Searching for commercial real estate in the city: report

“Most locations adjoining ORR have seen average land value growth of 15% to 25%” over the past six months

“Most of the locations adjoining ORR have seen an average growth of 15% to 25% in land value”

Hyderabad recorded the absorption of around 5.2 million SFTs in the first half of this year and continues to be one of the leaders in terms of commercial leasing business in India. Approximately 9.5 million SFTs of “grade A” office space was added to the city’s commercial market and activity grew by 12% year-on-year, while outpacing the pre-pandemic leasing activity, showing clearly restored market sentiments.

The CIRIL report on the Indian commercial real estate market for January to June 2022 published a few days ago indicates that the IT-BPM sector (50%) continues to be the main driver of demand, followed by BFSI – sectors banking, finance and insurance, engineering and manufacturing at 20% and 10% shares in global leasing.

Coworking operators (15%) were the main contributors to gross rental volume, with the Madhapur and Gachibowli submarkets remaining the preferred submarket for occupiers and accounting for 75% of total rental activity.

Rentals in most micromarkets remained stable even with many occupants consolidating space requirements. In the medium term, there is likely to be rental appreciation in the Madhapur sub-market due to unavailability of Grade A office space and higher premiums quoted by developers.

Around 11 million SFTs of space are expected to be available in the Gachibowli submarket by the end of 2023. IT and ITS as well as coworking space will continue to drive demand. The retail market saw the absorption of nearly 0.6 million SFTs of space, with fashion and apparel accounting for the highest proportion of rentals at 45%, followed by lifestyle brands, department stores and shoes. Westside, Max and Style Union and Zudios were active space takers.

The total supply of 0.7 million SFTs was added in 2021 and around 1.0 million SFTs of new shopping center supply was carried over to 2022. Lettings remained stable in most micro-markets , but have seen appreciation in some markets such as Madhapur, Kukatpally, Banjara Hills, Kondapur and Himayatnagar due to unavailability of good quality retail space and preference for superior retail space.

The warehousing market recorded transactions of around 1.5 million SFTs, mainly driven by consumer durables and manufacturing occupiers in places such as Patancheru, Edulnagulapally, Gundlapochampally, Medchal and Kallakal, witnessed by 80 % of these pull-ups.

Shamshabad has also become a favorite e-commerce destination due to its proximity to the airport. Most locations adjoining ORR have seen average land value growth of 15-25% over the past six months, according to the report.

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