February 2023: Savills, an international property consultant, releases the report titled – Hyderabad: The Sprint on the 26th of February 2023, stating that Hyderabad is surging as the economic powerhouse of India. Savills is an international giant headquartered in London with a network of more than 40,000 people in over 700 offices across 70 countries in the Americas, Europe, Asia Pacifica, Africa, and the Middle East. With offices in Bangalore, Chennai, Delhi NCR, Hyderabad, Mumbai, Pune, and Ahmedabad, Savills began its India operations in early 2016. The report highlights the economic growth of Hyderabad since the formation of a separate Telangana state and the key factors that have led to this growth.
Since the formation of the state of Telangana, Hyderabad has been on the top in terms of office leasing activity. Residential real estate has also been strong, with the city registering the highest housing sales in 2022 in the last 8 years. In the retail segment too, annual supply addition increased for the first time since 2018, as 2022 witnessed around 1 mn sq. ft. of supply infusion. As of Dec 2022, Hyderabad had around 8% share in the operational mall stock of India. Data centers, the sunrise sub-sector within real estate, have emerged as a favorite asset class for investors. Of the 500 acres of data center-related land transactions in 2022 in the country, around 26% came from Hyderabad.
The economic success story of Hyderabad has been highly based on the below four key factors –
1. Policy Push: Proactive government policies such as Information Communication Technology (ICT) Policy 2.0, Telangana Electric Vehicle (EV) and Energy Storage Solution (ESS) Policy, Space-Tech framework, state-wide optical Gibre network and Growth in Dispersion (GRID) policy, and TS-iPass, have powered the growth story of Hyderabad.
2. Infrastructure: Steady infrastructure creation and upgrades, including the Nehru Outer Ring Road (ORR), expansion of metro rail, and the implementation of a Strategic Road Development Plan (SRDP), have ensured excellent connectivity in and around the city, thereby enhancing core real estate potential. Other planned infrastructure developments include the Regional Ring Road (RRR) and Elevated Bus Rapid Transport System (EBRTS).
3. Affordability: Relatively affordable price points have defined ‘The Hyderabad Opportunity’ to a large extent particularly in the commercial office market, wherein the entire city enjoys a cost advantage. Hyderabad stands to benefit most from sub-dollar office rentals over a long period of time. Therefore, it is a major market for Flexible spaces. The city witnessed 2.3 mn sq. ft. of leasing activity from Flexible spaces in the period 2020-22, which is around 15% of the shared space demand in the country. Similarly, residential capital values and rentals for the secondary business districts or sub-urban areas of Hyderabad are 10-20% lower, compared to similar localities in other major cities in southern India.
4. Human Capital: In FY22, almost 1.5 lakhs employment opportunities were realized in the IT/ITeS sector which in turn translated to a phenomenal one-third of the IT-related jobs in the country. By the end of FY22, IT/ ITeS employed around 7.8 lakh people in the state (primarily Hyderabad); this is a 24% YoY increase compared to FY21. People are
particularly drawn in by the quality of life the city offers to work professionals and students alike.
It is however to be noted that a Gifth driver of the momentum is also now working at a great pace. That Gifth element is the pin-sharp sectoral focus, summarised as:
5. Sectoral Focus:
a. A Transit-Oriented Development (TOD) Approach: This approach is adopted to address the challenges of urban sprawl by concentrating the activities at a node or along a public transit corridor, thereby increasing the efficiency of land utilization. Areas in proximity to the airport in South Hyderabad can benefit the most from such a model.
b. Sharp focus sectors such as Life Sciences, Data Centres, EV Ecosystem, AVGC, and Aerospace:
i. Developing a world-class life science city in the peripheral areas of Hyderabad will provide a significant boost to existing clusters. It is anticipated that revenues from the life sciences sector in the state will be 3-4 times the current levels and reach USD 40-50 billion by 2030.
ii. By 2025, Hyderabad will have a 7-10% share (~2.5 mn sq. ft.) in India’s data center stock
iii. Hyderabad’s EV ecosystem is likely to witness USD 3- 4 billion in investments, employing more than 1 lakh people by 2030. The creation of a world-class Telangana Mobility Valley (TMV) is also a big step in this direction.
iv. Currently, around 150 Animation, Visual Effects, Gaming, and Comics (AVGC) companies provide direct employment to approximately 30,000 people. With significant impetus from the state government, the sector can support 0.5-1.0 lakh people in the next 5 years
v. The Maintenance, Repair & Overhaul (MRO) industry within the aerospace segment in the country is likely to reach USD 2-3 billion in the next Give years, and Hyderabad is likely to play a prominent role in it
Mark Ridley, Group & Global Chief Executive OfLicer, Savills said, “I am delighted to have had the opportunity to visit Hyderabad. The city has an enormous focus on innovation, IT, life sciences, and infrastructure, driven by a talented workforce and a strong entrepreneurial spirit. Hyderabad has all the characteristics of a Megapolis in the making and the momentum is such, it’s unstoppable.”
Mr. Christian Mancini CEO of Savills APAC (ex Greater China), Anurag Mathur CEO of Savills India, Mr. Naveen Nandwani Leasing Head for Savills India, and Mr. Sesha Sai, Head of Savills for Te Telangana presented the report, Hyderabad: The Sprint to the Honourable Minister for ITE&C, the Principal Secretary for ITE&C Mr. Jayesh Ranjan, and the Chief Relations Officer, Mr. Amarnath Reddy Atmakuri.
Hon’ble Minister for IT, Industries & Commerce, MA & UD, Telangana, Sri KT Rama Rao said, “Hyderabad is now the most sought-after gateway city for global corporations cutting across sectors. It provides incomparable value-proposition whether by way of infrastructure, policy support, quality real estate, or ease of living. Most companies wish to expand their footprint by increasing their presence in Hyderabad. We remain committed to creating a best-in-class and exemplary business hub for the next several generations. Telangana is at the forefront in identifying growth sectors and developing enabling policy frameworks to attract newer businesses. This report of Savills accurately identifies the growth drivers and emerging sectors that the Telangana government is working on.”
Christian F. Mancini, CEO, Asia Pacifica (ex. Greater China), Savills said, “This is my first visit to Hyderabad and has indeed given me the opportunity to witness the scale and pace of development that deFines this city. Hyderabad is a shining example of a powerful economic hub in the making, not only within India but globally. Hyderabad has emerged as the most promising and significant city of the decade.”
Anurag Mathur, CEO, of Savills India, said, “Over the last two decades, we have seen Hyderabad
take a quantum leap to become one of the top-ranked markets within a short period. The city has
consistently invested in future propositions like IT, life sciences, logistics, warehousing, and other
areas, reflecting its vision for sustainable and inclusive development.”