Hyderabad, the capital of newly found Indian state Telangana, is witnessing high demand due to a host of attractive attributes including the growth of infrastructure and the availability of a vast talent pool.
As of 2019-end, under-construction Grade A office space in the top seven cities is worth more than ₹2.5 lakh crore. Grade A office space in Hyderabad is expected to grow at 4 percent annually. Over the next five years, the city is anticipated to cross 11 million sq ft by the end of 2024.
As per Colliers Research, Grade A office stock in Hyderabad’s western corridor is about 59 million sq ft, making the area the largest micro-market in Hyderabad. The report estimates the upcoming supply to increase by 141 percent by 2024. Hyderabad is expected to be among the top four office markets of the country, backed by IT sector companies and global in-house centres by 2024.
Hyderabad’s GDP would get a boost and is considered to be the third-fastest among key Asian cities over the years. The vigorous growth in office space is driven by the expansion of technology companies in Western Hyderabad. From 2016-2019, the average office demand of Hyderabad increased by 81%. The average annual office space demand accounts for 14 percent of nationwide leasing.
Depending on the exact location and building facilities, office asset ownership has gained significant traction with investors, including NRIs.
During 2015-2019, Hyderabad received around Rs 14,204 crore in private equity (PE) funds. 75 percent of the total PE investments in the city during 2015-2019 were allocated for office assets.
Depending upon the location and infrastructure, the return received by an investor over a property ranges from 7-9 per cent for Grade A office assets and between 9-10 per cent for non-Grade A spaces.