Why Hyderabad is a magnet for MNCs?; iSprout, WeWork, Awfis at brisk

Hyderabad has solidified its status as a top choice for multinational companies establishing their global capability centres (GCCs). According to a report from Knight Frank India, the city has seen a significant increase in office space demand from these entities. In fact, 60% of Hyderabad’s office space transactions in the first half of 2024 were attributed to GCCs.

The report highlights a dramatic surge in office space acquisitions by GCCs in Hyderabad, growing from a mere 0.2 million sq ft in the first half of 2023 to an impressive 3 million sq ft in the same period in 2024. This underscores the city's burgeoning role as a hub for global business operations.

Knight Frank India's report indicates that nearly one-third of all office space acquired by GCCs in India was located in Hyderabad. Another real estate consultancy, CBRE, also noted a significant increase in office space leasing in the city, rising from 3.4 million sq ft in the first half of 2023 to 4.4 million sq ft in 2024. The total supply of office space during the January-June 2024 period stood at 4.6 million sq ft.

Key sectors driving the office space absorption include life sciences (27%), research, consulting, and analytics (27%), and technology firms (17%). The average rental rates in the city have increased by 4%, reaching ₹68 per sq ft per month.

The information technology sector, which faced a slowdown in 2023 due to an economic downturn in Western markets, has shown signs of recovery in 2024. There has been a notable rise in hiring within areas such as artificial intelligence and machine learning.

Office space completions saw a year-on-year increase of 300% in the first half of 2024, reaching 5 million sq ft. New supply has been introduced in key areas such as Gachibowli, Hitec City, and the Financial District.

Flex space operators have also been active, leasing 15% of the total office space in Hyderabad. Companies like iSprout, WeWork, Awfis, and The Headquarters have been particularly prominent, increasing their leased office space by 45%, from 0.52 million sq ft in 2023 to 0.75 million sq ft in 2024.

In the residential sector, sales have surged by 21% on an annual basis, with 18,573 units sold in the first half of 2024. Around 22,200 new residential units were launched this year, with 67% of these new launches catering to the premium segment priced over ₹1 crore.

Joseph Thilak, National Director for Occupier Strategy and Solutions at Knight Frank India, remarked, "The government's ongoing investments in key infrastructure projects, including the Hyderabad Metro Rail and the Regional Ring Road, are anticipated to enhance the city's appeal as an attractive place for both living and working. These developments are expected to further stimulate demand for housing in Hyderabad."