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Hyderabad

City of Pearls

Hyderabad was historically known as a pearl and diamond trading centre, and it continues to be known as the City of Pearls. Hyderabad is the fifth-largest contributor to India's overall gross domestic product.

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Hyderabad
Hyderabad
Hyderabad

Hyderabad, the land of the Nizams, is today a modern fast paced city that's attracting the cream of Indian talent as well as some of the top international technological companies. A city that is as ancient as the hills, seeped in history, rich in flavours, Hyderabad has found a balance between its ancient classics such as the Charminar and the fast paced life of an IT hub.

Economy

India's GDP growth for the third quarter of FY2015–16 slowed down to 7.3% from 7.7% in the previous quarter. Growth in the construction sector was witnessed at 4.0% during the third quarter, up from the 1.2% growth in the previous quarter. The government, in its Union Budget 2016–17, exempted the Dividend Distribution Tax (DDT) for Special Purpose Vehicles (SPVs) of Real Estate Investment Trusts (REITs), which will make REITs more attractive in the real estate sector. The Parliament recently passed the Real Estate (Regulation and Development) Bill 2015, which is expected to create a uniform regulatory environment and bring transparency to the sector, thereby giving a boost to investments into the sector.

Demand outpaced supply, vacancy declined.

Grade A new supply declined by 26.9% compared to the previous quarter and was noted at 602,000 square feet (sf). Net absorption too declined albeit at a lower pace (by 13.5%) and was recorded at 839,400 sf. As a result, overall vacancy levels reduced to 8.08%, which is one of the lowest rates recorded in Hyderabad since 2009.

The submarket of Madhapurwas the most active, accounting for the entire Grade A new supply during the quarter and also for 67% of the total net absorption. Gachibowliaccounted for 30% of the net absorption and the remaining was in the submarket of Peripheral East. The Information Technology and Information Technology enabled Services (IT-ITeS) sector remained the key driver of demand,contributing 78% of the share in leasing activity.

Due to reduced availability and high anticipated demand going forward, the weighted average rents increased by 2.4% for Grade A developments during the quarter. High demand from occupiers coupled with vacancy rate of under 2% pushed rents up by 5.1% quarter-on-quarter in the submarket of Suburban Madhapur.

outlook

Net absorption is likely to increase as approximately 2.4 million square feet (msf) of Grade A pre-commitments are scheduled to get absorbed in the next quarter. However, vacancy levels may increase due to 3-4 msfof new supply.

QUICK FACTS ABOUT

  • Current Population Current Population10.1 MN
  • Metro & Airports Metro & AirportsCONNECTIVITY
  • International InternationalHEALTHCARE
  • Per Captia income Per Captia income$5,063
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