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Year-end 2020 SPOTLIGHT Hyderabad Market Watch Savills Research Office Hyderabad Market Watch - Office – Year-end 2020 Hyderabad Market Watch - Office – Year-end 2020 GDP growth (annual % change) 10 8 6 4 2 0 -2 -4 -6 -8 -10 2015 2016 2017 2018 2019 2020 2021 -12 China, People's Republic of India United Kingdom United States Asia Pacific World Source IMF World Economic Outlook (graph represents IMF WEOs till Oct 2020) COVID impact on sectoral GDP (%) -47.0% -50.3% Trade, Hotels -15.6% Construction -8.6% -5.3% -39.3% Finance, -8.1% Manufacturing 0.6% INDIAN Real Estate Q1 FY 21 The crash Among the numerous features of these Projections and hope 3.4% Q2 FY 21 ECONOMY By the middle of the year, global agencies Atma Nirbhar Bharat Schemes, the At its peak, the pandemic-induced like the IMF projected deep fall in growth infusion of INR 6,000 crores equity by the compulsions wiped off about one-fourth of Agriculture 3.4% across the world, and indeed, in India too. government in National Infrastructure the GDP, as demand plummeted. While the Investment Fund (NIIF) debt platform slide has been arrested significantly third Source Statista (https://www.statista.com/statistics/1107798/india-estimated-economic-impact-of-coronavirus-by-sector/) India’s second quarter GDP growth deserves special mention, as core quarter onwards, damage control persists showed a decline of 23.9% (Q-o-Q). The 2020 infrastructure development is a key focus as 2020 ends. next quarter’s -7.5% meant that India was area. Similarly, the announcement of in recession. It is important to note that INR 18,000 crores as additional outlay for In spite of this adversity, forecasts by the infections peaked in India on Pradhan Mantri Awas Yojana - Urban various agencies present hopes of a sharp In a major achievement, India’s GST collections September 17th 2020*. (PMAY – U), is another key feature worth and V-shaped recovery for several economies, including India. IMF’s October recorded a peak of INR 1.15 lakh crores in The four key areas which were deeply noting. This was provided over and above World Economic Outlook estimates India’s Follow through of 2019 dented at the height of COVID were the INR 8,000 crores already given in the December 2020. growth rate in 2021 to be in the range of As 2019 ended, the economic slowdown was being countered consumption, employment, supply chain year. The estimated benefit is launch of 12 10.5%-11.5%, which is among the highest. deftly by a strong set of policy measures by the Indian and government income. The strongest lakh and completion of 18 lakh houses. RBI and most agencies forecast remarkable government. These measures were neatly categorized in nine declines were registered in consumer The Reserve Bank of India contributed Incidentally, 2019 was considered to have sets, as highlighted in our 2019 Year End Market Watch. The durables, auto sales and exports. (COVID significantly during the crisis by according delivered the best ever 12-months for office economic growth in 2021. initial two months of 2020 did present a glimmer of hope for Impact on sectoral GDP graphic on p.3) high priority to keeping the economy leasing in India for a second successive recovery, though the task appeared uphill. By the end of afloat. From 5.15% benchmark lending rate year. 2020 was expected to create a new Packages & policy support Two key events occurred at the height of March, however, the contours of an unprecedented economic at the beginning of the year, the repo rate record. However, the socio-biological pandemic in July. India’s second REIT got listed, storm, a true black-swan event of global scale, began revealing In a proactive fiscal measure, the Central was brought down to 4% by December. It is catastrophe broke the flow and left an the enormous problem that lay ahead. The COVID-19 Government announced three Atma reported that the transmission to the indelible scar. TIME magazine chose to as Mindspace Business Parks REIT was pandemic, which appeared a distant malaise to most Indians Nirbhar Bharat schemes, between May and consumer also improved during the year as famously cancel 2020 on its iconic cover. It oversubscribed 12.96 times. till a month ago, was already at the doorsteps. November. We had issued the details of compared to earlier times. is from this rubble that 2021 will rise. these from time to time, in our fortnightly Armed with vaccinations developed in In no time thereafter, the follow-through of 2019 became a Savills Round Ups. Together, these record time, the human race gets up again. Around the same time, the government floated closed chapter, as the virus spread swiftly across the country. amounted to a commendable 15% of the Affordable Rental Housing Complexes (ARHC) Almost all businesses, some more than others, slipped into country’s GDP (refer Annexure for specific * https://indianexpress.com/article/ survival and cash preservation mode. Staying afloat became explained/india-coronavirus-numbers- details), though mostly by way of debt and explained-covid-2020-cases-deaths-testing- Operational Guidelines to provide a boost to the theme from then on. loans. recoveries-7128525/ rental housing. savills.in 2 3 Hyderabad Market Watch - Office – Year-end 2020 Hyderabad Market Watch - Office – Year-end 2020 COMPLETIONS & VACANCY Supply addition: 2020 vs 2019 HIGHLIGHTS 2020 2019 YoY Change 16 10% New completions also declined by 35% YOY to about 30.6 mn sq.ft, with major fall of about 14 0% INDIA 60% YOY noted in cities namely Delhi-NCR, 12 -10% Pune and Mumbai. While Bengaluru and 10 -20% Hyderabad saw relatively lesser YOY decline of . t f . q 14% and 21%. Interestingly, Chennai s 8 -30% maintained similar levels of new completions at n m OFFICE 6 -40% about 3.6 mn sq.ft. during 2020. Bengaluru, Hyderabad and Delhi-NCR together comprised 4 -50% of 80% of the new completions this year as most supply that had come was committed in 2 -60% previous years. 0 -70% i i e u d R a MARKET a r n a C n b u u b l n The overall India vacancy levels have N m a a P e r u g h e marginally increased to 11.7% in 2020 as new n M C d e y B supply exceeded the pace of leasing activity this Delhi- H year. Most cities have witnessed rise in vacancy SUMMARY Rental trends levels as the demand remained subdued. The rental value change across micromarkets varied The year 2020 saw a temporary within a city compared to last year, with an average slowdown in office markets with both decline of about 7% YOY noted in a few micromarkets in NCR and Bengaluru, while Chennai and Hyderabad saw leasing activity and new completions Deal size categories New completions in Chennai declining from the previous year, as the a 3% YOY decline. However, Mumbai and Pune markets 50,000-99,999 sq.ft. were at similar levels as 2019 sustained similar rental ranges as last year. pandemic impacted business activities 13% unlike other cities that saw Interestingly, Mumbai sustained rental values similar as across sectors. However, the confidence 2019 despite its low leasing volumes as vacancy levels decline and deferment of is expected to return soon as there are witnessed a marginal declined of 1% in 2020 compared planned supply. to the previous year. announcements of vaccinations to less than 25,000 sq.ft. 25,000- contain infections and return to 49,999 sq.ft. 12% Overall the markets saw stable rents with normalcy. 15% certain pockets dragging overall decline in favor of occupiers. Vacancy levels ABSORPTION HIGHLIGHTS Absorption: 2020 vs 2019 2020 2019 Fall (2019-2020) 100,000 sq.ft. or more 60% Cities 2019 2020 The office space absorption across India’s six major cities1 18.00 0% % stood at 31.9 mn sq.ft. in 2020, driven by Bengaluru that 16.00 % Bengaluru 7.0% 10.0% 2 -10% 0 9 0 14.00 . continued to lead the pack. While absorption fell by 43% . Demand split by sectors % 6 9 -20% 3 % % Chennai 12.4% 13.0% 12.00 2 2 YOY, it is important to note that the year 2019 saw a record . 2 5 e - . t - n f 3 . i 2 . 10.00 -30% l high of leasing in 2019 at about 55.7 mn sq.ft. in the last q c % 6 4 s Hyderabad 4.5% 10.8% e - % 4 0 n 8.00 D - 8 decade. -40% 7 1 m . Y . Engineering & o IT 6.00 8 Mumbai 13.9% 13.4% 0 Y Manufacturing 5 -50% Bengaluru recorded the highest office absorption of 11.4 mn 6 - 4.00 - 48.7% 12.7% sq.ft. in 2020, despite a drop of 27% compared to the NCR 18.0% 21.4% 2.00 -60% previous year. Following Bengaluru closely, Hyderabad 0.00 -70% i i Pune 4.2% 6.5% e u R registered leasing of 5.4 mn sq.ft. in 2020. Hyderabad took d a a r n a C n b u u l b n over Delhi-NCR while the latter stood at the third place with N m a P a - e i r Co Healthcare u g BFSI h h e l approximately 4.4 mn sq.ft. absorption in 2020. Like the n working M C d e e 4.5% Rental range in 2020 y 12.3% B previous year, the top three cities of Bengaluru, Hyderabad D 8.4% H and Delhi-NCR constitute around 66% of the total leasing In INR psf pm Low High Average YOY Change* activity in 2020.

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