Hyderabad's Office Space Surplus: Demand-Supply Dilemma

Hyderabad's office space is predicted to face a significant vacancy rate by March 2026, with fresh supply surpassing demand. The city's unique FSI rule enables large-scale speculative construction, leading to a demand-supply mismatch. Despite this, IT, BFSI, and flex spaces drive potential absorption.

Hyderabad is set to face a significant office space vacancy by March 2026, with fresh supply outstripping demand, according to ICRA. The occupancy rate could drop to 75.5-76% for Grade A offices from 86% in March 2023.

The supply growth in Hyderabad's market stood at an impressive 14% CAGR from FY2017 to FY2024, compared to 7% for India's top six markets. Currently accounting for 15% of India's available office space, this figure is expected to rise to 17% by March 2026.

Industry experts attribute the rise in office space to growing interest from GCCs and domestic companies, with key demand drivers being IT, BFSI, and flex spaces. Despite rising vacancies, Grade A offices with sustainability and technology features are likely to attract occupiers and command premium rents.

(With inputs from agencies.)