Whalesbook
Market Tightens as Rents Soar
Hydarabad's office rents climbed to a historic peak in Q1 2026, now nearly matching Bengaluru's rates. This rise stems from intense demand by Global Capability Centres (GCCs) and large corporate tenants, creating a shortage of office space in prime areas. The city's overall vacancy rate dropped by 260 basis points from the previous year to 20.22%. In the key Madhapur district, vacancy for top-tier Grade A+ properties has fallen sharply to just 4.8%, indicating significant demand pressure on premium office buildings.
Rental Growth and City Comparisons
Cushman & Wakefield reported that Hyderabad's average office rent grew by 11.6% year-over-year to Rs 92.2 per square foot per month in Q1 2026. Madhapur's rents reached Rs 105.5 per square foot due to limited supply and ongoing tenant interest. These rates place Hyderabad close to Pune (Rs 93 psf) and Delhi NCR (Rs 92 psf), but slightly below Bengaluru (Rs 97 psf). Mumbai remains the priciest market at Rs 171 psf.
Leasing Surges with Major Deals
Hyderabad recorded its strongest first-quarter leasing performance ever, with gross leasing volume (GLV) rising 21.6% year-over-year to 3.15 million square feet in Q1 2026. This represented 14% of India's total office leasing of approximately 22 million square feet. Large deals over 100,000 square feet were dominant, making up 81% of the total leased space. GCCs were a major demand driver, accounting for 26% of leasing as companies expanded their tech, operations, and back-office functions. The IT-BPM sector led demand with a 36% share, followed by flexible workspace providers (30%) and BFSI firms (23%).
Outlook on Future Supply
Cushman & Wakefield anticipates about 11 million square feet of new office space will be added to Hyderabad's market by the end of 2026, with most new developments expected in Gachibowli. Another 20 million square feet are projected for 2027 and 2028. This new supply could ease rental pressures, but the market currently shows continued strength. Analysts are monitoring how quickly new inventory is absorbed against the steady demand from GCCs and growing businesses, which will influence future rental trends. Hyderabad's importance for IT and business process outsourcing continues to attract foreign investment, supporting high occupancy and rental growth, further boosted by new infrastructure and government incentives.