NEW DELHI: The office market in Hyderabad is projected to welcome 18-19 million square feet of new Grade-A supply between Q4 FY26 and FY27, according to the rating agency, ICRA.
Occupancy rates are expected to remain stable at approximately 82.5-83% by March 2027, driven by consistent demand from IT-BPM and BFSI sectors. Notably, around 23% of the forthcoming supply is already pre-leased.
Leasing activity in Hyderabad has demonstrated resilience during the first nine months of FY2026. Within this timeframe, the city added 8.4 million sq ft of new Grade-A office space, with net absorption slightly outpacing supply at 8.5 million sq ft, effectively lowering vacancy rates to about 17% by December 2025, a decrease compared to the previous year.
ICRA anticipates that vacancy levels will remain stable even as new supply comes onto the market, with net absorption likely keeping pace with completions. Currently, Hyderabad holds approximately 16% of India’s Grade-A office stock across the top six markets, with areas such as Hitec City-Madhapur, Gachibowli, and the Financial District leading in both supply and demand.
Rental growth is expected to be gradual, with average office rents in key micro-markets rising at a compound annual rate of 3-4% over the last five years. A similar year-on-year increase is anticipated for FY2026 and FY2027. Limited new supply in Hitec City is expected to maintain tighter vacancy levels, while other major corridors should achieve balanced market conditions.
