WHAT'S DRIVING THE GROWTH IN HYDERABAD?

Shaping up as one of the biggest commercial hubs of the country, the southern city recorded the highest absorption of commercial real estate in its history. A city that is now under everyone’s radar, Commercial Design looks into its potential growth in the years to come

The year 2019 wasn’t exactly a favourable year for the Indian real estate industry. With headwinds of an economic slowdown, the market reported a deck of unsold inventory, marginal growth and declining demand. But the one that stayed resilient and, in fact, showed a robust growth was its commercial segment. Office real estate boomed in 2019 and is likely to further bloom in 2020. Its supply has been steadily increasing as has absorption rates.

According to a Knight Frank India report, it rose 27% year-on-year to an all-time high of 60.6 million square feet in 2019. “The Indian office space market has been largely insulated from macro concerns that plague the economy and has only gained traction in 2019 due to the large infusion of supply that came online during the year. The segment that was starved of supply saw a record 5.7 million square metres (61.3 million square feet) attain completion during the year, which was evenly matched by an unprecedented 5.6 million square metres (60.6 million square feet) of transactions,” states Shishir Bailja, chairman and MD, Knight Frank India.

OVERALL REVIEW

The annual transaction volumes in the Indian office space market has been growing from strength to strength for the better part of this decade. However, constrained by the lack of good quality available supply, the Indian office market saw vacancy levels fall consistently from 21.4% in 2012 to 11.6% in 2017. Knight Frank’s report states that it is only since the beginning of 2018 that office space started getting delivered in increasing volumes to meet growing demand. Vacancy level currently stands at 13.1%.