Office leasing and space absorption in Hyderabad have taken a hit in 2025 due to a sharp rise in supply and declining demand. Here’s what’s driving the downturn and what the future may hold.
Hyderabad Office Leasing Faces a Slowdown in 2025
Hyderabad’s commercial real estate market is experiencing a noticeable slump in 2025. Office leasing and space absorption have declined due to oversupply and cautious corporate behavior. Once a top performer, the city now grapples with rising vacancy rates and delayed tenant decisions.
Too Much Supply, Not Enough Demand
Developers have added significant new inventory over the past few years. Builders like Mindspace, Phoenix, DivyaSree, and GAR Infobahn ramped up construction based on earlier demand trends. However, the market’s current absorption levels haven’t kept pace.
Today, Hyderabad reports a vacancy rate of around 24%. This figure is among the highest in major Indian cities. The imbalance between new supply and leasing activity is driving this surge in unoccupied spaces.
Occupancy Rates Continue to Fall
As per ICRA, Grade A office occupancy stood at 86% in March 2023. It is now projected to dip to about 75.5–76% by March 2026. The downward trend is driven by excess supply and a slowdown in corporate expansion.
Companies are re-evaluating their space needs. Many are choosing to delay or downsize rather than lease more space. The hybrid work model and economic uncertainty are adding to this cautious sentiment.
Gachibowli and Financial District Hit Hardest
The impact is especially strong in Gachibowli and the Financial District. These two areas account for nearly 60% of Hyderabad’s upcoming office space supply. Vacancy rates here may hit 25–30% within the next year.
In contrast, Hitech City is showing resilience. Vacancy rates there are expected to stay under 10%. Tenants continue to prefer this area for its connectivity and infrastructure.
Peripheral Locations Show Promise
As central markets become saturated, businesses are exploring the outskirts. Peripheral areas are gaining traction, thanks to affordable rentals and better infrastructure plans.
The upcoming Metro Phase II and the proposed Regional Ring Road are boosting interest. Colliers estimates that these outer zones will make up 12–15% of Hyderabad’s total office stock by 2030.
A Strategic Window for Tenants
Despite the slowdown, companies have a chance to re-strategize. With abundant Grade A spaces now available, many are consolidating operations. Others are renegotiating leases or shifting to better locations.
Experts believe this correction was needed. While places like Kokapet and Gachibowli may take time to recover, sub-markets like Madhapur are seeing steady interest. This could drive quicker absorption in selected pockets.
Outlook: Challenges Now, Opportunities Ahead
The road ahead looks mixed. Oversupply remains a concern in the short term. Yet, upcoming infrastructure and evolving work models may balance the market over time.
For now, Hyderabad’s office leasing market faces a correction phase. But long-term growth could still be within reach, especially with strategic planning and demand picking up in newer areas.
About The Author
Ahssanuddin Haseeb