COMMERCIAL REALTY OCCUPIER DEMANDS & MARKET DYNAMICS
With business growth, there is an escalating need for office spaces that are designed to bolster employee wellness and productivity through modern amenities and infrastructure, ultimately improving organizational efficiency. Kishore Veeraghattam, Sr. Executive Director, Office Services, Hyderabad, Colliers sharing his observation of Hyderabad market stated, “In 2023, Hyderabad experi enced a significant increase in office living activity, with net absorption reaching 8 million square feet and accounting for a 15% share of India's 58 million square feet. As a result, the supply in Hyderabad has reached 103 million square feet of grade A stock, with an additional 30-35 million an- ticipated within the next 2-3 years. Global corporations' expansion, pri- marily in the tech sector, is fuelling demand for office space in the city. Infrastructure development and the thriving IT industry contribute to a positive outlook for Hyderabad's real estate market. The ongoing metro rail and other projects further enhance growth potential within the city's railway sector.” Sharing methods for optimizing profits within the domain of commercial real estate, Abhijit Banerjee, Co-founder & Partner, Upwisery, said, “India is currently witnessing an immense development of commercial real estate, with nearly 60-62 mil- lion square feet under construction; notably, Hyderabad contributes 8.6 million to this surge. However, while a significant amount of space is absorbed, challenges persist with supply outpacing demand, potentially affecting the market dynamics by 2025. As a consequence, rental yields are under pressure, influencing capitalization rates and causing delays in REIT listings and global fund investments. Despite these pressures, Hyderabad presents lucrative opportunities due to its attractive rents and availability of near-completion properties, suggesting a potential re- vitalization of the investment cycle.” Expressing his thoughts on the projected evolution of the demand-supply dynamics within the office sector market of Hyderabad in the coming years, SP Reddy, Founder & CMD, Terminus Group, ar- ticulated, “Developers often succumb to an illusionary mindset, believing their products will inevitably attract buyers, which can lead to an excess in supply and ultimately harm the market. Despite the robustness of the U.S. job and stock markets, unlike past recessions, there is a concerning mismatch in India's commercial real estate sector, with continuous construction in anticipation of global tenants. We must thoroughly analyse market trends and explore emerging sectors of real estate to ensure sus- tainable development. It's vital for developers to forgo some greed to achieve a more balanced market dynamic, especially as Hyderabad faces impending rental price negotiations.” Elaborating on the various na- scent trends in commercial real estate and addressing the potential impact these developments may have on the broader demand for office space within India, particularly in Hyderabad, Venkat Neelakantan, Global Head of Real Estate and Sustainability Office Transformation at Capgemini, said, “The pandemic has fundamentally altered our work culture. The shift to remote work has brought about significant lifestyle improvements, questioning the sustainability of traditional office spaces. Our firm has embraced a hybrid model that balances company and employee benefits, fostering a robust and attractive work environment. It is crucial to align organizational goals with employee expectations to ensure a successful transformation”. Speaking about the measures being implemented to ensure that facility management strategies in accordance with sustainability practices, Vinitha Kannambroth, Region- al Head, South - IFM Operations, Embassy Services Pvt. Ltd., said, “Embassy Services has integrated sustainability into its facility management strategies in recent years, particularly following the COVID-19 pandemic. Our approach involves conducting a thorough sustainability assessment, developing and executing an ESG-aligned plan, and rigorously measuring outcomes. We leverage advanced technolo- gies like AI for energy, water, and waste management while fostering community engagement to enhance overall sustainability practices. Advisory services on green energy further assist our clients in reducing their carbon footprint, aligning with India's net-zero objectives. Challenges such as initial investment hesitancy and resistance to change are addressed through effective communication and highlighting the long-term en- vironmental and economic benefits of these initiatives.” In contemplating whether the escalating interest in hybrid work configurations in India will establish the core-plus-flex strategies as the preeminent method in office real estate by the year 2030, Anuj Munot, CEO and Founder, UrbanWrk, said, “It's projected that flexible workspac- es will constitute 25-30% of corporate areas, a significant increase from the current 10%. This shift is driven by the cultural trend towards creating workplaces closer to employees' residences, thereby reducing commute times while maintaining office presence. Looking ahead, with govern- mental stability and global practices moving into India, flex spaces are estimated to reach 100 million square feet by 2030, reflecting their growing significance in commercial leasing.” THE EVOLVING WORKSPACES The flexible workspaces are getting facilitated by operators, offering agile solutions for quick scaling and collaborative environments in tradi- tional and novel office space environments. As per Venkat Neelakan- tan, “In today's evolving workspace, organizations are prioritizing flexible spaces that encourage collaboration and adaptability. Office design has shifted to serve these modern needs, ensuring employee safety and foster- ing a culture of innovation.” Expressing his views regarding the prospects of Hyderabad as a viable option for long-term real estate investment, Abhijit Banerjee said, “Despite short-term challenges, Hy- derabad's medium-term prospects appear promising due to diverse eco- nomic drivers including IT, pharma- ceuticals, and industrial growth. The city offers unique advantages with its lack of historical constraints and abundant space for development. Furthermore, the hospitality industry, particularly luxury accommodations, as well as data and science parks, are sectors poised for significant growth.” Underscoring the swift progres- sion of technological innovations, particularly in the realm of artificial intelligence, and its significance for the real estate sector, SP Reddy said, “Artificial Intelligence blends the illusory with reality, encompassing three fundamental components: machine learning, deep learning, and generative AI. Machine learning uses statistical data to make predictions, as with estimating future real estate prices based on historical trends. In industries like healthcare and real estate, the practical application of AI holds the potential to revolutionize by leveraging massive quantities of data for predictive analysis and customer engagement.” Anuj Munot added, “The reality is, office's purpose has changed and whether the design suits that purpose is a question we tend to ask. Flex-spaces is the answer to that question as the work culture itself has changed.” Kishore Veeraghattam concurred, “The well-established are now looking towards flex-spaces to set their initial footprint in a new territory. Flex is becoming part of an investor portfolio as well.” In terms of sustainability consid- erations, according to Vinitha Kan- nambroth shared, “At 71% of Grade A office stock, Hyderabad brings the second-highest green penetration in India. Adoption of advanced technol- ogies like the Internet of Things and Artificial Intelligence enables efficient asset utilization and monitoring. This multifaceted approach—including human behavioural considerations and technological innovation—en- sures the office infrastructure is future-proof and enduring.” The well-established are now looking towards flex-spaces to set their initial footprint in a new territory- Kishore Veeraghattam Colliers Hyderabad presents lucrative opportunities due to its attractive rents and availability of near- completion properties- Abhijit Banerjee Upwisery It's vital for developers to forgo some greed to achieve a more balanced market dynamics and better rentals- SP Reddy Terminus Group Our firm has embraced a hybrid model that balances company and employee benefits, fostering a robust and attractive work environment- Venkat Neelakantan Capgemini At 71% of Grade A office stock, Hyderabad brings the second-highest green penetration in India- Vinitha Kannambroth Embassy Services Pvt. Ltd Flex spaces are estimated to reach 100 million square feet by 2030 in India, reflecting their growing significance in commercial leasing- Anuj Munot UrbanWrk
Tags : HYDERABAD SIGNIFICANT TRANSFORMATION COMMERCIAL REAL ESTATE SECTOR OCCUPIER DEMANDS MARKET DYNAMICS.