Real Estate

Hyderabad office market sees net absorption rise 83 per cent in Q4 : JLL

Our Bureau Hyderabad | Updated on January 27, 2021

Office space investments offer stable annual cash flow and capital appreciation thereby offering attractive returns for HNIs

Southern markets account for 71 per cent of new completions

The Hyderabad office market has exhibited signs of sustained recovery with net absorption increasing continuously over the past three quarters, with Q4 2020 witness to a net absorption of 2.83 mn sq. ft, a jump of 83 per cent over the previous quarter.

This was backed by new completions during the quarter getting operational with full occupancy. This is at par with the average quarterly levels witnessed in the historic year of 2019. Hitec City and Gachibowli continued to attract occupiers, accounting for a major chunk of the leasing activity, according to real estate consultany JLL.

“The city has recorded new completions of 3.72 mn sq. ft, a jump of 12 per cent over the previous quarter. In sync with net absorption, Hitec City and Gachibowli accounted for all of the new completions. New completions as well as net absorption is expected to further increase in the next two quarters as major projects, which have been fully pre-committed, are expected to get operational,” said Sandip Patnaik, Managing Director and head, Telangana and Andhra Pradesh, JLL

As the year witnessed occupiers resorting to space and cost optimisation strategies, vacancy levels in the city continued to rise in Q4 2020. Rentals have largely remained range-bound across most of the submarkets in the city during the quarter.

“The southern markets of Hyderabad, Chennai and Bengaluru accounted for a major chunk (71 per cent) of the total new completions in Q4 2020. On an annual basis, new completions across the top seven cities dipped by 30 per cent to about 36.34 million sq ft in 2020 as compared to 51.62 million sq ft in 2019. It is important to point out that new completions surpassed the average annual levels of 34 million sq ft witnessed during 2016-18,” said Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

India’s office market continues to recover, witnessing a net absorption of 8.27 million sq ft, an increase of 52 per cent in Q4 2020 (Oct-Nov-Dec) when compared to Q3 2020. Except for Bengaluru, net absorption of office spaces improved in the other six cities of Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, Pune, according to JLL Research.

Hyderabad led the pack with the highest net absorption in Q4 2020. While the southern markets of Bengaluru and Hyderabad accounted for more than 50 per cent of the net absorption in Q4 2020, the maximum increase in net absorption (when compared to Q3 2020) was witnessed in Mumbai, Delhi NCR and Chennai. Kolkata also witnessed a strong resurgence albeit on a lower base.

Indicating a continued recovery, new completions during the October-December quarter were recorded at 12.78 million sq ft., an increase of 39 per cent when compared to Q3 2020.

“The year 2021 is expected to witness close to 38-40 million sq ft of new completions, while net absorption is likely to hover around 32-35 million sq ft. This will be at par with the annual net absorption levels seen during 2016-2018,” he added.

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Published on January 27, 2021
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