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Micro markets in Pune, Chennai and Hyderabad attracting office space occupiers due to sub-dollar rents : Report


Hinjewadi in Pune, Gachibowli, Nanakramguda and Kokapet in Hyderabad and Mount Poonamallee Road and Pallavaram-Thoraipakkam Road in Chennai have emerged as the preferred location for office occupiers due to sub-dollar office rents, affordable residential prices and rentals and robust connectivity.

According to Savills India, over the past decade, Triumvirate of Gachibowli, Nanakramguda and Kokapet in Hyderabad have undergone a transformation, evolving into thriving commercial and residential hubs.

Compared to the major IT corridor of HITEC City, the Triumvirate provides occupiers with a significant rental arbitrage of 25-30%.

The Triumvirate has witnessed growth in the residential sector, with average capital values appreciating within the range of 15-25% during the period from 2020 to 2022.

The Triumvirate maintains a robust market presence, accounting for 42.8 mn sq. ft. of office space, which constitutes 39% of the total city-wide office inventory as of H1 2023.

Between 2020 and 2022, the Triumvirate experienced impressive growth, adding 15.1 mn sq. ft. of office space which was almost 46% market share in the city’s new office supply.Nanakramguda, part of the Triumvirate, has custom-built campuses for multinational giants like Google, Amazon, Wipro, Microsoft, TCS, Capgemini, Franklin Templeton, and Cognizant, making it a campus-style development hub. “Hyderabad has started featuring among the top-3 office markets in India, which is a commendable rise. As a small caution though, a few issues like over-dependence on technology sector and rapidly rising supply volumes may need proper shepherding in times ahead,” said Arvind Nandan, Managing Director, Research & Consulting, Savills India.

In Chennai, MPR PTR cluster offers office rentals approximately 15-20% lower than established locations of Pre-Toll OMR and CBD areas. Flex per-seat monthly rentals at the cluster start at just Rs 7,500, significantly lower than the OMR region’s average of Rs 10,000.

Rising costs in central Chennai driving homebuyers to affordable areas like MPR & PTR, witnessing a 12-15% capital value increase since 2020. Home rentals near MPR & PTR are 25-30% cheaper than central areas like Adyar and Anna Nagar.

As of H1 2023, the total inventory of premium office buildings in the region amounts to approximately 17.5 mn sq. ft., constituting 21% of Chennai’s total office space.

“As Chennai’s urban landscape evolves, MPR & PTR have emerged as dynamic epicenters of opportunity, seamlessly blending affordability, infrastructure excellence, and strategic growth. With a thriving real estate ecosystem, enhanced connectivity, and a visionary outlook, these clusters are poised to shape the future of Chennai’s real estate landscape, offering a compelling proposition for businesses and investors alike,” said Anup Vasanth, Managing Director, Chennai, Savills India.

In Pune, leasing activity in Hinjewadi, Pune, is poised for continued growth, following a positive trend observed in 2022 and the first half of 2023. This momentum is expected to persist throughout 2023, resulting in a cumulative gross absorption of approximately 2 million sq. ft. over the next three years.

Hinjewadi offers high-quality office spaces at competitive rates, suitable for varied occupier needs. Its expansive campus-style developments cater to tech, life sciences, engineering, and manufacturing, emphasizing sustainable practices, enhancing overall value.

Significantly, Hinjewadi’s contribution to Pune’s total office leasing has nearly tripled in 2022 when compared with 2020. This increased demand is primarily propelled by the IT-BPM, engineering, and manufacturing sectors. Interestingly, Global In-house Centres (GICs), captive centres, and third-party offshoring centres are also playing a substantial role in driving this demand, particularly within IT-SEZ developments.

From Q1 2019 to Q1 2022, Hinjewadi experienced a 50% increase in the number of housing units sold and a substantial 84% surge in terms of their total value. During the period of 2019-2021, Hinjewadi consistently saw an annual average sale of 16,200 units, totalling an average annual value of INR 98 billion.

“Hinjewadi is experiencing remarkable growth, driven by the IT, engineering, and manufacturing sectors. Its appeal lies in sub-dollar office rents, affordable housing, and excellent connectivity. It’s a burgeoning hotspot for businesses and residents alike,” said Naveen Raina, Executive Director and Interim Head, Pune, Savills India.


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