oversight from HYDRAA, though causing some short-term uncertainty, is helping ‘weed out questionable developments and ensure long-term sustainability.’

“For premium homebuyers, Hyderabad continues to offer exceptional value with its combination of spacious living, world-class infrastructure, and proximity to employment hubs,” he added.