Hyderabad: Hyderabad’s office market has exhibited signs of sustained recovery with net absorption increasing by 83 per cent in fourth quarter of 2020, according to a report by JLL Research.
The net absorption has continuously increased over the past three quarters. In Q4, net absorption stood at 2.83 million square feet, a jump of 83 per cent over the previous quarter.
This was backed by new completions during the quarter getting operational with full occupancy. It is important to note that this is at par with the average quarterly levels witnessed in the historic year of 2019. Hitec City and Gachibowli continued to attract occupiers accounting for a major chunk of the leasing activity, said JLL, a leading professional services firm that specializes in real estate and investment management.
“The city has recorded new completions of 3.72 mnsq. ft, a jump of 12% over the previous quarter. In sync with net absorption, Hitec City and Gachibowli accounted for all of the new completions. New completions as well as net absorption is expected to further increase in the next two quarters as major projects, which have been fully pre-committed are expected to get operational,”said Sandip Patnaik, Managing Director and head, Telangana and Andhra Pradesh, JLL
As the year witnessed occupiers resorting to space and cost optimisation strategies, the vacancy levels in the city continued to rise in Q4 2020. Rentals have largely remained range bound across most of the submarkets in the city during the quarter.
India’s office market continues to recover witnessing a net absorption of 8.27 million sqft, an increase of 52 per cent in Q4 2020 (Oct-Nov-Dec) when compared to Q3. Except for Bengaluru, net absorption of office spaces improved in the other six cities (Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, Pune) according to JLL Research. Hyderabad led the pack with the highest net absorption in Q4 2020. While the southern markets of Bengaluru and Hyderabad accounted for more than 50% of the net absorption in Q4 2020, maximum increase in net absorption (when compared to Q3 2020) was witnessed in Mumbai, Delhi NCR and Chennai. Kolkata also witnessed a strong resurgence albeit on a lower base.
The increase in net absorption was driven by pre-commitments in new completions during the quarter. 56 per cent new completions were already pre-committed. Moreover, office occupiers usually take a longer-term view while making leasing decisions and many occupiers are utilising the current situation to get attractive deals from landlords. While IT/ITeS continues to form a majority proportion, leasing activity is being driven by increased demand for office spaces from sectors such as e-commerce, healthcare and FMCG.