The Hindu Business Line : Hyderabad faces shortage of quality office space

Quality office space, which has emerged as a high demand segment in Hyderabad's real estate market, continues to be in short supply. One reason is the delay in ongoing quality office projects in and around the city.

According to realty consultants Cushman & Wakefield, both in the suburban and peripheral areas of the city, the office market is facing the crunch.

Growing demand

With the city continuing to attract interest from the IT/ITES, biotechnology and industries sectors, the demand for good office space continues to grow. A number of companies in these segments have approached the State Government for land to build their own campus in `built-to-suit' facilities.

The supply situation is expected to improve by the first-half of 2007 with the completion of a number of projects in the pipeline, the Cushman & Wakefield survey predicts.

New projects

A number of projects are coming up in the established peripheral areas of Madhapur & Gachibowli. Local and national developers continue to acquire land in emerging areas such as Uppal & Shamshabad, thus ensuring a steady supply of quality space in the medium to long term, realty consultants said.

The Hyderabad Urban Development Authority (HUDA) auctioned about 69 acres of land in Kokapet to raise about Rs 700 crore for infrastructure projects such as the Outer Ring Road (ORR), expressways and metro rail. The highest bid of Rs 14.45 crore per acre was made by Kailash Ganga Constructions, which bagged the award.

A large number of State-based builders have also initiated huge residential complexes to cash in on the demand and real estate boom. Similarly, commercial space creation is also growing at a frenzied pace. The announcement by large business houses to enter the retail space in Hyderabad, has also fuelled demand.

However, the recent `hitches' in the ORR and the auction process taken up by HUDA at Kokapet, have temporarily dampened the mood in what analysts termed as an `overheated' real estate market.

In view of the shortages, the rental values across all micro-markets continued to remain firm. Overall, analysts feel that a correction in the market values is due.

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