HYDERABAD: Hyderabad finds itself trailing behind four major metropolitan cities in the country, Bengaluru, Delhi, Chennai, and Mumbai, in terms of office space transactions and completions. According to data from Knight Frank, the office space market in Hyderabad saw a total transaction of 2.9 million square feet during the first half of 2023. The decline in transactions can be attributed to subdued office leasing in the first quarter, as the IT industry faced global challenges.
Office completions in the first half of 2023 plummeted by 76 per cent year-on-year, reaching 1.3 million square feet. This drop can be attributed to the elevated base effect from the previous period, particularly in the first half of 2022 when there was a substantial supply influx. However, there are anticipated new completions in Hyderabad for the upcoming quarters.
In a market traditionally anchored by the IT sector, companies primarily engaged in offering outsourcing services to international clients, often referred to as third-party IT services players, constituted 52 per cent of total transactions during the first half of 2023.
The data highlights that companies focused on catering to the Indian market accounted for 25 per cent of office space leases during the same period. Within this category, tenants in the BFSI (Banking, Financial Services, and Insurance) sector dominated the landscape, contributing significantly to overall transactions.
The rise of start-up incubators and accelerators in Hyderabad has propelled the popularity of flexible workspaces, addressing the scalability and tenure needs of these budding enterprises.
Flex spaces accounted for 18 per cent of total leased space during the first half of 2023, marking a considerable increase from the 6 per cent reported during the first half of 2022.
Rentals remained steady, experiencing a modest 2 per cent year-on-year increase during the first half of 2023. Hitec City and the Financial District, central to most office leasing activities, witnessed stronger rental growth during this period. Hyderabad continues to be a rapidly growing city in the nation, offering a high quality of life and robust infrastructure that attract a growing number of corporations.