Hyderabad
Hyderabad’s real estate sector is thriving, with strong growth not only in residential properties but also in retail and warehousing. The city has seen a surge in apartment developments, and office spaces are bustling with activity. As the population grows, companies are competing to meet the increasing demand for services.
Particularly, there is a high demand from customers for fashion, homeware, food and beverage, and departmental stores. Retail store owners are scrambling to secure spaces in prime locations. Both domestic and international brands are keen on setting up outlets in the city, making Hyderabad’s retail and warehouse market more dynamic compared to other metro cities.
The growth of the city is not limited to just one sector. Along with residential and commercial spaces, retail and warehousing sectors also play a key role in this development. This is evident in the Hyderabad real estate sector as well. Due to various reasons, the retail and warehousing real estate sector has been stagnant for the past few years. However, this year, the situation is changing, and it is moving forward with a positive outlook.
In the last three years, the growth of Grade A malls in Hyderabad has been slow. Meanwhile, the luxury retail leasing in the West Hyderabad retail sector has seen significant growth. There is also strong demand for retail leasing in Central Hyderabad. In this area, there is an annual demand of 1 million square feet for leasing space. Even though rents are higher in these two areas, the activity is also higher, which is why companies are prioritising opening stores in West and Central Hyderabad.
After the pandemic, luxury brand companies are preferring high streets to open retail stores in major cities. Until 2019-2020, malls dominated retail leasing in Hyderabad, but since 2021, high streets have taken over. Luxury brand companies are prioritising crowd-pulling areas to open individual retail stores. The fashion and apparel sector leads in retail space demand, followed by homeware and departmental stores. As food & beverage outlets and hypermarkets grow, Hyderabad’s retail real estate market is booming.
With both luxury and international brands, as well as Indian designer wear brands, competing, the retail industry is expanding in the city. Malls and high street shopping are growing in areas like Madhapur, Hi-Tech City, Kondapur, Gachibowli, Kukatpally, Madeenaguda, Chandranagar, Manikonda, Shaikpet, Miyapur, Ramachandrapuram, and Patancheru.
Reports suggest that compared to the past, the annual incomes and per capita income of city residents have increased significantly. At the same time, spending habits have also risen. People are spending large amounts on expenses without saving, and Hyderabad’s cosmopolitan culture is evident, with many individuals having settled in the city from different places.
Foreigners coming to the city for work also contribute to this trend. Employment and businesses have increased, which has raised the purchasing power of city residents. As a result, both local and international brand companies are expanding in prime city locations and areas with high populations. This has led to an increase in demand for retail space and a boom in the city’s commercial real estate sector.
Although the retail and warehousing real estate sector appeared to be down during the pandemic, it quickly gained momentum after recovering from the crisis. According to CBRE, industrial leasing in Hyderabad, which had been sluggish for two to two and a half years, is now accelerating at jet speed. From January this year, 21 lakh square feet have been leased, and 13 lakh square feet have become available with activities starting, as per the CBRE report.
Of the total leasing, third-party and 3PL (third-party logistics) account for 39%, while engineering and manufacturing companies hold 24%, and FMCG companies account for 10%. In the first six months of this year, an independent company leased a warehouse spanning 2.5 lakh square feet, Skyroot Aerospace leased 1.9 lakh square feet, and the Central Warehousing Corporation signed a lease agreement for 1.5 lakh square feet.
When it comes to office spaces, companies are primarily interested in leasing Grade A commercial spaces in prime areas with a high-tech atmosphere. IT and ITeS companies hold the majority stake in office space leasing, followed by engineering and manufacturing companies. Hyderabad plays a major role in the office space landscape with a 14% share. Over the past two and a half years, office space leasing in the city has increased by 27%. Compared to the past, the share of these two sectors in office leasing has significantly grown.
For production to increase, a peaceful and conducive work environment is necessary, which is why there is such high demand for brand-new, flexible, and attractive commercial spaces. In Hyderabad, the availability of office spaces is higher in secondary business districts like Madhapur, Raidurg, Hi-Tech City, and Kondapur. The increase in demand for office spaces also indicates a rise in retail sector activity.
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