What drives Hyderabad rental market despite layoffs?


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Demand and supply disequilibrium, diversified industrial set-up and anticipated infrastructure projects act as key growth enablers for Hyderabad's rental market.

Despite being a Tier-I city, the commercial rentals in Hyderabad are much economical when compared to other metro cities in India. Commercial rentals in Hyderabad are basically in line with that of Tier-2 cities. This is particularly due to the increased demand of quality spaces at affordable rates.

IT industry in the city is having an overall net addition (as more staff is getting hired compared to layoffs) of staff which is driving the IT markets. Apart from the increase in staffing on year on year basis the companies are also signing up new spaces basis on their future projections/contracts in pipeline vis-a-vis ongoing contracts etc. Though IT sector in Hyderabad contributes to 15 percent on national IT exports, it is not solely dependent on IT sector when it comes to absorption of office space. Hyderabad is a conglomeration of various diversified industries and the down trend in one industry is invariably recompensed by the other.

Hyderabad commercial rental values are not location centric. Unlike the other Real Estate markets in India where the developers work on a build and lease model, property developers in Hyderabad have always focused on the Built to suit or the pre-leased development. The other important factor for the rental markets do well in Hyderabad is the shortage in supply of space compared to the demand of space.

Traditionally, over the past decade the highest Hyderabad witnessed highest leasing absorption around 3-4 million sq.ft. However, in the year gone by the space absorption was over seven m sq ft hence, the space which was available or which was under construction / also got leased which created demand and supply disequilibrium and pushed the rental by almost 50%.

Currently Hyderabad being joint capital for two states any such layoff’s effect is inconsequential. Apart from that in Telangana there is no other big notable city to compete or to be an alternative to Hyderabad.  Additionally, infrastructure in Hyderabad is far better than many other metros in India. The existing 8 lane Outer Ring Road (ORR) and the L&T Metro rail which is ready to be operational in near future, acted as important growth drivers. 

On the whole, the conducive political situation and the proactive approach by the State Government of Telangana coupled with slew of Infrastructure initiatives have caught the interest of the Global Corporate Giants to seriously consider Hyderabad for their expansions and also consolidation. The migrating population into Hyderabad is always been rising which has attracted the corporates to establish their centers in Hyderabad.


Disclaimer: The views expressed in the article are solely of the author and may not represent 99acres.com's opinions on the subject. 99acres.com does not take responsibility for any actions taken based on the information shared by the author.

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  • Comments
  • Chethan Reddy August 31, 201712:09 pm

    Nicely written & very good insights.

  • Vinay Keesara August 31, 201712:16 pm

    Well Articulated

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