Hyderabad: Hyderabad maintains its momentum in the growth of office space, which consequently also positively affected the residential sector, in terms of sales as well as maintaining a healthy price increase quarter-on-quarter, a sign of stability, despite the pandemic . The city is expected to average a new office supply of 15-16 million square meters during the period 2021 to 2025.
The office led India’s office inventory with a share of 30 percent in the first half of 2020, while driving the office’s survey in the country with a share of 18 percent during the same period. Hyderabad recorded 4.3 million square meters of net survey in the second half of 2020, with an overall vacancy on a single figure (about eight percent).
High absorption and lower vacancy rates make the office market in Hyderabad attractive to investors. More demand may be observed in the future with pre-leased or near-completion assets from Grade A developers. The city emerged as one of the leaders amid the Covid-19 According to Sandip Patnaik, managing director and principal, Telangana and Andhra Pradesh, JLL, the confidence in doing business is instilled by the government of Telangana.
The city administration has benefited from the exclusion period by speeding up the existing infrastructure project work along with launching new projects, Patnaik stressed.
On the other hand, landlords considered the prevailing situation and became more accommodating to the demands of occupiers, while providing longer rent-free periods, lowering rent increases and fully equipped offers to occupiers, reducing their net effective rental expense.
Faster recovery
Sentiments improved further in the last quarter of 2020 with the news of the possible development of vaccines, and the office market regained its momentum. The year ended with a net survey of 6.47 million square meters.
The lifting of the lock-in and travel restrictions is expected to help revive fixed assets, improve revenue visibility and attract cross-border investment in the sector by 2021. The increasing demand from emerging sectors such as healthcare, e-commerce and data centers is expected to balance any impact from other sectors.
The events of 2020 will increase the acceptance of practices for work from home this year, but it will only complement the traditional way of working from the office. Collaborative spaces will continue to grow and absorb demand due to their flexibility and short-term solutions, he noted.
Completion of the metro track is likely to increase demand in premium business areas (PBD) West & East, while rents are expected to remain stable for 2021 and gradually increase by 2022. Investment management funds such as Strata Prop & Property Share have investments done during Covid times in the city in pre-leased office assets with a ticket size of about 100 million.
While office space showed steady growth, the residential sector also maintained momentum. Hyderabad has shown the highest recovery in terms of selling residential units in India. In 2020, Hyderabad will achieve 62 percent of total sales in 2019 with a 17 percent increase in the selling price HNIs (high net worth individuals) and family offices of local businesses are showing interest in the residential sector.
Patnaik added that Hyderabad dominated new launches, making up 39 per cent of the total launches during Q4 2020 and having the lowest unsold inventory in the country. Demand and prices are expected to rise in the next 3-4 years, especially in the middle segment (Rs 80 lakhs to Rs 1.2 crore).
Source: Telangana Today