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5 Supply, Absorption and Vacancy trends of the City
The commercial office space absorption in Hyderabad has been approximately 4-5 million sq ft per year in the last five years.
Due to the economic slowdown, the absorption in 2008 was low at approximately 3.2 million sq ft and in 2010, Hyderabad
witnessed the highest absorption of 5.9 million sq ft aided by the economic recovery. Suburban areas of Madhapur, Gachibowli,
Kondapur and Raidurg accounted for almost 80% of the total city’s absorption in the last five years.
The below chart represents the supply, absorption and vacancy trend for the city since 2009.
A snapshot of the supply, absorption and vacancy trend for the city is as follows:
• The total commercial office stock in Hyderabad as of December 2014 is 55.2 million sq ft (including Grade A and B
office spaces).
• The total absorption of commercial office space in Hyderabad from January to December 2014 has been approximately
6.0 million sq ft (approximately 21% higher than the previous year)
• The supply of commercial office space from January to December 2014 increased by around 30% at approximately
5.3 million sq ft vis-a-vis 2013 at approximately 4.0 million sq ft.
• It is estimated that approximately 17.6 million sq ft of additional commercial space is expected to come up by 2017
(Grade A office space supply during the same period is estimated at additional approximately 10.2 million sq ft).
Approximately 76% of the upcoming supply is expected to come up in suburban areas of Madhapur, Gachibowli
and Raidurg.
• The rentals in various micro-markets except suburban micro-market (Madhapur and Gachibowli) of the city have
remained stable vis-a-vis 2013. However rentals in Madhapur and Gachibowli increased in the range of 3-5% as
compared to 2013.
• The vacancy level for commercial office space in Hyderabad as of December 2014 was approximately 17.9% as
compared to 19.0% during December 2013.
• Demand for office space is expected to increase moderately in the next two years driven by improved economic
conditions and stable political scenario in the state. Rentals are expected to rise in suburban micro-market, due to
the limited vacant commercial space and remain stable in the short term for the other micro-markets.
Vacancy (%)
Absorption (million sq ft)
Area (million sq ft)
Supply (million sq ft)
Source: C&W Research
8
6
4
2
0
2010
2011
2009
2012
2013
2014
2015
(F)
26.5%
23.3%
21.1%
18.3% 19.0%
17.9% 19.0%
