Hyderabad's real estate growth rapidly expands beyond its core hubs, with peripheral areas emerging as the city's new growth frontiers. Fueled by prominent upcoming infrastructure projects such as the Metro Phase II extension, proposed Regional Ring Road (RRR) and industrial corridors, Hyderabad's peripheral areas hold immense growth potential in the coming years. Additionally, supportive government policies such as Information & Communication Technology 2.0, Micro, Small and Medium Enterprises (MSME) policy, Data Center policy, etc., a conducive business environment, and relatively affordable real estate price points are set to make Hyderabad's peripheries increasingly attractive for businesses and investors.
While established hotspots in the West & Central Hyderabad will continue to drive real estate activity, peripheral areas, including North, South, East and West peripheries, are expected to account for 12-15 per cent of Hyderabad's Grade A office stock and 5-10 per cent of annual office space demand in the next 3-5 years, according to Colliers' latest report. The residential market is also set to witness significant traction, with property prices in the peripheral areas projected to rise 10-20 per cent over the next 3-5 years.
While existing established markets in Hyderabad, such as HITEC City, Raidurg, Kondapur, Gachibowli, Nanakramguda, etc., will continue to drive the office market, peripheral areas are likely to increasingly complement established office micro markets in the next few years. Emerging areas in the city's periphery are likely to account for 20-25 per cent of Hyderabad's Grade A new supply, significantly up from a current share of less than 5 per cent. Moreover, areas including Kokapet, Shamshabad, Uppal and Pocharam are expected to see a notable rise in Grade A space uptake. Resultantly, peripheral micro markets can contribute up to 10 per cent of Hyderabad's annual leasing activity in the next 3-5 years. Additionally, Grade A stock in the peripheral areas can increase to 20-25 million sq ft in the next few years from around 13 million sq ft. With heightened demand, average rentals across the four peripheral micro markets can rise further by 5-15 per cent in the near-mid-term.
Driven by proximity to established IT hubs in West Hyderabad and anticipated infrastructure upgrades in Corridor 5 of Metro Phase II, peripheral areas like Kokapet & Neopolis can witness spillover office space demand in the next few years. Interestingly, most of the upcoming supply in the micro market already holds a pre-LEED certification. Grade A office space demand & supply in West Periphery are projected to grow multifold times. Consequently, we can anticipate Grade A office stock in the micro market to double up and reach close to 22 million sq ft in the next 3-5 years.
Housing prices in the Western Periphery micro market have surged by over 50 per cent in the last five years, with further increase of 10-15 per cent expected in prominent localities like Kokapet, Neopolis, Nalagandla, etc. While upscale residential developments will continue to focus on these areas, affordable & mid-segment housing will gain larger ground in Tellapur, Lingampally, Bandlaguda and Miyapur.
Within the South Periphery micro market, areas like Shamshabad and adjoining localities such as Kothur & Shadnagar are primed for industrial & warehousing growth, benefiting from manufacturing clusters near Rajiv Gandhi International Airport (RGIA), the upcoming airport metro connectivity and proposed Hyderabad-Bengaluru Industrial Corridor.
The Data Center market in Hyderabad will likely see robust growth in the coming years driven by the State Data Center policy and the updated Information & Communication Technology policy. Leading operators have already announced their expansion plans and will likely set up more than 350 MW of Data Center capacity in the South Periphery micro market in the next 3-5 years.
The upcoming Corridor 8 of the Phase II metro project and the proposed Hyderabad - Warangal Industrial Corridor are likely to spur residential real estate of the East Periphery micro market across housing categories, including plotted development and luxury villas. Areas such as Uppal, Pocharam, Nagole, Hayath Nagar, LB Nagar, etc., will continue to see strong housing demand amidst improved connectivity and price arbitrage of 40-50 per cent compared to central areas of the city.
Existing connectivity to Warangal & Vijayawada and the upcoming industrial corridor will likely fast-track greenfield project development and catalyse demand for warehouses, logistics hubs, and manufacturing units near Pocharam, Ghatkesar, Rampally, etc. Ancillary industry development in the EV sector can also add to the warehousing demand over the next few years.
The North Periphery micro market, led by proximity to existing industrial hubs in Medchal, Kompally, and Shamirpet and proposed infrastructure projects such as the Regional Ring Road and Hyderabad-Nagpur Industrial Corridor, will drive demand for Grade A warehouses in the long term. The micro market will continue significantly contributing to Hyderabad's industrial & warehousing demand driven by Third-party Logistics (3PL), retail and electronics segments. Additionally, with the influx of state-of-the-art warehouses, supply-side constraints can be mitigated largely over the next 3-5 years.
The North Periphery micro market, driven by its proximity to Genome Valley and key R&D clusters, has the potential to complement the city's life sciences and pharmaceutical industry. Real estate requirements and investments for innovation, research, manufacturing centres, and 'plug & play' laboratories are expected to rise further in the coming years. Overall, nascent alternative segments such as life sciences can witness quantum growth over the next few years, backed by anticipated segment-specific policies and incentivisation of dedicated manufacturing clusters.
