Hyderabad’s office market is poised for its next phase of growth, supported by steady leasing activity, improving vacancy levels and stable rental appreciation, according to ICRA.
The city is expected to add around eighteen to nineteen million square feet of Grade-A office space during the late financial year two thousand twenty-six to financial year two thousand twenty-seven period. Nearly one-fourth of this upcoming supply is already pre-leased, reflecting sustained occupier confidence despite ongoing global economic uncertainties.
Leasing momentum across India remained resilient during the first nine months of financial year two thousand twenty-six, with Hyderabad emerging as one of the stronger performers. During this period, the city added eight point four million square feet of new Grade-A space, while net absorption slightly exceeded supply at eight point five million square feet. Continued demand from IT-BPM and BFSI occupiers helped reduce vacancy levels to around seventeen per cent by December two thousand twenty-five.
ICRA expects market fundamentals to remain stable as new supply comes online. Occupancy levels are projected to remain in the range of eighty-two point five to eighty-three per cent by March two thousand twenty-seven, supported by a diversified occupier base and consistent leasing activity.
Hyderabad’s share of India’s Grade-A office stock has also expanded, accounting for nearly sixteen per cent of supply across the top six markets as of December two thousand twenty-five. Key micro-markets such as Hitec City, Madhapur, Gachibowli and the Financial District continue to anchor demand, with limited new supply in Hitec City likely to keep vacancies in check.
Rental growth has remained steady, with average office rents rising at a three to four per cent annual pace over the past five years. Similar growth is expected through financial year two thousand twenty-seven. Despite global macroeconomic risks, ICRA believes Hyderabad’s strong leasing fundamentals will support stable market performance in the medium term.
