Hyderabad's Office Sector Enters Hyper Growth Phase
Hyderabad’s commercial real estate market is emerging as India’s new economic powerhouse, with Grade A office stock reaching 151.1 million sq ft and 82.9 million sq ft under construction. This surge is driven by a mix of tech expansion, corporate confidence, and evolving workplace preferences.
Large-Format Transactions Double in Scale
Hyderabad recorded a 2.2X surge in office transactions exceeding 1 million sq ft between 2023 and 2024, signaling a shift toward larger leases by multinational corporations and tech giants. Key drivers include:
- Expansion of existing tenants: High-demand sectors like IT/ITES and fintech occupy bulk spaces to accommodate team growth
- New market entrants: GCC-based companies and global consulting firms establishing regional hubs
- Institutional investments: REITs and private equity funds acquiring marquee properties
This trend aligns with Q1 2025 absorption of 4 million sq ft – the highest quarterly volume in five years – as developers race to deliver 40 million sq ft of planned Grade A supply.
Coworking Demand Booms Amid Hybrid Work Craze
While coworking spaces aren't explicitly detailed in recent reports, the broader 26% growth in flex work demand (as outlined in market projections) reflects Hyderabad’s alignment with global workplace trends:
| Factor | Impact |
|---|---|
| Enterprise clients | Companies embrace managed workspace models to cut fixed costs |
| Startup ecosystems | Emerging tech hubs in Kukatpally and Gachibowli drive demand |
| Infrastructure | Proximity to metro lines and IT parks attracts flexible workspace operators |
High-street leasing dominated 90% of Q1 2025 activity, indicating retail/office hybrids may be absorbing some coworking demand. However, dedicated coworking operators are likely thriving in peripheral business hubs.
Vacancy Dip Signals Market Tightness
Grade A/A+ vacancy rates dropped 1.5% as per market projections, reflecting intense competition for prime spaces. This comes despite:
- Green-certified stock accounting for 18% of India’s total – a sustainability draw for ESG-focused tenants
- Rental growth in high-demand corridors like Gachibowli and HITEC City
- Pre-leasing: Developers securing tenants for upcoming projects to lock in revenue
With stock approaching 150 million sq ft and strong absorption, Hyderabad is solidifying its position as India’s second-largest office market after Bengaluru.
Future Outlook: Sustained Growth Despite Challenges
The pipeline of 82.9 million sq ft under construction[Outline] will test market absorption capabilities. However, Hyderabad’s advantages in:
- Cost competitiveness: Lower operational costs vs. Mumbai/Delhi
- Talent pool: Thriving IT ecosystem and educational institutions attract professionals
- Infrastructure: Upcoming metro expansion and logistics corridors boost demand
suggest continued dominance. Investors should watch for larger land parcels being repurposed into mixed-use business parks catering to hybrid work models.