EVOLVING SHIFTS IN HYDERABAD COMMERCIAL REALTY

Over the past decade, Hyderabad's commercial real estate sector has experienced significant growth, establishing itself as one of the leading business hubs in the country. Maintaining high property development standards, leveraging IoT and data-driven facility management, and demonstrating ESG compliance are critical factors for long-term value creation.

The city's progress is evident in the growing number of Global Capability Centers (GCCs) choosing Hyderabad over other locations, driven by the availability of premium commercial spaces and social amenities. While sustainability remains a key area for future focus, Hyderabad continues to be a thriving hub for businesses and professionals alike. As per Kishore Veeraghattam, Managing Director - Hyderabad, Colliers, over the past decade, office space absorption in Hyderabad has significantly increased from 4 million square feet to 12.5 million square feet, further supported by the expansion of Global Capability Centers (GCCs), which accounted for 4.5 million square feet in 2021. Hyderabad's infrastructure development, including metro connectivity and well-planned road networks, have played a crucial role in accelerating real estate expansion. Currently, the city's total office stock stands at 110 million square feet, with 70 million square feet concentrated in Hitech City and 40 million square feet in Nanakramguda and Kokapet.

For sustained tenant retention, developers must adopt a hospitality-driven mindset to enhance operational efficiency and user experience. Kishore Veeraghattam.

Elaborating on the user experience, technology, and digital transformation influence, as well as the compliance and legal aspects of commercial real estate projects, Bala Prasad Peddigari, Chief Innovation Officer, Technology, Software and Services Business Group, Tata Consultancy Services, said, "The industry has undergone a dramatic transformation, shifting its focus toward user experience rather than just square footage. Developers now emphasise well-centred designs, smart building ecosystems, and automation, integrating sustainability features such as water conservation and adaptive lighting. This shift is enhancing occupancy rates, tenant retention, and overall satisfaction.

Hyderabad presents immense potential in multiple industries, requiring investment in office spaces and supporting infrastructure for expansion. Bala Prasad Peddigari.

With the rise of hybrid work and co-working models, flexible lease structures are now essential, allowing for shorter lease terms while maintaining client goodwill. Community engagement initiatives, such as fostering social connections between employees and local communities, play a vital role in modern real estate strategies. Sharing his view on how Hyderabad's office market will perform in 2025 and which sectors will drive its sustained growth, Venkat Neelakantan, EVP & Group Head - Corporate Real Estate Services, Capgemini India, stated, "Hyderabad has a highly skilled talent pool across various industries, supported by numerous educational institutions that shape industry-ready professionals. The city's success in attracting GCCs is largely driven by its robust real estate sector, which provides high-quality office spaces that meet corporate expectations. Strong infrastructure and connectivity have further enhanced business growth, ensuring efficient commutes despite increasing urbanization."

When a million square feet of commercial space is developed in a region, historical absorption trends indicate that businesses and talent will naturally be drawn to that area. The demand cycle follows a natural progression, beginning with job creation, leading to housing needs, and subsequently driving growth.

Hyderabad continues to attract businesses due to its strong talent pool and infrastructure, positioning itself to accommodate future growth and opportunities. Venkat Neelakantan.

Hyderabad's Key Investment Hubs

1. HITECH City: Known as the "Cyberabad" of Hyderabad, HITECH City hosts leading tech giants and a thriving startup ecosystem. The rapid growth of IT companies has increased demand for commercial properties, making it a prime destination for investors seeking high rental yields and strong property appreciation.
2. Gachibowli: Located near the Financial District and HITEC City, Gachibowli is a preferred location for IT companies. The increasing commercial and IT hubs have maintained a steady demand, driving up property prices. The influx of IT professionals makes it highly attractive to rental income seekers.
3. Kukatpally: Kukatpally is emerging as a hot investment spot due to its strategic location and excellent connectivity to key business districts like HITEC City and Gachibowli. The area is well-connected by metro rail and roads, with proximity to the Outer Ring Road (ORR), making it easy to commute to other parts of the city.
4. Madhapur: Madhapur is a vibrant IT and corporate hub housing some of the world's largest companies and major IT parks, such as Raheja Mindspace and Cyber Towers. The constant influx of fresh talent into these firms boosts the demand for residential and rental properties, ensuring continuous returns for investors.
5. Kondapur: Located next to HITEC City, Kondapur has become a sought-after area for businesses. With its affordability and steady growth, it offers a balanced mix of capital appreciation and rental income, making it an attractive investment option.
6. Shamirpet: Situated in northern Hyderabad, Shamirpet is known for Genesis Village/Genome Valley, one of the largest biotech hubs in the region. The area holds long-term growth potential for both investors and professionals.
7. Adibatla: Recognized as Hyderabad’s next hub for IT and aerospace, Adibatla is home to facilities like Tata Aerospace. The presence of IT parks and SEZs makes it an attractive investment area for professionals and investors seeking growth.
8. Kokapet: Located near Gachibowli and the Financial District, Kokapet is emerging as a major real estate hotspot. With land parcels ready for development into a high-end commercial belt, it is set to benefit from the Telangana Government's "Golden Mile" scheme, which will significantly increase real estate price.

Tenant retention is crucial for developers as it enhances long-term asset value, whether financed or non-financed. Understanding the needs of not just the lessee but also their employees has become a priority. Hyderabad, in particular, is seeing new-age office spaces being built to adapt to evolving occupier needs, including technological advancements. As confirmed by SP Reddy, Founder & CMD, Terminus Group, "Our latest project, One West, is occupied by a multinational company and is designed to prioritize both work and comfort. Modern office spaces now integrate work and play areas, including walking trails and child-friendly zones, to enhance employee well-being. The government has introduced regulations allowing an environmental deck of six meters in height, which can be utilized for green spaces, cafeterias, and recreational activities without being counted in the built-up area. Additionally, the return-to-office culture is gaining momentum, reinforcing the need for collaborative spaces, sports facilities, and thoughtfully designed environments that foster teamwork and productivity."

While the city's expansion has moved from Gachibowli to the Financial District of Neopolis and Kokapet, the next major growth corridor is expected to be the airport region. SP Reddy.

Opening up about which area in Hyderabad is expected to emerge as the next real estate hotspot this year, Goutham Gedela, Head - Commercial Business, My Home Group, informed, "The western region continues to dominate due to its maturity and established infrastructure. In the short to mid-term, Gachibowli and Kokapet, particularly Neopolis, are expected to emerge as key growth markets, driven by proactive government initiatives and the increasing preference for mixed-use developments. In the mid to long term, the city is expected to expand towards the southern region, particularly Boduppal, where land remains more affordable compared to the established western corridor. Although the eastern part of Hyderabad presents potential for cost-conscious clients, its growth will depend on developers' willingness to invest and establish a competitive market."

One of the key approaches in modern real estate is providing "Real Estate as a Service," where developers focus on delivering a service-driven experience. Goutham Gedela.

Hyderabad's Commercial Real Estate Landscape

• Logistics and Warehousing: This sector is experiencing substantial growth, expanding at a significant CAGR (Compound Annual Growth Rate), driven by increasing consumer demand and India’s position as the third-largest global consumer market. The demand for logistics and warehousing solutions is expected to rise as the e-commerce and retail sectors grow.
• Infrastructure Development: Large-scale infrastructure projects, such as the RRR (Regional Ring Road) and improved road connectivity, are fueling business expansion and economic growth in Hyderabad. Enhanced connectivity is attracting both businesses and investors, creating opportunities in commercial real estate.
• Emerging Sectors: Industries like life sciences, AI, and medical devices present vast investment potential beyond traditional real estate. Hyderabad is becoming a hub for these sectors, offering promising opportunities. However, challenges remain due to limited risk capital investment, which impacts the ability to scale disruptive ideas and innovations in these fields.

Workspace Design & Technology

Hyderabad's office workspace sector is propelled by the city’s rapidly expanding IT, pharmaceutical, and startup ecosystem, alongside progressive government policies and modern infrastructure. Joseph Thilak, National Director - Occupier Strategy & Solutions, Knight Frank India, stated, "The work environment has seen a significant transformation in the post-COVID period. Many employees in India struggled with the work-from-home format during COVID due to space constraints in their homes. Companies realized the limitations of remote work, leading to a gradual return to office spaces. To enhance employee experience, organizations are incorporating wellness spaces, gyms, open offices, and coffee lounges. Creative workspace designs play a crucial role in encouraging employees to return to the office."

While design plays a crucial role in encouraging employees to return to the workplace, the shift to hybrid models allows companies to maintain efficiency while balancing remote and in-office work. Joseph Thilak.

Madhava Sripada, Director of Business Development, Studio HBA, agreed, "Workplace design has evolved significantly, focusing on intricate details and modern trends. The rise of Gen Z employees has further influenced workplace aesthetics, as companies now emphasise unique architectural statements and brand identity. Exposure to global designs in cities like Singapore, London, and Dubai has inspired businesses to incorporate personality and style into their buildings. Modern workspaces prioritize flexibility, allowing for multipurpose areas that can be easily adapted for different needs, including cultural celebrations and relaxation zones. Additionally, sustainability and high-end interiors have become key aspects, with companies investing in sophisticated designs that enhance employee engagement and workplace experience."

Learning from the successes and challenges of earlier developments, Hyderabad has integrated thoughtful design elements, making each building unique and sustainable. Madhava Sripada.

Sundari Patibandla, CEO & Co-Founder of iSprout, said, "The flex, co-working, and managed office segment is relatively new and has evolved over the past six to seven years. Post-COVID, this segment has gained significant importance in the office space market, particularly in Grade A properties and emerging markets like Hyderabad. One of the key drivers of its growth is the reduced capital expenditure required by companies, as flex operators handle major investments such as deposits and infrastructure, allowing businesses to focus on revenue-generating activities. Additionally, the flexibility and scalability offered by flex spaces enable companies to expand gradually based on demand while providing high-quality amenities that enhance employee well-being and attract top talent. Previously, office spaces were designed with solo or cubicle-based concepts, but companies like Google have popularized open office layouts. Many organizations no longer have dedicated manager cabins; instead, they utilise shared workspaces with meeting rooms, discussion areas, and phone booths for calls. This shift has created a more collaborative and engaging work atmosphere, incorporating wellness rooms, gyms, cafeterias, and game zones to enhance employee well-being and productivity in modern flex office designs."

For the flex office space sector, capital investment has been a major constraint in expanding operations. With the introduction of IPOs and REITs, investment has become more accessible. Sundari Patibandla.

Design & Tech Trends in Commercial Real Estate

• Compliance & Regulatory Factors: Compliance and regulatory requirements shape IPOs and REIT (Real Estate Investment Trust) listings. Flexible space operators and occupants benefit from these evolving regulations as they navigate the changing landscape.
• BIM (Building Information Modeling): BIM is actively implemented to optimize project costs and streamline multi-year developments. However, it still requires advancements in scalability and better integration with automated design solutions to maximize its potential.
• Quality Design Aspects: Key aspects like acoustics, lighting, ambient air quality, and energy efficiency are now critical components of Grade A buildings. These buildings focus on using high-quality materials to enhance the comfort and productivity of occupants.
• Sustainability: Sustainability has become a core focus in commercial real estate. There’s a strong emphasis on open spaces, greenery, and wellness-oriented amenities, including healthier food options in cafeterias. These elements are becoming essential to attract tenants who prioritize a healthy and sustainable work environment.
• AI-Driven Tools: AI-driven tools are making a global impact with billions in value. In India, Building Information Modeling (BIM) is emerging as a key tool for designers, helping to improve the accuracy and efficiency of real estate development processes.