Hyderabad office leasing dips 20% to 3.5 mn sft in H2

Hyderabad: Hyderabad's commercial market traditionally anchored by the Information Technology (IT) sector witnessed a decline of 20 per cent year-on-year (y-o-y) to 3.5 million sft in July-December (H2) of 2022 mainly due to the spike in transactions seen during the same period previous year, Knight Frank India said in its latest report released on Tuesday.

According to it, new office completions remained strong recording a rise of 56 per cent y-o-y with addition of 6 million sft in H2 of 2022. The IT industry remained the mainstay of the market during H2 2022 accounting for 31 per cent of the space transacted during the two quarters. This was mostly driven by large-scale transactions.

Other services sector including e-commerce, education, healthcare and logistics companies) accounted for the highest share of 52 per cent in H2 2022. The sector witnessed a prominent growth from 4 per cent in H2 2021 to 52 per cent in H2 2022. Despite a challenging climate where the IT sector deferred its expansion plans, the commercial market space in the city benefitted from a nurtured broad tenant base, over the years, supporting demand during H2 2022 period.

During the calendar year 2022, the office leasing market in the city has seen a growth of 12 per cent y-o-y to 6.7 million sft. This was the third highest leasing volumes across top eight markets in India, next to Bengaluru and Delhi-NCR.

As per the data, annual office completions jumped 146 per cent y-o-y to 11.2 million sft, highest over a decade in Hyderabad. About 92 per cent of the total office supply in the city in 2022 was received in West Hyderabad with Hitec City and the Financial District comprising 44 per cent and 34 per cent respectively, of the total completions.

Driven by restored demand for quality assets in favourable regions such as Hitec City and the Financial District; the average transacted rentals for Hyderabad increased by six per cent y-o-y in 2022.

In a virtual press conference, Samson Arthur, Senior Branch Director – Hyderabad, Knight Frank India said, "The IT industry remained the mainstay of the market during H2 2022. This was mostly driven by large-scale transactions inked by IT giants. Growth in IT transactions is a very positive indicator for the market, as the city continues to attract IT players. IT sector businesses have been driving up volumes generated by managed office/co-working players in the city."