Hyderabad: Hyderabad, one of the fastest-growing metro cities, has been widely sought by several multinational companies owing to its infrastructure, living conditions and amenities. Office spaces have been burgeoning in the cities with the spurt of startups. As the city fares better in terms of office spaces, companies switch to Hyderabad instead of Mumbai, Delhi and Bengaluru.
A survey done by Anarock Property Consultants, a leading real estate company revealed that the lease rate in Hyderabad is Rs57 per square foot while it is Rs125 in Mumbai in 2021. In terms of affordable office space, Chennai, Pune, and Bengaluru is in affinity to Hyderabad.
Multi-national companies are interested in consolidation in Hyderabad as Covid cases are on the decline and vaccination drive was prompt and successful, according to Jayesh Ranjan, the principal secretary of the Industries and Commerce and Information Technology departments of the Telangana government.
Telangana government's push for the IT sector by setting the target of Rs3 lakh crore IT exports in the next five years is a huge relief. Besides, favourable startup ecosystem; rapid industrialisation is also one of the reasons for rising demand in the office space market in Hyderabad.
Telangana ranked among the top states in the Ease of Doing Business. Many national and international companies are looking towards expanding their operations in Telangana. In addition, there is a growing interest in setting up Research and Development centres in Hyderabad. The city has become an IT hub as the government has been providing infrastructure and facilities at subsidised rates, said Jayesh Ranjan.
The last four years' witnessed significant trends in the office space market. In 2018, a square foot of office space was available at the cost of Rs21 in Hyderabad while it stands at Rs57 now. Currently, the cost per square foot stands at Rs125 in Mumbai, Rs78 in Delhi, Rs77 in Bengaluru, Rs68 in Pune, and Rs60 in Chennai.
The survey also pointed out that the demand for office space is escalating in South Indian states. Analysing nationwide office space leasing details showed that Hyderabad, Bengaluru, and Chennai jointly account for 66 per cent of the total office space while other metro cities account for 44 per cent office space.
When area is taken as a parameter, the net office area in the top seven metro cities in 2021 was 21.32 million square feet, out of which southern cities accounted for 14.06 million square feet. Hyderabad solely accounted for 5.7 million square feet. Over the past four years, 24.7 million square feet area was occupied for office space. Anarock Property Consultants have estimated that Hyderabad’s total office space will expand to 15 crore square feet.
Experts say the total office space will expand to 32.25 million square feet post the completion of construction that is underway. Samson Arthur, senior branch director at Knight Frank India, opined that rental prices in the city are usually more affordable compared to property rates.
At present, various IT-ITES, Business Process Outsourcing (BPO), and Knowledge Process Outsourcing (KPO) companies are operating in about seven crore square feet in the city. Marketing experts are of the opinion that Hyderabad is likely to surpass Bengaluru which has so far been the number one in the office space.
Hyderabad with 28 per cent of office space accounts for one-third of the country's office space and over the past four years the city witnessed an uptick in office space area by 12 per cent. According to the survey, Hyderabad’s favourability lies in its geographical positioning, IT and allied sectors’ growth, strong startup ecosystem, and industrialisation.
Wells Fargo leased 13 million square feet of office space and Google 10 million in 2020-21. Salarpuria Sattva Knowledge City, Divyasree Orion, Raheja Mindspace also hit the top ranks among the list of leases. Besides Hitech City, Gachibowli, and Madhapur; companies are also planning to set up operations in Banjara Hills, Begumpet, and Kukatpalli, as per sources.
Demand for office space witnessed a slump since the onset of the pandemic as companies switched to work-from-home. Developers indulged in multi-storied office buildings remain braced over the slump. However, there is a respite after inoculation against Covid and a dip in Covid cases. Operations have picked up the pace again, however, companies prefer to work on hybrid models rather than taking entire office space on lease, as per sources. The hybrid model would only account for only 15 to 20 per cent of overall operations.
