Why is Hyderabad overtaking Bangalore in terms of office space demand?

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After a long crisis prevailed in Hyderabad owing to the Telangana issue, the city is on its way to replacing Bangalore as the office hotspot with 6.3 million sq ft^ absorption in 2016. 99acres.com examines growth stimulators and the future of office space in the city.

Recently declared as 'one of the world’s most dynamic cities in the world'*, Bangalore is losing a share of its office space demand to Hyderabad. With affordable property rates as compared to Bangalore, experts feel that Hyderabad has the potential to leave Bangalore behind in the next five to seven years backed by world-class infrastructure, manageable traffic, and uninterrupted power and water supply. While the upcoming Hyderabad-Nagpur Industrial Corridor (HNIC) will create lakhs of jobs in West Hyderabad; Hitech City, Kukatpally, Gachibowli, Nanakramguda, Kokapet, Moti Nagar, Manikonda, Serilingampally and Kondapur will remain the most preferred centres for office space investment due to their strategic geographical location.

Growth Stimulators

Affordability: The rates of the units in IT corridors in Hyderabad are around 15 to 20 percent lesser compared to the ones in Bangalore. “Since startups and Small to Medium Enterprises (SME) are budget-conscious, Hyderabad is anticipated to be the centre of co-working spaces in the next five years,” feels Satyendra Tomar, an investment expert and serial entrepreneur.

Home to world-renowned companies: Though there is an influx of new multinationals like Apple, it is largely expansion plans of existing IT companies such as Microsoft, Oracle, HCL, Cognizant, Tata Consultancy Services (TCS), Wipro and Infosys that are opening doors to enhance employee strength and additional office space uptake. A few months back, FMCG giants like Johnson & Johnson and P&G also set up huge manufacturing bases in Hyderabad. The world’s leading e-commerce company Amazon has also acquired 3 lakh sq ft in the city as its one of the biggest fulfilment centre. Seeing such businesses thriving in the city, areas such as Madhapur, Hitec City and Gachibowli have witnessed more enquiries, resulting in low vacancy levels.

Well-connected: Apart from being well-linked to the domestic airline network, Hyderabad also enjoys international connectivity. This is one of the reasons why the city has garnered the attention of international companies such as Uber, GE Capital, Google and Deloitte.

Office builders’ next stop: While Bangalore has reached its saturation point, Hyderabad has ample land bank. Additionally, land prices in the capital of Telangana are comparatively low, which is why developers are choosing Hyderabad over Bangalore. From DLF to Bengaluru-based DivyaSree Developers, all big players are mulling expansion in the city.

Future potential

Unlike Bangalore, traffic on the prime streets of Hyderabad is manageable. Multinational companies prefer cities that help their employees to cut on their travelling time so that they can focus on their work. In a bid to avoid any traffic congestion in the future, Telangana government has initiated a Strategic Road Development project in the city, which is expected to be completed by March 2018. The entire project, which costs Rs 2500 crore, promises the construction of six skywalks (111 km), 11 corridors, 54 junctions and 68 major roads to smoothen traffic movement during peak office hours.

While Bangalore is likely to experience a shortage of Grade A office space supply in the city, Hyderabad will have more quality office space on its platter in the next two years. RMZ Group’s Sky View in Hitec City is envisioned to offer 10 million sq ft quality office space. Around 3.5 million sq ft of it will be completed by December 2018. Embassy Office Parks and Phoenix Group's under construction office park in Gachibowli, with seven million sq ft quality space, will change the story of Hyderabad.

According to a Cushman & Wakefield-Global report, Hyderabad would soon be on investors’ radar as the city is expected to account for roughly 11 percent of the total under-construction Real Estate Investment Trust (REIT)-eligible projects over the next four years. This, along with news of approval of Mega City project and Pharma City (in the outskirts of Hyderabad), is going to have a positive reflection on commercial demand.

“Thus the upcoming business areas of Uppal, Mamidipalli, Adibatla and Pocharam stand to gain over the mid to long-term after the creation of lakhs new jobs once these projects take off, confirms Ugan Thakur from Thakur Reality. Additionally, planned development in the form of an Information Technology Investment Region (ITIR) spread over 202 sq km can be seen another add-on that will help Hyderabad to create an edge over Bangalore.

^ As per JLL’s data

* As per JLL's annual City Momentum Index (CMI) survey.


Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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  • Comments
  • Raghavendra Kumar Dilli July 30, 20177:30 pm

    But I dont see construction companies constructing low budget Flats like 800 Sft to 900 Sft. Multiple middle income people looking for similar kind as per their mid-level income range. But it happened like a 2bhk always above 1100 sft and not below Sft 1000.
    Also the additional charges like amenities, GST etc are very high. And now buyers looking towards 2nd hand/used flats market.Most of the 2nd hand flats coming with wood-work and all amenities inclusive except registration charges.So all Inclusive prices looking attractive. High Income range buyers always can afford any big costs since they look always more facilities and more quality life. They issue comes only for Mid range. I am the best example. I am a mid range income guy and looking to buy a 2bhk around 27 Lakhs a furnished flat. From past 6 months searching but no builder offering my budget flats since they all do only luxury flats. And now I started looking in used flats market. So affordable housing is in high demand where construction companies should look into.

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