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Hyderabad’s office market slows due to Covid crisis: Knight Frank India

Our Bureau Hyderabad | Updated on July 16, 2020 Published on July 16, 2020

Subdued transaction activity arrested the growth of weighted average transacted rentals in Hyderabad office market to 3.3 per cent   -  Nagara Gopal@thehindu

Residential sales nearly halved

Office transactions in Hyderabad saw a 43percent y-o-y decline to 2.2 mn sq ft in the first half of 2020. The city also saw a 32 per cent y-o-y decline to 2.7 mn sq ft in new office space completions, according to Knight Frank India H1 2020 report.

Subdued transaction activity arrested the growth of weighted average transacted rentals in Hyderabad office market to 3.3 per cent.

The report said residential sales in Hyderabad witnessed a decline of 43 per cent y-o-y while new project launches fell 19 per cent during this period. Weighted average prices recorded a 7 per cent increase.

Hyderabad's office market has seen a record growth of 172 per cent in its transaction volumes in the last five years. In 2019, the city recorded an all-time high of 1.2 mn sq m (12.8 mn sq ft) in office transactions which was the second-highest amongst the top eight cities in the country.

An immediate impact of the Covid-19 crisis was felt by the co-working industry and its absorption fell by a significant 75 per cent in H1. The ‘Other Services’ sector transactions were also adversely impacted.

 

On the other hand, Information Technology / Information Technology Enabled Services (IT/ITeS) sector companies, the primary driver of Hyderabad’s office market, contributed 75 per cent in the total transactions pie for H1.

Samson Arthur, Branch Director–Hyderabad, Knight Frank India, said, “Hyderabad’s office market recorded its highest take-up in 2019 driven by expansionary demand, mainly of IT/ITES and co-working sector. The momentum continued into mid-March 2020 resulting in a positive rental outlook even at end of H1 2020, although rate of growth has receded. The impact of Covid-19 is evident with pre-commitment deals coming under pause mode.”

On the demand side, large occupiers are looking to recalibrate their space needs.

The outbreak of the Covid – 19 pandemic and the subsequent national lockdown have slowed down the revival of Hyderabad residential market. H1 2020 was amongst the lowest periods for the residential market in Hyderabad as sales hit a decadal low and launches grew but not at the 2019 rate of growth.

Launches fell by 19 per cent, this half-year. Sales recorded a 43 per cent fall with 4,782 units sold in H1. This has been the lowest recorded sales figure for the city in this decade. Demand was strong until the pre-Covid period of January to March 2020 and was only restricted by the low availability of supply. Things took a sharp turn in the aftermath of the Covid crisis and the subsequent lockdowns.

 

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Published on July 16, 2020
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