HYDERABAD: Already at a high 12% to 15%, the vacancy in Hyderabad’s office space could see a further jump — amid the third wave of Covid-19 — courtesy, a huge flow of new supply added to the sector recently.
According to market data, new supply hit a record high of 11.7 million square feet (sft) in 2021 — the highest ever for the city and a 50% jump over 2020. In 2022, this is likely to peak reaching anywhere between 15 and 20 million sft, thus causing vacancy too to shoot up, say industry insiders.
“But as vacancy rates inch up, it is important to note that the impact is not uniform across sub-markets. The highest addition to the vacant space is primarily coming from Gachibowli and emerging locations such as Kokapet, Nanakramguda,” suggest data compiled by real estate services firm, Cushman & Wakefield.
Pre-pandemic, a dynamic absorption rate in Hyderabad always kept the vacancy levels limited to 4% to 8%. In fact, historical data shows that between 2016 and 2019 offices in Gachibowli had no more than 3% to 4% of vacancy as a healthy stream of IT/ITeS investors made their way into the western corridor. This has changed only in the last two years.
“Office markets were to revive at the end of last year. Though Omicron seems to have deferred, it should stabilise when work-from-office resumes,” said Samson Arthur, branch director (Hyderabad), Knight Frank India.
Agrees, Veera Babu, managing director, Hyderabad and East India of Cushman & Wakefield. “Despite some concerns optimism prevails and the outlook remains bright on the back of robust fundamentals and investment attractiveness. We can expect the office market to rebound in 2022-23 and will be more robust as witnessed post second wave,” he said.
