Hyderabad: an emerging multi-asset real estate powerhouse
December 9, 2024 / By Tejaswi Poludasu
Hyderabad has undergone a remarkable transformation in recent years, establishing itself as a pre-eminent multi-asset class real estate hub in India. The city has thrived in the commercial, residential, retail, industrial, and life sciences sectors. This growth is driven by strong economic performance, strategic planning, business-friendly policies, enhanced infrastructure, a skilled workforce, and comparatively affordable property prices.
Infrastructure and policy initiatives: Building a vision for rapid development
The city’s transformation has been bolstered by ambitious infrastructure and policy initiatives over the last decade, which lay a strong foundation for sustained growth in the real estate sector.
Figure 1: Key policies and infrastructure initiatives transforming real estate dynamics in Hyderabad
Source: JLL Research
Multi-faceted growth: Diversifying real estate landscape
Hyderabad’s growth story begins with its booming IT/ITeS sector, which attracts global firms and fosters a vibrant start-up ecosystem. IT/ITeS exports, ranking second in India, reached USD 32 billion in FY 2022-23. The city hosts over 4,000 start-ups, including innovation powerhouses like T-Hub and T-Works.
The office market has grown significantly, representing 15.6% of India’s Grade A office stock and 17% of India’s stock of global capability centres (GCC). Since 2019, the city has added 78.2 million sq. ft. of Grade A office space, contributing 25% to India’s supply, making it the fastest-growing city in India. Hyderabad’s Grade A inventory reached 131.2 million sq. ft., tripling since 2016 and ranking as the fourth largest in India.
The residential market has expanded alongside its commercial sector, with sales doubling and unit launches increasing fivefold over the last five years. The upper-mid and luxury segments lead sales, attracting diverse buyers.
On the industrial front, growth has been equally impressive, with significant expansions in logistics and warehousing, especially near the airport. The warehousing stock has reached 30 million sq. ft., and vacancy rates are expected to decrease from 8-9% to 5%, indicating active absorption in the coming years.
The retail market is steadily growing, with the total stock of Grade A malls standing at 9.86 million sq. ft. and decreasing vacancy rates, signalling healthy absorption.
Hyderabad is also emerging as a preferred location for data centres, boasting 1 million sq. ft. of inventory and 52 MW of operational capacity.
The life sciences sector stands out, attracting global investments. Hyderabad, often referred to as the “life sciences capital,” hosts over 1,500 pharma companies. Genome Valley, a 10,000-acre life sciences park with more than 200 companies, plays a crucial role in the city’s $50 billion pharma industry, which produces one-third of India’s vaccines. The city’s forward-thinking life sciences policy has fostered the development of the pharmaceutical industry, contributing significantly to Hyderabad’s evolution into a multi-asset class city.
Outlook: Pioneering growth and connectivity
Hyderabad’s future looks promising, with substantial growth projected across various sectors. The city is anticipated to add 17-19 million sq. ft. of office space annually until 2026, launching over 100,000 new residential units in the next 3-4 years, and expanding warehousing by 4 million sq. ft. within two years. Major retail players plan to expand their presence in the city, signalling strong investor confidence. Additionally, data centre capacity is expected to increase by 23 megawatts (MW) in the next couple of years.
Upcoming initiatives include Mucherla 4.0, AI City, T-Square, pharma villages, metro expansion with airport connectivity, and the Regional Ring Road. The Integrated Township Policy and Mega Master Plan 2050 aim to strengthen growth, enhance transportation, promote sustainability, and foster economic expansion across sectors. These efforts are making Hyderabad an affordable and sought-after destination in India.
