Grade A office space in Hyderabad to cross 11 million sq ft by 2024: Report

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Grade A office space in Hyderabad is expected to grow at 4 percent annually over the next five years to cross 11 million sq ft by the end of 2024, a research report noted.

According to Colliers Research, Grade A office stock in Hyderabad’s western corridor is about 59 million sq ft, making the area the largest micro market in Hyderabad. The report estimates the upcoming supply to increase by 141 percent by 2024.

Around 46 million sq ft of new supply is planned to be built in 2020-2021, the Colliers White Paper titled Colliers Radar: Resurgence of Hyderabad, said.

"We expect Hyderabad to be among the top four office markets in India by 2024, led by expansion of technology companies, and global in-house centres. This will be well led by the city’s GDP, which is likely to be the third-fastest among key Asian cities and regions over the next five years. This robust growth in office space is driven by the rising technology occupiers’ expansion in Western Hyderabad areas of Rai Durg, Gachibowli and Kokapet, and business-friendly policies from the state government," said Megha Maan, Senior Associate Director, Research, Colliers International India.

The western corridor of the city is expected to witness robust growth in leasing activities which is projected to touch 3.8 million sq ft. These commercial spaces that have been pre-committed would be occupied in 2020.

"Occupiers from the Central Business District (CBD) are looking for office space in HITEC City and Rai Durg submarkets for expansion or relocation in the wake of the huge upcoming supply of 8.0 million sq ft planned by the end of 2020," said Sankey Prasad, Managing Director and Chairman at Colliers International India.

The whitepaper said the city is witnessing high demand due to a host of attractive attributes including the newfound political stability after the formation of the new state, growth of infrastructure and the availability of a vast talent pool.

"Hyderabad's total stock was close to 65 million sq ft at the end of 2019 with 90 percent of the supply concentrated in the Western corridor, and about 84 million sq ft of new supply projected in this submarket by the end of 2024," said Arpit Mehrotra, Managing Director, Office Services, South India at Colliers International India.

Compared to 2012-2015, Hyderabad's average office demand grew 81 percent in 2016-2019. The average annual office space demand was 6.8 million sq ft in 2016-2019, accounting for 14 percent  of nationwide leasing as compared to an average of 10 percent  in 2012-2014, the report noted.

Hyderabad attracted close to Rs 14,204 crore in private equity (PE) funds during 2015-2019. Of the total PE investments in Hyderabad during 2015-2019, 75 percent  went into office assets.