Hyderabad commercial real estate sees 172% growth in last five years

According to the report by Knight Frank India, Hyderabad is one of the few cities that recorded positive rental growth of 2% year-on-year (YoY) in Q3 2020.
Minister KTR
Minister KTR
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According to a report by Knight Frank India, Hyderabad city has seen a record growth of 172% in the commercial real estate market between 2014 to 2019. According to the research report titled 'WFH, #WorkfromHyderabad', in terms of commercial market, Hyderabad is one of the few cities that recorded positive rental growth of 2% year-on-year (YoY) in Q3 2020.

Residential prices have grown by a significant 5.3% Compounded Annual Growth Rate (CAGR) in 10 years, and even during the present COVID-19 challenge, rents continue to remain steady.

Hyderabad is among the only two metro cities, the other being Bengaluru, that have not seen a fall in residential prices despite the ensuing market uncertainties and low sales, says the report released in Hyderabad.

According to the report, Hyderabad witnessed a remarkable growth in corporate activity over the last five years and jumped from a rank of sixth in 2014 to second in 2019 in terms of annual office space demand across key cities in the country. Hyderabad Airport's share of passenger traffic handled in the country has increased from 5.5% in 2014-15 to 6.4% in 2019-20.

According to the report, since the formation of the state, Telangana's real Gross Domestic Product (GDP) has significantly grown to Rs 6.63 trillion in 2019-2020 from Rs 4.16 trillion in 2014 with a CAGR of 8.08% which is considerably higher than the national real GDP CAGR of 5.7% for the same period.

The driver of the state's economic growth has been the tertiary sector (services sector) dominated by the Information Technology (IT) services. Telangana IT/ITeS exports contributed revenue of Rs 1.25 trillion in the year 2019-2020, with 18% annual growth against Rs 1.9 trillion in 2018-19. The city is the second-largest contributor to the revenue from IT exports in the country and is home to global bigwigs like Google, Amazon, Microsoft, and Facebook.

The report also highlighted that, as the conventional real estate asset classes struggle to get back on their feet on account of the ongoing pandemic, two new asset classes are seeing a sudden spurt in demand - data centres and warehouses. The forced shift to e-commerce to enable contactless business and to fulfil physical distancing norms has created a need for more warehouses and logistic centres across the country.

Hyderabad, being the distribution hub in Telangana, is also seeing increased traction in the warehousing segment. Telangana is among the very few states in India to have an independent data centres policy, as early as 2016. The state has already garnered an investment of Rs 25,000 crore for data centre mega projects. Recently, Flipkart opened its data centre in Hyderabad, second after Chennai, to support its core operations.

Telangana Industry and Information Technology Minister K T Rama Rao inaugurated the new office in Dallas Centre, Knowledge City, located in the premier IT-Hub.

Rama Rao noted that Hyderabad has transformed into the new tech hub of India in the last six years. IT sector presence in the city has also transitioned from mere backend operations to primary production and product development services.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said besides IT/ITeS, the Telangana government has increased impetus on industries such as pharmaceutical and life sciences, food processing, electronics, and textiles in a bid to diversify its economic interests.

In the last four years, Telangana attracted investments of over Rs 10,000 crore in the life sciences industry. To give a further boost to this industry, the state government has released the Life Sciences Policy of Telangana and launched vital projects such as Genome Valley 2.0, Hyderabad Pharma City, and Medical Devices Park in Sultanpur.

Samson Arthur, Branch Director - Hyderabad, Knight Frank India said that Hyderabad has been ranked high across categories of living and business. It is now emerging with modern business clusters and holds promise for new industrial ecosystems on the lines of the successful IT sector.

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