Post stability, Hyderabad witnesses 15-20% gain in commercial rentals

Hyderabad is witnessing a sudden upsurge in commercial office rentals that have appreciated over 45% as corporates have started taking calls on their expansion plans, which were shelved for the past five years.

According to Jones Lang LaSalle (JLL) India, the rents in 2009 and 2010 were in the range of 28-32 per sq ft per month, compared with 43-47 per sqft now. “During the political instabili ty, construction activity slowed down significantly, leading to rise in rents in key sub-markets of Hyderabad. The rents appreciated almost 15-20% in the past two years, given the strong corporate expansion in Hyderabad with limited availability of quality leasable space,” said Trivita Roy, associate director (research and REIS), JLL India.

The bifurcation of Andhra Pradesh had delayed office space plans of several companies. With the formation of the new state -Telangana -and new policies being rolled out by the new government, the unease among corporates has eased, and they have started looking for office space.

The city, which is home to offices of MS, Google, Facebook, Amazon and Yahoo, saw property valuations mostly being stagnant, or increasing by less than 2%. IT companies that had kept their expansion on hold in Hyderabad due to the Telangana crisis are back in action. Accenture, UHG, Zen Q, HSBC and JPMC ex panded more than one lakh sq ft this year, which has reduced the vacancy levels in Hyderabad.

The vacancy in the key IT hubs such as Hitec City and Gachibowli is about 7% for grade A office assets. “About 3.6 million sq ft of supply is likely to hit market in 2016 and this does not include the built to suit, or campus options, of office space,” said Roy.

Vineet Surana, director at APS Property Solutions in Hyderabad, said, “Grade A office space vacancy levels had fallen to single digits. Rentals in peripheral business districts like Madhapur & Kondapur have seen a surge of 15-18% over the previous years.

Coincidentally, the city also recorded the highest office space absorption among the top eight cities in the country in the third quarter of 2015, according property consultant Cushman & Wakefield, as political stability in the region saw more corporates sign property deals.

Net absorption of office space in the city was recorded at 24 lakh sq ft, while commitments were at 3.85 lakh sq ft, the highest office space net absorption witnessed after the formation of Telangana and the highest since 2008.

Puravankara Projects, a Bengaluru-based developer, sold its Grade A Office Space in Hi-Tech City (Kondapur), in Hyderabad, to investors in four days.

“We are witnessing an increasing demand for commercial office space in Hyderabad. Infrastructure development, political stability and significant FDI in vestments have been very encouraging. This would lead to a sustained real estate growth in this region,” said Ashish Puravankara, MD, Puravankara Projects.

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