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Hyderabad's office real estate sector is expected to witness substantial expansion in new grade-A space between the final quarter of FY26 and FY27, with a projected addition of 18-19 million sq ft, according to a report by rating agency ICRA. Occupancy is projected to remain steady at around 82-83% by the end of FY27, supported by continued demand from IT-BPM and banking, financial services and insurance (BFSI) occupiers. Around 23 % of the forthcoming supply is already pre-leased, reflecting sustained market interest. Leasing activity in the city has been resilient, with net absorption slightly outpacing new completions in the first nine months of the current fiscal, helping reduce vacancy rates. Key micro-markets such as Hitec City-Madhapur, Gachibowli and the Financial District continue to lead both supply and demand in Hyderabad's office landscape.
Hyderabad's office market is poised for a significant increase in grade-A space over the next two fiscal years, with an expected new supply of between 18 million and 19 million sq ft by the end of FY27, according to a report by rating agency ICRA. The projected additions follow robust leasing demand and aim to meet occupier requirements, particularly from the information technology and business process management (IT-BPM) and banking, financial services and insurance sectors. A notable share of this forthcoming supply around 23% is reported to be pre-leased, indicating strong commitment from occupiers ahead of completion. Advertisement
ICRA's assessment suggests that overall occupancy levels are likely to remain stable at approximately 82.5 % to 83 % by March FY27. This reflects continued confidence in Hyderabad's office market fundamentals, even as new space comes online. Leasing activity in the first three quarters of the current fiscal year has remained resilient, with about 8.4 million sq ft of grade-A space added to the market. Net absorption for the same period marginally outpaced new completions, recorded at roughly 8.5 million sq ft, contributing to a reduction in vacancy levels compared with the previous year.
Hyderabad currently accounts for an estimated 16 % of India's grade-A office stock across the country's top six markets. Key micro-markets including Hitec City-Madhapur, Gachibowli and the Financial District continue to dominate both supply and demand, driven by strong leasing activity and sustained occupier interest in these locations.
Rental growth across Hyderabad's major office corridors is expected to remain gradual. Average rents have risen at a compound annual rate of 3-4 % over the past five years, and similar year-on-year increases are anticipated through FY26 and FY27. Limited new supply in micro-markets such as Hitec City could support tighter vacancy levels there, while other corridors are projected to maintain balanced conditions as additional space is absorbed.
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