- It could remain 24.5% vacant by 2026
- Rating agency ICRA statement
Office space vacancies in Hyderabad are increasing. Due to the recent supply exceeding demand, the rating agency ICRA has stated that by March 2026, 24.5% of the total office space in Hyderabad could remain vacant. The office vacancy rate was 14.1% in March 2023 and is expected to rise to 19.3% by September 2025. The agency estimates that Grade-A office space occupancy in Hyderabad will reach 75.5% to 76% by March 2026. In March 2023, this occupancy was recorded at 86%, indicating that supply will exceed net occupancy.
From 2016-17 to 2023-24, the annual growth rate of office space supply in Hyderabad has been 14%, compared to around 7% in the six major cities of the country. By March 31, 2024, Hyderabad’s share of the total office supply in these six markets is expected to be 15%. The report also suggests that this share could reach 17% by March 2026.
Hyderabad is the only major Indian city with the Unrestricted Floor Space Index (FSI) regulation, according to Anupama Reddy, Vice President of ICRA Corporate Ratings and Co-Group Head. She mentioned that some developers are undertaking large-scale constructions without proper leasing forecasts, leading to a significant imbalance between demand and supply. As a result, in 2023-24, Hyderabad saw the addition of 19 million square feet of office space, the highest in the city’s history. This trend of increased supply is expected to continue through 2024-25 and 2025-26.
