Hyderabad to witness launch of more than 1.3 lakh housing units in the next two to three years

Office space leasing momentum in Hyderabad is expected to soar with gradual return-to-office acceleration.

Hyderabad is expected to witness the launch of more than 1.3 lakh housing units within the next two to three years as well as an addition of approximately 35 to 38 mn. sq. ft. of high-quality business parks across its micro markets, a report by CBRE South Asia Pvt Ltd titled From Now to Next: Tracing Hyderabad’s Real Estate Dynamics has said.

Hyderabad is expected to witness the launch of more than 1.3 lakh housing units within the next two to three years (Wikimedia commons)

The expansion of the technology sector and industrialization in Hyderabad has led to a predominant concentration of residential development in proximity to the key office micro-markets of IT Corridor and Extended IT Corridor in the western part of the city, the report said.

West Hyderabad is poised to maintain its status as the favored residential hub for home buyers, primarily serving the mid-segment, high-end, and premium categories. In contrast, North, East, and South Hyderabad's micro-markets are anticipated to attract mid-segment home buyers. Central Hyderabad is expected to sustain demand primarily in the high-end and premium segments, said the report.

Homebuyers' preferences are likely to gravitate towards projects categorized under two budget brackets ( ₹45 lakh to ₹1 crore and ₹1 to ₹1.5 crore), appealing to multiple first-time buyers and end-users entering the market. The real estate landscape may witness escalating budgets due to rising land and development costs coupled with larger unit sizes, the report noted.

Office space leasing in Hyderabad set to increase

Fueled by a robust business environment cultivated over recent years, global corporations have entered Hyderabad, establishing outsourcing centers, back offices, research and development (R&D) facilities, and regional headquarters. The escalating demand for office spaces has led to a substantial surge in supply since 2019, particularly along the city’s IT Corridor and Extended IT Corridor.

Consequently, the city's investment-grade office stock surpassed 100 million square feet in 2022 and crossed 119 million square feet by the end of the July-September 23 quarter, a significant increase of 63% from 73 million sq. ft. stock in 2019. Hyderabad stood among the top three cities dominating office space leasing in January to September 2023 at 6.6 mn. sq. ft., with 35% Y-o-Y increase. Key sectors that drove absorption included life sciences, BFSI and technology.

A gradual return-to-office acceleration is expected to boost leasing momentum in the city, although concerns about global headwinds persist. With the necessary infrastructure in place, occupiers would continue to focus on IT Corridor for their office requirements, said the report.

However, the rapidly increasing supply addition in Extended IT Corridor would provide more options and enable them to leverage comparatively low rentals. The need to support hybrid and distributed working would continue to drive demand for flexible spaces across the key micro-markets, it showed.