Hyderabad: The Emerging destination for commercial real estate investment in India

The city's gross office space demand was at its peak in the third quarter of 2021.

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Hyderabad: The Emerging destination for commercial real estate investment in India

Hyderabad is one of the regions in India that has grown at a rapid pace since economic reforms were implemented. It’s difficult to think of many other regions that have seen such large inflows of highly skilled expats. As a result, the Hyderabad Commercial Real Estate Sector has grown as a result of the Hyderabad Dream.

In terms of gross office space demand, Hyderabad surpassed Bengaluru as India’s top CRE destination during the July-September quarter. Occupiers concentrated on large block deals, particularly in the BFSI and flexible workplace sectors. According to real estate experts, Hyderabad emerged as one of the most resilient cities following an average performance in the second quarter of 2021.

Also Read: Ultimate Guide for Hyderabad Real Estate Investment

Growth dynamics of commercial spaces in Hyderabad

With 2.5 million square feet of leasing volume, Hyderabad surpassed Bengaluru for the first time (MSF). However, on a year-to-date (YTD) basis, India’s Silicon Valley remains the market leader. In the third quarter of 2021, the top six cities in India reported around 10.3 MSF of office gross absorption, the highest volume since the first quarter of 2020. Hyderabad, Bengaluru, and Pune, which are IT-ITeS-driven cities, accounted for 62 percent of gross absorption.

Hyderabad emerging market for commercial real estate investment

                                                                                  Source: Financial express

Experts believe that cities, not countries, are driving Asia’s growth. Over the period 2022-24, Bengaluru and Hyderabad are expected to be Asia’s fastest and third fastest-growing cities, respectively. While Bengaluru has always been the CRE bright spot, Hyderabad has shown tremendous potential and has grown by leaps and bounds in the last decade.

Also Read: Investing in Hyderabad Real Estate-A Boon or Bane?

Hyderabad’s CRE growth story has been aided by a renewed and planned emphasis on the city’s infrastructure, the availability of talent, lower costs, a proactive state government, and favorable state policies.

To maintain its real estate momentum, the state intends to implement several integrated projects throughout the city. In recent years, technology behemoths such as Apple, Google, Facebook, and Amazon have entered this market, resulting in tremendous economic growth.

The BFSI and flexible workplace sectors accounted for the majority of leasing demand in the Hyderabad market, accounting for 66 percent of total demand. The micro-market saw the most leasing traction, accounting for 53% of total demand, while Hitec City contributed 40%. With 10.8 MSF, the region saw the highest supply since Q2 2020, with Hyderabad and Pune contributing the most, at 29 and 25 percent, respectively.

According to industry experts, despite the ongoing pandemic, Hyderabad has demonstrated resilience and is poised for a growth recovery shortly. According to them, while vacancy levels showed an upward trend in the previous quarter, they do not expect a further increase in the vacancy number by the end of 2021 because the majority of the new upcoming supply is already pre-committed.

Also Read: Residential Property Investment in Hyderabad

Experts have also noted that the vacancy may put some pressure on rentals in the short term; however, we are seeing a surge in inquiries for upcoming Grade A projects from occupiers assessing their real estate strategy.

Despite the significant downturns that this industry has experienced in the country in recent years, Hyderabad is one of the places that has seen growth in this sector. Property prices have even risen steadily and rapidly, aided by sound government policies aimed at attracting realtors. The relative balance of property prices in Hyderabad gives it a significant advantage over metropolitan cities such as Delhi NCR and Mumbai. This makes it a popular investment destination not only for large multinational corporations but also for smaller businesses.

While the IT/ITeS sector has continued to dominate the Hyderabad real estate scene, new investment channels are gradually gaining traction. As a result, significant research is being conducted in the areas of rental property, residential real estate, and retail real estate. One significant implication of this is that co-living players are gradually making inroads into the Hyderabad real estate market. It won’t be long before they fully realize its full potential. In the first quarter of 2019, Hyderabad had already surpassed Bengaluru to take the top spot for office property. It won’t be long before new benchmarks are reached. Assetmonk is a WealthTech platform offering real estate investment opportunities with an IRR upto 21% in cities such as Bangalore, Hyderabad and Chennai. Click on to know more.

Hyderabad: The Emerging destination for commercial real estate investment in India FAQ'S:

Commercial real estate returns in India, particularly in Hyderabad, are among the best in the world. When compared to other investments, the benefits of commercial properties will be consistent and reliable annual returns.

You can start investing in commercial investment opportunities by focusing on the location of the Commercial Property, Quality Matters, Demand Vs Supply, Judge Actual Rent in the Market, Quality of tenants, Better Interiors, Lease Policy Security deposit, etc.

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