Hyderabad leads office space leasing after Bengaluru

HYDERABAD: While Bengaluru continued to dominate office space leasing activity across the country, Hyderabad came out on top in adding new office space in 2019. Experts point out that Hyderabad has seen unprecedented growth in commercial leasing activity in last few years.
Thanks to strong demand, attractive rentals and infrastructure push, the city has emerged as a major location for global investors.In a report, CBRE South Asia said that Hyderabad’s office space has gone up in extended IT corridor and was mainly driven by higher demand from IT/ITeS firms.

According to Anshuman Magazine, chairman and CEO, CBRE India, the office sector growth was driven by demand from MNCs and local companies in Bengaluru and Hyderabad.
Total leasing activity grew by over 25% in 2019, while rental values remained stable. New office space supply also rose to 52 million sq ft in 2019 from 35.7 million sq ft in 2018. In fact, gross leasing activity in 2019 touched a historic high of 61.6 million square ft, experts said.
Bengaluru, Hyderabad, NCR Delhi and Mumbai dominated office space leasing accounting for 75% of overall space take-up. Annual space take-up increased in all cities except Kochi. Bengaluru continued to be the market leader with gross absorption of 15 million sq ft in 2019, while Hyderabad witnessed 9.5 million sq ft of gross absorption.
Special Economic Zones accounted for one-third of leasing activity, mainly in Bengaluru and Hyderabad. Interestingly, a quarterly dip in supply and leasing activity was observed at 5% in the last quarter of 2019. Addition of office space supply in quarter IV reduced by more than 50% to 7.8 million sq ft in NCR Delhi, Pune, Hyderabad and Chennai.
The real estate sector attracted both institutional investors and developers, with nearly $1.5 billion worth capital pumped in Quarter-IV of 2019. Hyderabad dominated in overall quarterly investments followed by Chennai and Mumbai.
Overall investments in 2019 in the real estate sector reached $6.1 billion, out of which over 40% was in office sector. Mumbai dominated investments in office in 2019, followed by NCR Delhi and Hyderabad. “In the coming years, the real estate sector is expected to offer vast development and investment opportunities. Office stock is expected to grow to a billion sq ft by the end of 2030,” Anshuman Magazine said.
The CBRE report also said that NCR Delhi and Bengaluru dominated large-sized deal closures in the last quarter of 2019. “However, a few large deals were also reported in Hyderabad, Chennai and Pune by tech firms, BFSI corporates and flexible space operators,” it added.