Hyderabad posted 2.62 million sq ft in leasing, doubling YoY. Net absorption hit 1.82 million sq ft, led by Healthcare, BFSI, and IT. Madhapur saw the most activity and rent growth. Vacancy held at 23.1%. A large pipeline and Metro expansion support long-term growth, especially in core micro-markets.
Hyderabad’s office market had a robust start to 2025, clocking 2.62 million sq ft in gross leasing volume (GLV)—an impressive 111% year-on-year increase. Net absorption stood at 1.82 million square feet, driven by a surge in large-format deals from sectors such as healthcare, Pharma, and BFSI. However, city-wide vacancy remains elevated at 23.1%, owing to high inventory levels and selective occupier demand.
Larger Deals and Sectoral Demand Drive Leasing
Larger transactions shaped leasing activity in Q1, many exceeding 100,000 sq ft. Healthcare & Pharma emerged as Hyderabad’s top-performing sector, contributing 32% of GLV, followed by BFSI and IT-BPM.
- Top sectors:
- Healthcare & Pharma: 32%
- BFSI: 26%
- IT-BPM: 19%
- Key submarket:
- Madhapur dominated with 1.4 million sq ft of leasing, accounting for 55% of the city’s total.
Fresh leasing accounted for the bulk of activity, reaffirming Hyderabad’s position as a preferred market for large occupiers seeking cost-effective, scalable workspaces.
Limited Supply in Q1, Vacancy Stable but High
Hyderabad witnessed a low supply quarter, with just 1.32 million sq ft of new completions in Q1. This supply came exclusively from Phoenix Equinox T2 in Madhapur. While the restricted new supply helped moderate the vacancy trend, the city’s vast inventory base kept overall vacancy at 23.1%.
- City inventory: 112.9 million sq ft
- Submarket vacancy:
- Madhapur: 14.4% (tightest)
- Peripheral West: 41.8% (highest)
- Total completions in Q1: 1.32 million sq ft (Madhapur only)
Madhapur remains the city’s most in-demand micro-market, characterised by strong demand, limited new supply, and ongoing infrastructure growth.
Rents Continue to Firm Up in Core Markets
City-wide stock-weighted average rents rose to ₹82.62/sq ft/month, supported by higher-quality completions and firm landlord pricing in core submarkets.
- Madhapur rents: ₹91.73/sq ft/month (highest in the city)
- Peripheral East: ₹66.50/sq ft/month
- Peripheral West: ₹61.00/sq ft/month
Madhapur led rental growth due to the scarcity of Grade A options and growing interest from global occupiers.
Key Deals Reflect Stronger Corporate Commitments
Foremost leasing transactions during the quarter highlighted Hyderabad’s appeal to enterprise occupiers:
- Micron Technology – 550,000 sq ft in Suburban (Gachibowli)
- P&G Financial Services – 300,000 sq ft in Suburban (Kondapur)
- Capgemini – 150,000 sq ft in Suburban (Gachibowli)
All these deals were for fresh leases, reinforcing Hyderabad’s position as a preferred market for expansion.
Outlook
Hyderabad is set to add over 4 million sq ft of office space in the next 12–18 months. With infrastructure projects like Metro Phase II advancing, connectivity and occupier confidence are expected to improve further. Core submarkets, such as Madhapur, will likely retain their demand edge. A healthy pipeline of quality supply and improved infrastructure will support Hyderabad’s office growth in 2025. While overall vacancy will remain elevated in peripheral zones, core areas like Madhapur may see further tightening. Rents are expected to hold or rise selectively in demand-heavy locations.
