Gross leasing in Q1 reached 3.16 million sq ft, up 25.1% y-o-y

• Hyderabad witnessed gross leasing of 3.16 million sq ft in Q1 2026, up 25.1% y-o-y, albeit down on a q-o-q basis. IT/ITeS led leasing with a 49.2% share, followed by Flex and BFSI with 29.4% and 19.1% shares, respectively.
• Quarterly net absorption in Q1 2026, at 3.09 mn sq ft, was the highest in 16 quarters, underpinning strong expansion-oriented market sentiment. Hitec City led the net absorption with a 52.2% share, followed by Gachibowli contributing the rest.

No new supply recorded during the quarter

• With no new completions recorded during the quarter, the city’s operational stock stands at 143.4 million sq ft.
• With no new completions and improved net absorption, overall vacancy declined to a 10-quarter low of 23.6%, dropping 210 bps q-o-q. Gachibowli and Hitec City witnessed a vacancy drop of 290 bps and 200 bps, respectively, in Q1.

Rents and capital values continue to rise, supported by strong demand and sustained investor confidence

• Rents continued to strengthen, rising by 2.4% q-o-q and 10.7% y-o-y. Stronger q-o-q rental growth was recorded in Hitec City (3.1%), with new transactions being recorded at elevated rents in prominent, high-quality assets.
• Capital values grew at a slightly faster pace than rents in the quarter, with yields across submarkets witnessing a marginal drop of 5 bps.

Outlook: Sustained demand in prime corridors to keep vacancy levels range-bound

• Annual supply of 16-17 million sq ft is expected in the near term, primarily concentrated in Gachibowli, which is likely to face higher headline vacancy levels. Hitec City is expected to maintain lower vacancy rates due to continued demand for quality space.
• Robust market activity is expected to persist due to ongoing demand from various sectors, including GCCs in IT/ITeS, BFSI, the healthcare sector and flexible workspace operators.