Hyderabad’s office leasing market hit a remarkable 13.1 million square feet of gross absorption in 2024, capturing a 17% share of India’s top six cities, according to Savills India. This surge in demand underscores Hyderabad’s growing appeal as a prime business destination, driven by strong performances across various sectors.

The IT-BPM sector continued to dominate, accounting for 50% of total leasing, followed by Healthcare and Pharma (16%), Flexible Workspaces (14%), and BFSI (7%). Large-scale deals of 100,000 square feet or more contributed to 53% of the leasing activity, reflecting a 46% year-on-year increase. This trend highlights the increasing preference for larger, high-quality office spaces as businesses expand.

The SBD I micro-market emerged as the dominant area, contributing 65% of Hyderabad’s total leasing activity. Key locations like Raidurg, Hi-Tech City, and Madhapur remained hotspots for leasing transactions, with Nanakramguda in SBD II also seeing notable activity, particularly due to the addition of new supply.

The IT-BPM sector’s dominance was solidified by a two-fold increase in absorption levels compared to the previous year, while the Healthcare and Pharma sectors also showed impressive growth. In fact, the average deal size in these sectors rose by 58%. Flexible Workspaces accounted for 1.8 million square feet, while BFSI leased 1.1 million square feet.

Grade-A office spaces in prime locations, especially within SBD I, remained highly sought after. Non-SEZ projects dominated new supply, representing 83% of the developments, with SBD II making up 73% of recent completions. This shift in supply trends signals the growing importance of non-SEZ properties in Hyderabad’s commercial real estate landscape.

Leasing activity was primarily driven by large deals, although mid-sized transactions also contributed significantly. The demand surge across IT-BPM, Healthcare, Pharma, and Flexible Workspaces has solidified Hyderabad’s position as a preferred business hub in India.

The city’s vacancy rate remained steady at 22% by the end of 2024, with premium-grade buildings in SBD I maintaining a low vacancy rate of under 10%, a clear indication of the strong demand for high-quality office spaces despite broader market conditions.

Rental prices in Hyderabad also saw a sharp rise, with average rents increasing by 24% annually. Developments in SBD I experienced an even steeper hike of 26%, while city-wide rent increments ranged between 19% and 22%, driven by the strong demand for premium office spaces.

Sarita Hunt, Managing Director of Bengaluru and Hyderabad at Savills India, commented, “Hyderabad’s office leasing market has demonstrated remarkable resilience and growth, securing the second spot among India’s top leasing markets. With robust infrastructure and a strong supply of Grade-A assets, the city is well-positioned for sustained momentum, with flexible workspaces and GCCs continuing to drive future demand.”

Looking ahead, the city’s commercial real estate market is set to maintain its upward trajectory. With an anticipated 12 million square feet of leasing activity in 2025 and a substantial 15 million square feet of new supply, Hyderabad is positioned to meet the evolving needs of businesses and continue strengthening its place as a leading business hub in India.