Hyderabad: Hyderabad’s office market is entering its next growth phase, backed by steady leasing demand, improving vacancy trends, and consistent rental appreciation, according to ICRA. The city is expected to see about 18–19 million square feet of new Grade-A office supply over the late FY2026–FY2027 period, with nearly a quarter of the upcoming space already pre-leased—an indicator of sustained occupier confidence despite global economic uncertainties.
Leasing activity has remained resilient across India through 9M FY2026, and Hyderabad has been among the stronger performers. During the period, the city added 8.4 msf of fresh Grade-A space, while net absorption stood slightly higher at 8.5 msf, largely driven by continued demand from IT-BPM and BFSI occupiers. As a result, vacancy levels have eased to around 17 percent as of December 2025, improving from the highs seen a year earlier.
ICRA expects market fundamentals to remain stable even as new supply enters. Occupancy levels are projected to hold in the range of 82.5–83 percent by March 2027, supported by ongoing leasing momentum and a diversified occupier base.
Hyderabad’s share in India’s Grade-A office landscape has also expanded steadily. As of December 2025, the city accounted for roughly 16 percent of total stock across the top six markets, with Hitec City/Madhapur, Gachibowli, and the Financial District continuing to anchor supply and demand dynamics. Limited upcoming supply in Hitec City is likely to keep vacancies contained there, while the other major micro-markets are expected to maintain balanced occupancy trends.
Rental growth has remained gradual but consistent. Average rents across key micro-markets have risen at a 3–4 percent compound annual pace over the past five years, and a similar year-on-year increase is anticipated through FY2026 and FY2027. Over the longer term, Hyderabad’s office stock has grown significantly faster than most peer markets, supported by developer activity and favourable planning policies that have enabled large-scale expansion.
While global macroeconomic developments remain a key monitorable, ICRA believes Hyderabad’s strong leasing fundamentals and steady demand outlook should help the market sustain stable operating metrics in the medium term.
