In the first half of 2024, 4.4 million sq. ft. of office space leased
1 million sq. ft. more compared to the same period last year
In office space leasing Hyderabad ranks third
The influence of GCCs is increasing in the country
CBRE Hyderabad Head Gipson Paul
(King Johnson Koyyada, 9030034591)
Gipson Paul, Head of CBRE Hyderabad, mentioned that the real estate market scenario in Hyderabad is very positive. He specifically discussed various aspects of the Hyderabad real estate market with real estate experts. He revealed that in the first two quarters of this year, 4.4 million square feet of office space was leased. In contrast, during the same period last year, only 3.4 million square feet was leased. This indicates that an additional 1 million square feet of office space was leased in the first six months of this year.
He mentioned that Hyderabad ranks third in office space leasing across the country. In Hyderabad, IT companies are primarily leading in office space leasing. He noted that BFSI, high-tech companies, and pharmaceutical companies are also expanding their operations, with the influence of Global Capability Centers (GCCs) growing.
“Generally, most IT companies are either based in the U.S. or Europe, with some in Asia. These companies often outsource their operations to India. The primary reason for choosing Hyderabad is the lower cost of living here. The talent pool and infrastructure are also good. American companies look for places where operational costs are lower. They consider factors like real estate prices and employment costs, seeking the lowest overall expenses. This results in significant savings for them, which is why they primarily choose India. After coming to India, they explore cities like Bengaluru, Pune, Hyderabad, and Chennai,” he explained.
Gipson Paul mentioned that Global Capability Centers (GCCs) generally increase their usage as soon as they start operating here, and once a GCC sets up, others tend to follow suit. “When clients come to the city, they look at the social culture, the cost of living, and, most importantly, whether human resources are available. The abundance of talent in Hyderabad is a major positive factor. All these aspects have made Hyderabad a highly attractive destination. Regarding our state, the real estate outlook is very favourable. Whichever government is in power, they remain positive and continue to develop in this area. As a result, Hyderabad has gained a strong reputation. Previously, people would consider Hyderabad only after deciding on other cities like Bengaluru, Delhi, or Gurgaon. But now, Hyderabad has become a highly attractive destination. Additionally, with the arrival of GCCs, the residential sector is also expanding, contributing to the city’s development,” he explained.
Paul noted that typically, IT companies require 75 to 100 square feet per employee. If 44 million square feet are occupied, it effectively creates direct employment for 44,000 people. “In addition to direct employment, there is also indirect employment. This means even more people will find jobs and opportunities. Moreover, Hyderabad is a peaceful city with a lower cost of living. Additionally, the widespread use of Hindi is a significant advantage. Initially, newcomers might feel somewhat uncomfortable until they expand their social circle, but eventually, they come to see Hyderabad as their own city and integrate well. They show interest in buying homes here, and the property prices are not excessively high. All this contributes to a positive outlook on the residential sector. These factors also positively impact other sectors such as retail and entertainment,” Paul said.
Increase in office rents!
He explained that with demand also rising, rents are expected to increase.
“In Hyderabad, the primary office space market is concentrated in IT corridors like Madhapur, Raheja Mindspace, and Gachibowli. The secondary market includes areas such as Gachibowli, Financial District, Puppalaguda, and Nanakramguda. There is very high demand in Madhapur and Raheja Mindspace. With transportation facilities like the metro available, clients are initially showing interest in these areas. As a result, rents here range between Rs 80 to Rs 85 per square foot. In areas like Puppalaguda and the Financial District, rents are around Rs 50 per square foot. The only difference between the two markets is the metro connectivity. Consequently, clients are showing interest in the primary market. If transportation facilities improve in the secondary market, there will definitely be an opportunity for growth there as well. With metro connectivity, prices in areas like Kokapet are expected to rise significantly, making it a future market,” he said.
Gipson Paul recalled that 20 years ago, there were no proper transportation facilities in Madhapur, and it only developed significantly after all the amenities were put in place. He expressed the view that as development increases in areas like Shamshabad, demand will also rise. However, he noted that this is not an immediate change; it will take around three to five years, depending on the pace of development. He mentioned that the logistics market in the Shamshabad area is gradually picking up. According to him, Medchal is currently the primary logistics market, while Shamshabad is emerging as a secondary market.
He projected that by 2025, GCCs will occupy 35 to 40 percent of office space in Hyderabad. The remaining space will be taken up by technology companies, pharmaceutical companies, and similar sectors.
Regarding CBRE, he noted that the CBRE Group is the largest provider of commercial real estate services in the world. The CBRE headquarters is located in Dallas, USA, and it is a Fortune 500 and S&P 500 company. With nearly 130,000 employees across almost 100 countries, CBRE began its operations in India in 1994. In India, more than 11,000 specialists work in 15 offices across over 80 cities.
