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IT expansion raises demand for office space in Hyderabad

IT expansion raises demand for office space in Hyderabad
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Highlights

Net office space absorption in Hyderabad is expected to match Bengaluru’s levels by the end of 2019.

In Hyderabad, the demands for office space is rising, led by expansion plans by IT and IT-enabled services (IT/ITeS), banking, financial sector and insurance (BFSI) players and co-working space operators, during sturdy business confidence.

Net office space absorption in Hyderabad is expected to match Bengaluru's levels by the end of 2019. In the first half of 2019, the office space absorption has gone up to 5.8 million square feet from 1.5 million sq ft in the same period of 2018. After this the Hyderabad's share in the overall office space market to around 27%, from 8% in the same period last year, as per the data from industry tracker JLL India.

'We have observed strong pre-commitments from the occupiers in the range of 150,000 sq ft to 500,000 sq ft. This is a strong indication of the positive outlook of the city, which is now catering to global companies as well as new age co-working operators. The trend is likely to continue, and this city will be one of the growth centres in the region," said Samantak Das, chief economist and head of research and REIS, JLL India.

Among large pre-leasing transactions that closed in the first half, WeWork has taken up 250,000 lakh sq ft in Gachibowli, Global Data has leased 180,000 sq ft in Hi-tech city, and Simpliwork has rented 300,000 sq ft in Gachibowli. "Leasing has been very high in Hyderabad in the past one year. We will add 3.5 million sq ft next year," said Bijay Agarwal, MD, Salarpuria Sattva.

The real estate developer, which is building over 13 million sq ft of commercial space in Hyderabad, has leased large spaces to firms including Microsoft, JP Morgan, Intel and Oracle in recent years.

In 2019 the completion of new projects is also expected to reach 13 million sq ft. As per JLL data in the first half of 2018, Hyderabad saw a fresh supply of 5.5 million sq ft, which was 23% of the overall new supply across the top seven cities. The office space market grew 21% year-on-year in the first half of 2019. Net absorption across the top seven cities touched nearly 22 million sq ft, indicating optimism among occupiers, mainly led by IT/ITeS companies (37% of overall leasing) and co-working players (15% of total leasing).

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