Despite 2 yrs of GRID policy, 85% offices are in West Hyderabad

Hyderabad: Hyderabad is one of the most sought-after office destinations in the country with over 104 million sft of office stock by the end of July-September quarter (Q3) of 2022, as per a recent report of global property consultant CBRE. Out of the total office stock in the city, more than 85 per cent of the stock is concentrated only in the Western part of Hyderabad with more than 88 million sft as of Q3 2022.

Even though several infrastructural developments are happening across the city, a majority of offices and commercial buildings are coming up only in the West Hyderabad micro-markets. The rapid growth of the office sector has triggered the construction of more residential units in this part of the city with a huge piled-up inventory of over 3.3 lakh flats by the end of Q3 2022.

Telangana government announced various incentives such as converting industrial parks to IT parks, lease & power subsidies, and other special incentive packages for the companies setting up their offices in locations outside of West Hyderabad under the GRID (Growth in Dispersion) policy, which aims to decentralise and reorganise the growth of Hyderabad equally across all four directions of the city. It's already more than two years that the State government has introduced the GRID Policy, but the IT companies and multinational corporations (MNCs) are still looking towards the Western part of the city to establish their units. Earlier, it had also started the 'Look East' policy to promote the growth of IT and BPO companies to set up their offices in the Eastern part of the city, but in vain.

After a decade of successful execution of the 158-km Jawaharlal Nehru Outer Ring Road (ORR), the State government has proposed another 339-km-long proposed Regional Ring Road (RRR) and to connect it with the ORR through 50 radial roads with an estimated budget of Rs 2,500 crore. The land acquisition has already started with the Central government nod for the northern and southern portion of the RRR.

Telangana government has recently put forwarded to expand the Hyderabad Metro Rail network towards North Hyderabad at an estimated cost of Rs 8,453 crore. It has also proposed Regional Rapid Transit System (RRTS) in two corridors. In spite of the government efforts to spread development all over the city, the focus of many tech firms is mainly on the West Hyderabad alone.

This is probably because of the availability of ample Grade-A office stock in the western part of the city. Improved connectivity and incentives by the State government under the GRID policy would propel real estate activity in newer locations in North, East, and South Hyderabad in the long term, Anshuman Magazine, Chairman & CEO (India, Southeast Asia, Middle East and Africa) CBRE, told The Hans India. "Several developers are likely to launch their projects closer to the RRR, especially in the industrial and logistics (I&L) sector. However, it would take time as the project is still in the land acquisition stage," he informed. He also observed increased investments from industrial and manufacturing players led to the growth of I&L sector across the city.

Similarly, the warehousing stock in Hyderabad touched 23 million sft by Q3 2022, with more organised developers entering the city in the recent years. With the entry and expansion of global / domestic brands, the city has also witnessed heightened demand for organised retail space over recent years. This has caused the total mall stock in the city to cross 11 million sft, with 21 developments as of Q3 2022.

V Rajashekar Reddy, General Secretary of real estate body Credai - Hyderabad said, "In view of the overall development across the city, and the development of industries and demand for housing and commercial real estate, the proactive governance by the State government has played a critical role in driving the growth."

He said, "Like most cities, only one part of the city – West Hyderabad had witnessed considerable growth, investments, and development for a long time. The proactive governance in the state realised the perils of lopsided development and the pressure it puts on the infrastructure. The government has built industrial corridors with incentives as per the GRID policy spreading the growth all across the ORR."

"This will give longevity to the growth of the city. As a result, many companies are exploring setting up units in these industrial parks. North Hyderabad is located on the National Highway with excellent connectivity by rail and road network. The proposed metro rail expansion to North Hyderabad will further improve connectivity and propel growth," the Credai member anticipated.

The National Highways Authority of India has also proposed to construct three elevated corridors, covering a total of 10 km to improve traffic flow in this belt. In an effort to make the north corridor at par with the west, the government has decided to set up the tallest IT Tower at Kandlakoya with a capacity to host 100 companies in phase-1 and employ over 50,000 people.

He further added, "The North Corridor will also greatly benefit from Hyderabad-Nagpur Industrial Corridor (HNIC) and witness the rapid growth of infrastructure and industry. All this, just indicates that North Hyderabad will go on to become what West Hyderabad was a decade ago. The property prices in this part will witness exponential growth across categories."