Hyderabad secures second position in office leasing in 2024, reaches 13.1 million sq ft of gross absorption

Hyderabad: Though Bengaluru topped the list, Hyderabad has surged ahead of the others and secured the second spot in India's office leasing market, experiencing a remarkable 52 per cent growth in 2024.

According to a report released on Thursday by Savills India, a global real estate advisory firm, Hyderabad’s office leasing market reached an impressive 13.1 million sq ft of gross absorption in 2024, securing a 17 per cent share among the top six cities in India.

The IT and BPM sectors led the market, accounting for 50 per cent of total leasing, followed by Healthcare and Pharma at 16 per cent, Flexible Workspaces at 14 per cent, and BFSI at 7 per cent.

Large-scale deals (100,000 sq ft or more) made up 53 per cent of overall leasing, reflecting a 46 per cent year-over-year increase.

Key areas such as Raidurg, Hi-Tech City and Madhapur, were hotspots for leasing transactions, with Nanakramguda in Secondary Business District (SBD) II also witnessing significant activity, particularly with new supply additions.

The IT-BPM sector maintained its dominance with a two-fold increase in absorption levels from the previous year. Healthcare and Pharma showed impressive growth with large space take ups, with the average deal size going up by 58%. Flexible Workspaces recorded 1.8 million sq. ft., followed by BFSI, which accounted for 1.1 million sq. Ft.

Grade-A office spaces in Hyderabad continued to attract significant demand, especially in prime locations within SBD I. Non-SEZ projects dominated the new supply, representing 83 per cent of developments, with SBD II accounting for 73 per cent of recent completions.

The report also said that the leasing activity surged with large deals driving the majority of transactions, complemented by mid-sized deals contributing significantly

The overall vacancy rate in Hyderabad remained stable at 22 per cent by the end of 2024. Premium quality buildings in SBD I maintained a vacancy rate of under 10 per cent, reflecting strong demand for high-grade office spaces, despite broader market conditions.

Hyderabad witnessed a 24 per cent annual increase in average rentals, with select developments in SBD I experiencing a 26 per cent rise.

City-wide rent increment largely ranged between 19 per cent and 22 per cent, driven by demand for premium office spaces.

Commenting on the Hyderabad Office Market, Savills India, Managing Director, Bengaluru & Hyderabad, Sarita Hunt, said “Hyderabad’s office leasing market has demonstrated remarkable resilience and growth, securing the second spot among India’s top leasing markets with the absorption reaching a notable 13 Mn SFT in 2024.

"The city’s vibrant micromarkets, particularly SBD I is a preferred destination for occupiers, driven by high-quality infrastructure and robust supply of Grade A assets. The IT-BPM sector continues to dominate, while the Healthcare, BFSI and Pharma sectors are emerging as significant contributors.

"As we look ahead, Hyderabad’s commercial real estate landscape is poised for sustained momentum, with flexible workspaces and GCC’s driving future demand. With an anticipated 12 million sq. ft. of leasing activity in 2025 and a substantial infusion of 15 million sq. ft. in new supply, the city is well-positioned to meet the evolving needs of businesses and strengthen its position as a leading business hub in India.”