HYDERABAD: Signs of recovery in the office leasing market has been observed in the city of Hyderabad as per the latest analysis by JLL, a real estate management firm. As per the analysis, net absorption grew by 31 per cent from the previous quarter to 1.5 million sq ft in Q3 2020. What this implies is that more and more projects have been completed and occupied as compared to office spaces vacated.
A key reason for such an increase is the fact that the city saw new completions of 3.3 mn sq ft during the quarter, with Gachibowli and HITEC City sub-markets being the highest contributors to new supply. With lockdown restrictions being relaxed fully in Q3, office projects finally reached their final stages of construction and pending receipts of occupancy certificates were completed in this phase, notes the research.
“Growth was mainly driven by pre-commitments to newly commissioned buildings during the quarter. As a fallout of the pandemic struck economy, occupiers are reassessing their real estate portfolios in a bid to reduce costs and review long term expansions. Thus, significant churn was also witnessed during the quarter,” said Sandip Patnaik, Managing Director (Hyderabad), JLL India.
As per the research, the city saw a healthy gross leasing of 1.9 million square feet in Q3 of 2020, which can be considered healthy. However, the growth rate was lowered due to the considerable amount of vacancy in real estate leasing as well. Between Q2 and Q3, the vacancy in leased spaces increased from 9.2 per cent to 11.3 per cent.
Meanwhile,in comparison with Bengaluru, the city’s office demand appears to be lesser, finds the research. While Bengaluru saw about 2.72 million square feet of net office space absorption, Hyderabad saw only 1.54 million square feet in Q3.