Hyderabad Commercial Realty Demand Increasing Rapidly

Hyderabad Property

The lull period in the Hyderabad real estate sector is slowly changing as commercial spaces see a revival in demand. The commercial space which is estimated to appreciate on an average of 18% per annum, in about five years, is a major contributor to real estate growth in India. This trend coupled with city’s well developed infrastructure is set to change Hyderabad’s real estate landscape. But is the city prepared to meet the growing demand?
Interestingly, in Hyderabad, the IT and ITeS sector continue to dominate the office space absorption. Out of 3.76 million sft only 78% accounted for the total space absorption in 2011. According to Cushman and Wakefield, Gachibowli and Madhapur are the fastest growing office locations in India. These suburban locations have catapulted Hyderabad to the fourth spot as fastest growing locations in terms of growth in rentals, which is 18.8% annually, they report. This year the projections show that they would continue to reign as the top suburban locations with close to 77% of the total office space absorption, in Hyderabad.
Prem Kumar, President, Andhra Pradesh Real Estate Developers’ Association, says, “Going by the projections of the last 10 years, it shows an average growth of 29% in real estate every year. In the same decade, the year 2005-08 was considered the boom period. Today it is predicted that the commercial absorption in the year 2012 will be around 3.5 million sft of space. The growth projections for this year look really exciting. Market might turn bullish with companies from abroad setting shops and expanding operations in Hyderabad. The market is expected to go up in the next two-three years. The hot spot for commercial spaces is the western corridor comprising the area near Bombay and Bangalore highway. In the days to come, there will be increased demand to which there might be shortage of stock.”
However, the experts say that the pre-commitments or pre-bookings for office space made in Hyderabad in 2011 will be absorbed in 2012, which might outdo Chennai in the rate of absorption. Though there is space supply of 4.54 million sft, ironically only 3.76 million sft was absorbed. This was mostly because SEZ space available in peripheral locations like Shamshabad and Uppal, are unable to attract the IT/ITeS sector primarily because of lack of proper infrastructure and poor transportation.
Getting proper offices spaces and to let the movement happen to these far flung areas which are underdeveloped and unattractive, is quite an uphill task. “Commercial space rentals in Hyderabad have gone up from Rs. 29 last year to Rs. 38 per sft this year. The rise in the rentals can majorly be attributed to expansion of operation of IT and ITES sector. Though prices in Hyderabad have increased it is still lower compared to Chennai and Bangalore. This is another reason why Hyderabad is a preferred place and has the best infrastructure in the country. But at the same time, the increased demand for commercial spaces will face supply crunch, because of lack of new development and concentration leading to saturation in Hi-Tech to JNTU stretch,” says G Yoganand, President, Confederation of Real Estate Developers’ Association of India.
Source: Times Property in The Times of India, Hyderabad

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