M A R K E T B E AT

HYDERABAD
Office Q1 2021

Market driven by flex space operators

13.0 % VACANCY (Q1 2021)
4.0 msf NEW COMPLETIONS (Q1 2021)
In Q1 2021, Hyderabad’s office market has continued to sustain the recovery in leasing activity witnessed towards the end of 2020. Gross
leasing was over 1.0 msf, up by 15% q-o-q, but lower by nearly 40% on an annual basis. More than 3/4ths of the total leasing was recorded in
Madhapur while flexible workspaces accounted about 30% of the total leasing activity (on par with Q4 2020) suggesting a steady growth in
demand for flexible workspaces. Skootr, one of the major co-working operators in the country has entered the city leasing nearly 300,000 Sf in
Madhapur. CAPEX savings, shorter lock-in periods, possibility to scale up / down as per business needs has made flex an integral part of space
strategies for most occupiers in recent months. About 2500 seats have been signed with various co-working operators across the city during Q1.
Nearly 870,000 msf of term renewals were also recorded in Q1. Nevertheless, occupiers in general continue to remain cautious and some of
them have deferred expansion / relocation / consolidation plans in the short term.

0.6 msf NET ABSORPTION (Q1 2021)
MARKET INDICATORS OVERALL
Q1 2021
Rise in vacancy driven by supply surge
Overall vacancy rate at the city level was recorded at 13.0% in Q1, a 450 plus bps rise on a quarterly basis, reaching a double digit nearly after 6
years. Vacancies were largely driven by new supply which is yet to be leased along with larger relocations and consolidations which also
contributed partly to the rising vacancy in select properties. New supply of 4.0 msf (of which nearly 87% is vacant) was recorded during the
quarter. Net absorption was about 620,000 msf, a 60% plus decline q-o-q as tenants continue to recalibrate space strategies for the short term.
Considering a gradual recovery in demand and pre-commitments in upcoming supply, we expect vacancy rate to remain at 15-18% levels over
the next 15-18 months.

Q1 2020 Q1 2021
12 month Headline rents are largely stable in Q1, new supply to keep rentals under check in the short term
Forecast
Despite rising vacancies both in Madhapur and Gachibowli, headline rents have largely remained stable over the last 3 months. Given the higher
Overall vacancy levels and continued addition of new supply, landlords continue to offer flexibility on the lease terms and rents areexpected to witness
5.5% 13.0% a downward pressure in the short to medium term, making it an occupier driven market. Tenants with sizeable requirements willcontinue to
Vacancy
enjoy flexibility for another 12- 18 months. From a long-term perspective, such flexibility makes the market even more competitive even as
Weighted Average vacancy remains in double digits.
Net Asking Rents 62.0 61.00
(INR/sf/month)

YTD Net 1,799,879 624,321

Absorption (sf) NET ABSORPTION & NEW SUPPLY OVERALL VACANCY & WEIGHTED AVERAGE ASKING RENT
12.0
80.0 14.00%
10.0 12.00%
8.0 60.0 10.00%
6.0 8.00%
40.0
6.00%
4.0
20.0 4.00%
2.0 2.00%
0.0 0.0 0.00%
2016 2017 2018 2019 2020 2021F

NET ABSORPTION (MSF) NEW SUPPLY (MSF) WEIGHTED AVERAGE RENTS (INR/SF/MONTH) OVERALL VACANCY(%)
M A R K E T B E AT

HYDERABAD
Office Q1 2021
MARKET STATISTICS

GRADE A WTD. AVG. RENT*

YTD GROSS PLANNED & UNDER
INVENTORY YTD CONSTRUCTION YTD NET
SUBMARKET VACANCY RATE (%) LEASING CONSTRUCTION
(SF) COMPLETIONS (SF) ABSORPTION (SF)
ACTIVITY# (SF) (SF)^
INR/SF/MO US$/SF/YR EUR/SF/YR

Madhapur 47,471,455 8.7% 846,000 11,145,135 1,885,030 578,716 71.00 11.70 9.74

Gachibowli 18,416,788 19.6% 197,655 13,665,000 2,209,923 137,085 61.00 10.05 8.37

Peripheral East 2,258,000 35.8% 0 0 0 -52,000 38.60 6.36 5.29

TOTAL## 69,698,064 13.0% 1,050,657 25,312,135 4,094,953 624,321 61.00 10.05 8.37

The report highlights Grade A details only. Certain indicators are historically corrected by addition / deletion of older / refurbished projects as per grade A classification and accounting for
changes in b uilt-up / leasab le area b esides adjusting tenant leases to reflect accurate market conditions.
^ Includes planned & under construction projects until 2023 Kapil Kanala
Net ab sorption refers to the incremental new space take-up
*Weighted average asking rental rates for vacant spaces that provide core facility, high -side air conditioning and 100% power b ack up Senior Associate Director, Research Services
* Term Renewals recorded during Q1 - 0.87 msf. Total Gross Leasing activity in Q1 2021 including term renewals – 1.9 msf +91 40 40405555 / kapil.kanala@ap.cushwake.com
## Totals include a smaller portion of grade A properties outside the ab ove-mentioned submarkets.
IT-BPM – Information Technology – Business Process Management, BFSI - Banking, Financial services and Insurance
Key to submarkets:
Madhapur includes Madhapur, Kondapur, Raidurg; Gachib owli includes Gachib owli, Nanakramguda, Manikonda Peripheral East includ es Pocharam and Uppal;
US$ 1 = INR 72.8 € 1 = INR 87.5
Numb ers for the first quarter are b ased on market information collected until 25 th Mar 2021

KEY LEASE TRANSACTIONS Q1 2021

PROPERTY SUBMARKET TENANT SF TYPE
DivyaSree Orion B # 3 Suburban (Madhapur) Salesforce 261,484 Pre Lease

BSR Tech Park Tower - 1 Suburban (Gachibowli) MassMutual 68,592 Fresh lease

Salarpuria Sattva Parcel - 4 Suburban (Madhapur) Goldman Sachs 106,408 Fresh lease
cushmanwakefield.com
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
SIGNIFICANT PROJECTS PLANNED AND UNDER CONSTRUCTION Cushman & Wakefield (NYSE: CWK) is a leading global
real estate services firm that delivers exceptional value for
PROPERTY SUBMARKET MAJOR TENANT SF COMPLETION DATE real estate occupiers and owners. Cushman & Wakefield is
Salarpuria Knowledge Capital Block -III Suburban (Gachibowli) Google 1,200,000 Q2 2021 among the largest real estate services firms with
approximately 51,000 employees in 400 offices and 70
Raheja Commerce Zone (Phase 1) Suburban (Madhapur) Qualcomm 735,903 Q3 2022 countries. In 2018, the firm had revenue of $8.2 billion
across core services of property, facilities and project
One-West Suburban (Gachibowli) ADP 1,100,000 Q3 2021 management, leasing, capital markets, valuation and other
services.
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contained within this report is gathered from multiple sources b elieved
to b e reliab le. The information may contain errors or omissions and is
presented without any warranty or representations as to its accuracy.