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IT sector prime driver of overall leasing activity in the Hyderabad: CBRE

As IT firms reconsider the widely acclaimed work-from-home approach and begin calling employees back to the office, firms in Hyderabad have begun to acquire office space on lease to accommodate employees in major centers.

As a result, according to a CBRE South Asia report, the IT sector has become a prime driver of overall leasing activity in the city. Hyderabad’s office space absorption in the fourth quarter (October – December) of 2022 was 8.2 million square feet (sft), with technology corporations accounting for 35%, banking and finance (14%), and engineering and technology (14%). (12 percent). On the other hand, supply was at 3.8 million sq ft in the same period.

The IT sector led leasing with a 48% share, followed by non-IT (27%), and SEZs (3%). (25 percent). The share of small-sized deals was high, the report said.   During the months of October to December 2022, three companies – Netcracker Technology, IDFC First Bank, and UrbanDesk – completed significant transactions.

According to the CBRE report, Netcracker Technology leased 200,000 square feet in DivyaSree Tech Ridge P2 (Phase 2), IDFC First Bank leased 1,80,000 square feet in Aurobindo Galaxy, and UrbanDesk leased 1,30,000 square feet in Gowra Palladium (Phase 1).

Based on the report findings, the office sector in India saw gross absorption of 56.6 million sft during 2022, representing a 40% (Y-o-Y) increase, marking the second-highest leasing activity ever after it peaked in 2019 with 65 million sft. Supply crossed 50 million sft during 2022, taking the total office stock in the country to over 827 million sft.

According to the report, Hyderabad, Bangalore, Delhi-NCR, and Mumbai accounted for nearly 75% of annual leasing activity.

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Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The technology sector would continue to drive leasing activity in 2023. The share of leasing by sectors such as BFSI, flexible spaces, engineering, and manufacturing is also expected to increase annually. Global corporates would remain committed to India, attracted by its cost and scale advantages and diversity of talent pool.”

He added that Hyderabad, Bengaluru, and Delhi-NCR would continue to be the most active leasing markets, with continued leasing activity expected in Mumbai, Chennai, Pune, and Kolkata.

Select tier-II and tier-III markets are also expected to retain corporate interest as they seek to locate closer to their talent pool.

 

 

 

 

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