CBRE South Asia Pvt. Ltd. analyses Hyderabad's real estate landscape, projecting a significant surge in the next 2-3 years. The city anticipates adding 35-38 million sq. ft. of premium business parks, driven by global corporations establishing operational hubs, back offices, R&D facilities, and regional headquarters. The office space demand, especially along the IT Corridor, increased by 63% since 2019, with Life Sciences, BFSI, and Technology sectors leading leasing. The residential market is stimulated by technology sector expansion, with over 130,000 units expected in the next years, concentrated in the western part near IT Corridor. Developers face challenges like rising costs and potential oversupply, emphasizing the need for strategic planning and partnerships. Overall, Hyderabad is positioned for vertical growth, attracting investors and homebuyers with generous FSI norms.
CBRE South Asia Pvt. Ltd. has delved into the landscape of Hyderabad's real estate, exploring both the office and residential sectors. Over the next two to three years, the city anticipates a substantial surge, adding 35–38 million sq. ft. of premium business parks in primary micro-markets. Global corporations fuel this surge by establishing operational hubs, back offices, research and development (R&D) facilities, and regional headquarters within the city's boundaries.
The demand for office spaces surged, particularly along the IT Corridor and Extended IT Corridor. The investment-grade office inventory was about 100 million sq. ft. in 2022 and reached 119 million sq. ft. by the end of July-Sep’23. This shows a 63% increase from 2019. Between January to September 2023, the Life Sciences, BFSI, and Technology sectors drove Hyderabad to secure 6.6 million sq. ft., marking a 35% YoY increase and placing the city among the top three in office space leasing.
A gradual return to office occupancy with a focus on the IT corridor is to drive the office demand. The Extended IT Corridor's growing supply offers additional options with modest rentals. The imperative to support hybrid and distributed work models will sustain demand for flexible spaces, with prudent planning required to avoid potential oversupply. Environmental, social, and governance (ESG) considerations are anticipated to significantly influence leasing decisions for global corporations.
Flight-to-quality leasing is projected to persist in premium office assets along the IT Corridor and Extended IT Corridor. Sustained demand for flexible spaces is expected to lead developers to integrate such spaces into their assets. Policies like Growth in Dispersion (GRID) and government land allocations in city peripherals are anticipated to drive real estate activity in North, South, and East Hyderabad. Infrastructure initiatives, including SRDP, metro rail expansion, and the Regional Ring Road, will enhance connectivity.
The technology sector's expansion and industrialization have stimulated the residential market and improved living quality. The city is set to launch over 130,000 residential units in the next two to three years, concentrated in the western part near the IT Corridor and the Extended IT Corridor.
West Hyderabad retains its status as the preferred residential hub, serving mid-segment, high-end, and premium categories. North, East, and South Hyderabad attract mid-segment homebuyers, while Central Hyderabad sustains demand in high-end and premium segments. Buyers prefer projects in two budget brackets (Rs 45 lakh–1 crore and INR 1–1.5 crore), appealing to diverse first-time buyers and end-users.
The real estate landscape may witness escalating budgets due to rising costs and larger unit sizes. Developers are expected to launch new projects, but increased supply may impact delivery timelines, leading to a rise in unsold inventory.
Homebuyers prioritize affordability and emphasize quality, aesthetics, and surroundings post-pandemic. Emerging developers are advised to explore joint ventures or partnerships to mitigate risks. Ongoing industrialization and government-led initiatives anticipate a lasting organic demand spill over from West Hyderabad to other areas. With this, Hyderabad is poised for vertical growth with generous FSI norms, attracting homebuyers and investors.
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