10% Drop In Hyd Office Space Demand

Hyderabad: Office space market in the city had experienced contrasting dynamics in 2024, with a 10 per cent decline in office space absorption to 5.3 million sft in the second half of the year compared to the same period a year ago, according to Knight Frank India’s latest report on residential and office real estate.

Despite an influx of new supply, the overall vacancy rate in the city has risen from 14.9 per cent in 2023 to 18.3 per cent in 2024, signaling a shift in market conditions.

However, prime locations such as Hitec City continue to show strong demand, with vacancy rates remaining low at 10 per cent. Grade-A office buildings have proven resilient, boasting vacancy rates as low as 2-3 per cent. The Southern Business District (SBD), which includes Hitec City, has remained the focal point of leasing activity, accounting for 93 per cent of all transactions in the latter half of 2024.

Rental rates in Hyderabad have seen a seven per cent increase year-on-year, with the SBD experiencing a sharper eight per cent rise. This surge in rental prices reflects the city’s growing appeal, spurred by ongoing infrastructure development and its business-friendly environment. Hyderabad ended 2024 with office absorption up by 17 per cent year-on-year to 0.96 million square meters, and a record 1.45 million square meters of office space was added -an increase of 139 per cent from the previous year.

The demand for office space is also being fueled by a mix of global corporations and domestic businesses.