The emergence of the city as a new destination for IT, BPO and related industries has opened up a number of avenues for real estate activities.
Hyderabad has grown to be a favourite hub for investors as the city has not only provided quality infrastructure for property investments but have also added attractions like special economic zones, industrial parks, IT campuses, and a new international airport to its credit.
Hyderabad real estate market has shown tremendous potential owing to the demands of the IT and ITES industry anchoring in the city. The primary demands of the Hyderabad real estate are driven by IT/ITES, Biotech, Pharmaceutical and Engineering, Telecom, Retail Banking, Financial and Insurance Services.
The commercial real estate sector of the city draws interest from the leading corporate houses and thus there has been quite high demand for international standards in office spaces.
The main areas benefitted include Banjara Hills, Jubliee Hills, Begumpet, Somajiguda, Punjagutta, Madhapur, Miyapur, Gachibowli, Hitech City and Srinagar Colony.
The city is also referred as the second Silicon Valley of India. There has been an extensive investment in digital infrastructure within the city promoting the setting up of several campuses by vast array of companies within the city. The list includes several multinational corporations having established centres in the city.
The Central Business District in Hyderabad is dispersed in a couple of areas namely Secunderabad, Begumpet, Abids, Somajiguda, Punjagutta and Ameerpet while the prime business district for commercial real estate on the IT/ITES is in suburban and peripheral locations of Madhapur, Kondapur and Gachibowli apart from major areas like Hitech City, Madhapur, Badanpet and Jubliee Hills.
The area around abounds in institutions such as Indian School of Business, Infosys, Wipro, UBS and ICICI. It is believed that the area might emerge as a third city in addition to the twin cities. Although Begumpet and Banjara Hills are considered prime locations, they do not cater to IT/ITES due to non-availability of larger floor plates.
The emergence of the city as a new destination for IT, BPO and related industries has opened up a number of avenues for real estate activities. While corporate houses and software based companies are seeking out commercial properties, the expatriates are in search of residential spaces.
Simultaneously, the same trend is felt in the retail sector with numerous retail malls and outlets mushrooming across the city, aiming to meet the rapid retail boom and tapping the increased purchase power parity of the middle class group.
While it seems like the western part of Hyderabad is doing exceptionally well, especially Gachibowli, Nanakramguda, Narsingi and Srisailam highway belt, North Hyderabad too is developing fast. However the Outer Ring Road with improved connectivity among all zones could have a positive impact on other areas as well.
Airline Growth Hyderabad, with its existing international airport, acts as a gateway to Andhra Pradesh and therefore a number of visitors either commence or conclude their journey in the city, with a likely overnight stay in the city.
The Hyderabad International Airport currently accounts for 5.3% of total passenger movements in India.
Hotel Industry Performance The Hyderabad hotel industry will comprise of approximately 8,100 quality rooms (branded and unbranded) by the end of the 2010/11 year.
The flurry of positive real estate activity upto late 2008 had initiated considerable interest in the hotel sector by investors and operators alike leading to a number of new hotel projects which will diversify the hotel product variants in the market. The total number of quality rooms is expected to grow to nearly 12,300 by 2014.
Demand Analysis: Being a commercial hub in Andhra Pradesh, about 75% of the demand here is corporate in nature. Of this demand, around 10% is the extended stay segment. Events like the Air Show (biennial), which debuted in 2008, Indian Cricket League and Indian Premier League (annual) have also created a seasonal demand in the city.
The availability of cricket stadiums and Hyderabad being a prominent team in both leagues ensures business and leisure demand during the season, with the latter currently representing a relatively small share of 4%.
The Hyderabad International Convention Centre and conference facilities in hotels across the city have contributed 10% of MICE demand to the total captured demand for the market in 2009/2010.
Occupancy Rates & ARRs – City Trend The market achieved approximately 59% occupancy in the year 2009- 2010 (including branded and unbranded hotels) and an Average Room Rate (ARR) of INR 4,300. ARRs are likely to grow over the projected period at a marginal rate, however occupancies are likely to recover over the medium term impacted by the new rooms entering the market.
The following graph indicates the Average Occupancy Rate (AOR) trend in the market. The market is likely to recover to 2010 levels post 2015 in terms of occupancy given the supply forecast at 4,200 to 4,500 rooms over the period.
Conclusion: Hyderabad’s hotel market has traditionally had a small supply base of quality hotel rooms. Sharp rises in occupancy and ARR achieved during the peak years have faced correction as a result of lower demand levels over the past two years and increasing supply.
With the growth of commercial development in the city periphery, hotels are likely to be faced with a scenario of demand transference and therefore innovative strategic steps are anticipated in the coming years in an effort to retain demand share.
Cushman & Wakefield provides a wide range of consulting services for hotels, resorts, serviced apartments and mixed-use developments.
Hyderabad: Growing at a fast pace
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The emergence of the city as a new destination for IT, BPO and related industries has opened up a number of avenues for real estate activities.
Hyderabad has grown to be a favourite hub for investors as the city has not only provided quality infrastructure for property investments but have also added attractions like special economic zones, industrial parks, IT campuses, and a new international airport to its credit.
Hyderabad real estate market has shown tremendous potential owing to the demands of the IT and ITES industry anchoring in the city. The primary demands of the Hyderabad real estate are driven by IT/ITES, Biotech, Pharmaceutical and Engineering, Telecom, Retail Banking, Financial and Insurance Services.
The commercial real estate sector of the city draws interest from the leading corporate houses and thus there has been quite high demand for international standards in office spaces.
The main areas benefitted include Banjara Hills, Jubliee Hills, Begumpet, Somajiguda, Punjagutta, Madhapur, Miyapur, Gachibowli, Hitech City and Srinagar Colony.
The city is also referred as the second Silicon Valley of India. There has been an extensive investment in digital infrastructure within the city promoting the setting up of several campuses by vast array of companies within the city. The list includes several multinational corporations having established centres in the city.
The Central Business District in Hyderabad is dispersed in a couple of areas namely Secunderabad, Begumpet, Abids, Somajiguda, Punjagutta and Ameerpet while the prime business district for commercial real estate on the IT/ITES is in suburban and peripheral locations of Madhapur, Kondapur and Gachibowli apart from major areas like Hitech City, Madhapur, Badanpet and Jubliee Hills.
The area around abounds in institutions such as Indian School of Business, Infosys, Wipro, UBS and ICICI. It is believed that the area might emerge as a third city in addition to the twin cities. Although Begumpet and Banjara Hills are considered prime locations, they do not cater to IT/ITES due to non-availability of larger floor plates.
The emergence of the city as a new destination for IT, BPO and related industries has opened up a number of avenues for real estate activities. While corporate houses and software based companies are seeking out commercial properties, the expatriates are in search of residential spaces.
Simultaneously, the same trend is felt in the retail sector with numerous retail malls and outlets mushrooming across the city, aiming to meet the rapid retail boom and tapping the increased purchase power parity of the middle class group.
While it seems like the western part of Hyderabad is doing exceptionally well, especially Gachibowli, Nanakramguda, Narsingi and Srisailam highway belt, North Hyderabad too is developing fast. However the Outer Ring Road with improved connectivity among all zones could have a positive impact on other areas as well.
Airline Growth
Hyderabad, with its existing international airport, acts as a gateway to Andhra Pradesh and therefore a number of visitors either commence or conclude their journey in the city, with a likely overnight stay in the city.
The Hyderabad International Airport currently accounts for 5.3% of total passenger movements in India.
Hotel Industry Performance
The Hyderabad hotel industry will comprise of approximately 8,100 quality rooms (branded and unbranded) by the end of the 2010/11 year.
The flurry of positive real estate activity upto late 2008 had initiated considerable interest in the hotel sector by investors and operators alike leading to a number of new hotel projects which will diversify the hotel product variants in the market. The total number of quality rooms is expected to grow to nearly 12,300 by 2014.
Demand Analysis:
Being a commercial hub in Andhra Pradesh, about 75% of the demand here is corporate in nature. Of this demand, around 10% is the extended stay segment. Events like the Air Show (biennial), which debuted in 2008, Indian Cricket League and Indian Premier League (annual) have also created a seasonal demand in the city.
The availability of cricket stadiums and Hyderabad being a prominent team in both leagues ensures business and leisure demand during the season, with the latter currently representing a relatively small share of 4%.
The Hyderabad International Convention Centre and conference facilities in hotels across the city have contributed 10% of MICE demand to the total captured demand for the market in 2009/2010.
Occupancy Rates & ARRs – City Trend
The market achieved approximately 59% occupancy in the year 2009- 2010 (including branded and unbranded hotels) and an Average Room Rate (ARR) of INR 4,300. ARRs are likely to grow over the projected period at a marginal rate, however occupancies are likely to recover over the medium term impacted by the new rooms entering the market.
The following graph indicates the Average Occupancy Rate (AOR) trend in the market. The market is likely to recover to 2010 levels post 2015 in terms of occupancy given the supply forecast at 4,200 to 4,500 rooms over the period.
Conclusion:
Hyderabad’s hotel market has traditionally had a small supply base of quality hotel rooms. Sharp rises in occupancy and ARR achieved during the peak years have faced correction as a result of lower demand levels over the past two years and increasing supply.
With the growth of commercial development in the city periphery, hotels are likely to be faced with a scenario of demand transference and therefore innovative strategic steps are anticipated in the coming years in an effort to retain demand share.
Cushman & Wakefield provides a wide range of consulting services for hotels, resorts, serviced apartments and mixed-use developments.
For more information visit
www.cushman-wakefield.com
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