In Recent times, Hyderabad is witnessing a sudden increase in commercial office rentals which has acknowledged over 45%, as corporates have started taking calls on their expansion plans that were delayed due to the bifurcation of Andhra Pradesh and shelved for the past 5 years.

After the formation of the new Telangana state and its new policies that are being rolled out by the new government, the discomfort among corporates has relieved and they have started looking for office space. IT companies that had kept their expansion on hold in Hyderabad due to the Telangana crisis are back in action.

Hyderabad, being home to many offices like MicroSoft, Google, Facebook, Amazon, and Yahoo saw property valuations mostly being stagnant, or increasing by less than 2%. Accenture, UHG, Zen Q, HSBC and JPMC expanded more than 1 lakh sq ft this year, which has reduced the vacancy levels in Hyderabad.

This has resulted in a sharp rise in office rentals from Rs 28-32 per sq ft per month in 2009 and 2010 to 43-47 per sqft now, according to Jones Lang LaSalle (JLL) India. “During the political instability, construction activity slowed down significantly, leading to rising in rents in key sub-markets of Hyderabad. The rents appreciated almost 15-20% in the past two years, given the strong corporate expansion in Hyderabad with limited availability of quality leasable space,” said Trivita Roy, associate director of JLL India.

The vacancy in the key IT hubs such as Hitec City and Gachibowli is about 7% for grade A office assets. “About 3.6 million sq ft of supply is likely to hit the market in 2016 and this does not include the built to suit, or campus options, of office space,” Trivita Roy added.

 “Grade A office space vacancy levels had fallen to single digits. Rentals in peripheral business districts like Madhapur & Kondapur have seen a surge of 15-18% over the previous years,” said Vineet Surana, director at APS Property Solutions in Hyderabad

Coincidentally, the city also recorded the highest office space absorption among the top eight cities in the country in the third quarter of 2015, according to property consultant Cushman & Wakefield, as political stability in the region saw more corporates sign property deals. Net absorption of office space in the city was recorded at 24 lakh sq ft while commitments were at 3.85 lakh sq ft, the highest office space net absorption witnessed after the formation of Telangana and also the highest office space net absorption since 2008.