Office space crunch in Hyderabad likely to push lease rates north
The severe shortage of office space in Hyderabad, pegged at a low 9% in a recent industry report, could led to a steep rise in the city's commercial leasing rates this year, predict market analysts. Only behind Bengaluru (4%) and Pune (5%), the vacancy levels in Hyderabad, at present, stand way lower than other metro cities like Mumbai, Delhi, Chennai and Kolkata, according to a survey conducted by Jones Lang LaSalle, the global real estate services firm. This is indicative of a “good supply-demand equilibrium“ in the IT hub, compared to other markets in the country, the report highlights. “In fact, the 9% availability is inclusive of areas where there is space but new lessees aren't willing to move. If one considers the Hi-Tec City stretch alone, which sees maximum demand, the va cancy wouldn't be more than 5 to 5.5%,“ said Sandip Patnaik, managing director (Hyderabad), JLL. This massive supply crunch -particularly of quality office space -is unlikely to ease before next year, industry insiders predict.“There is no respite in sight for tenants at least till the end of 2018, when we can see some larger space options entering the market,“ said Veera Babu, managing director (Hyderabad) of Cushman & Wakefield, another real estate services company. He pegged the current vacancy at an even lower figure ¬ about 3%.“Most of the upcoming space is already pre-leased, thus pushing rents upwards,“ he reiterated. Reason for this acute shortage? The prolonged slump in the property market, say observers. “It was only 2015 onwards that the industry started to look up again. The projects announced then are still under construction and will take at least another year or two to be ready,“ Patnaik said explaining how land acquisition alone takes 12 months to complete.
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