Office space demand in Hyderabad outpaced supply in 2016, says Colliers Study

BENGALURU: Demand for office space in Hyderabad outpaced supply in 2016, surging to the highest level since 2011 as large multinational firms expanded their presence in the city.

According to property consultancy firm Colliers International, about 5.6 million sq ft of office space was leased in the city during the year, up 37% from a year ago.

In contrast, only about 2.3 million sq ft of new office space came up in the city during the year.

"Hyderabad's office market is in transition and property owners have aggressively increased rents in 2016 as available office space diminished with massive expansion by IT occupiers. In the short term, supply should complement demand," said Surabhi Arora, senior associate director-research at Colliers International. Pre-let activity in Hyderabad was driven mainly by IT-ITeS, and banking, financial services and insurance occupiers booking space in properties scheduled for completion in the coming quarters. Some of the companies that expanded operations c in the city recently include Apple, Got ogle and Amazon. "The demand for t office space is very strong in Hydera bad and we have leased 1.6 million sq ft last year," said Bijay Agarwal, managing director, Salarpuria Sattva. The Bengaluru-headquartered builder has about 6 million sq ft of commercial property under construction in Hyderabad.

Amid the steep rise in demand, rentals appreciated in double digits across Hyderabad. "More than 80% leasing activity was concentrated in the IT corridor. Hyderabad also recorded 4-30% growth in rentals across sub markets, with strong leasing activities across the city ," said Ram Chandnani, managing director for advisory and transaction services at consultancy firm CBRE South Asia. The city accounted for 17% of the total office space absorption in the country , as per Colliers International data. India's office market witnessed an all-time high absorption of more than 43 million sq ft of office space in 2016, registering a year-on-year growth of 9%, according to CBRE's 'India Office MarketView Report Q416'.