Hyderabad’s commercial real estate market posted strong growth in the first quarter of 2025, with average office rents rising by 9%, according to the latest report from Knight Frank India. The uptick reflects continued momentum in the city’s office leasing sector, driven mainly by third-party IT service firms and Global Capability Centers (GCCs).

Office leasing activity was dominated by IT service providers, who snapped up 1.9 million square feet of space, accounting for nearly half (49%) of the total transactions. GCCs followed closely with 1.6 million square feet, making up 41% of leasing volume. Flexible workspaces contributed 6% with 0.26 million square feet, while India-focused businesses occupied just 0.1 million square feet or 4%.

Despite global headwinds, Hyderabad remains a magnet for large-scale occupiers, with demand concentrated in the tech and enterprise segments. The city’s infrastructure, talent pool, and cost advantage continue to make it a preferred destination for multinational firms expanding their back-end operations through GCCs. The steady growth in flexible workspaces also signals a healthy adoption of hybrid work models among newer startups and SMEs.

In contrast, the residential market saw a mild slowdown. Sales dropped by 1% year-on-year, totalling 9,459 units in Q1 2025. New project launches also dipped 4% to 10,661 units. Still, property prices remained upward, with the average price per square foot increasing 9% year-on-year to ₹6,164, underscoring sustained interest in homeownership and investment in real estate.

Interestingly, despite the broader sales dip, the premium housing segment witnessed strong demand. Homes in the ₹20–50 million range saw a 14% year-on-year rise in sales, highlighting a shift toward high-value properties. The mid-to-premium segment (₹10–20 million) led in volume, with 4,257 units sold, although it experienced a minor 1% decline.

On the flip side, the affordable housing category (below ₹5 million) took a hit, with sales falling by 38%. The ₹5–10 million bracket saw modest growth of 3%, while ultra-premium properties in the ₹50–100 million and ₹100–200 million ranges witnessed declines of 6% and 4%, respectively.

Hyderabad’s real estate outlook 2025 appears optimistic on the commercial front, with office demand from IT and GCCs expected to stay strong. While the residential market is adjusting to price pressures and changing buyer preferences, the growing appetite for premium housing indicates a maturing urban demographic with evolving lifestyle aspirations.

As corporate occupiers continue to expand and upgrade their workspace strategies, and buyers show renewed interest in upscale homes, Hyderabad is well-positioned to remain a key player in India’s flexible office and real estate ecosystem.