Our Bureau

Hyderabad, Jan. 18

WITH Hyderabad increasingly being recognised as the next hub of technology after Bangalore, the realty sector is undergoing a major transformation.

The absorption of commercial space and the increase in residential apartment structures have recorded a phenomenal growth in 2005. According to Cushman & Wakefield, the Real Estate Solutions major, the year-on-year growth has been in excess of 75 per cent compared to 2004.

The current available data indicates the market rising to an overall absorption of 3.5 to 4 million sq. ft. during 2006. The city's low cost of living and ability to draw quality talent from other locations, have emerged as positive points, Cushman & Wakefield said in its latest market report.

The proactive Government support and improved infrastructure have led to an increased interest from multinationals to set up operations in Hyderabad. The year 2006 is likely to see a total absorption of around 2.8 million sq. ft. However, the market continues to be in a significant short-supply situation. The supply continues to lag demand by over eight months, the report said.

On the back of a renewed corporate interest, rental and capital values have also risen over 15 per cent during 2005. Apart from the IT & ITES sectors, the Hyderabad market is also beginning to solicit interest from industrial and biotech sectors, Cushman & Wakefield report added.

Listing out the key leasing transactions, the report said ADP has leased approximately 200,000 sq. ft. on Rajbhavan Road; GE has taken about 250,000 sq. ft. in Madhapur; and HSBC has leased 250,000 sq. ft also in Madhapur.

Deloite has leased additional space from L&T in Madhapur; and Applabs has about 60,000 sq. ft. in Banjara Hills. Accenture has leased 500,000 sq. ft. in Mindspace. Interestingly, there were no significant investment transactions.

The laying of the foundation stone for the Outer Ring Road project by the Prime Minister early this year at Shamshabad and the progress being reported by the International Airport have also fuelled growth on the fringes of the city.

Mega events such as the Pravasi Bharatiya Divas (PBD), the Indian Science Congress and the upcoming Plenary Session of the Indian National Congress have already stretched the hospitality and hotel industry to the limits. Throughout 2005, most of the star and budget hotels reported over 90 per cent occupancy on weekdays.

The big events also exposed the shortcomings of the city such as the lack of roads and hotel rooms, according to several delegates at the PBD and the Science Congress meetings. While the Government has been consistently stating that it is serious on overhauling the infrastructure, the realty sector has also witnessed the entry of several players who are raking in money by artificially pushing up prices. The opposition Telugu Desam and the Left Parties have been vociferous in their criticism on the methodology of allocation of Government lands to corporates.

(This article was published in the Business Line print edition dated January 19, 2006)
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