Madhapur, Gachibowli Lead Hyderabad Office Leasing in Q1 2025
Office absorption doubled in Hyderabad Q1 2025. Limited supply and rising rents indicate strong occupier competition in key submarkets.
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Hyderabad’s office real estate sector recorded a notable rise in leasing momentum during the first quarter of 2025, with gross leasing activity reaching 2.6 million square feet, reflecting an 11 per cent year-over-year growth. Net absorption stood at 1.82 million square feet, a substantial increase compared to the same period last year.
Demand was primarily driven by large-scale deals, particularly from the healthcare and pharmaceutical industry, which accounted for 32 per cent of total leasing volume. The IT-BPM and BFSI sectors followed with 21 per cent and 11 per cent shares respectively. Key micro-markets, Madhapur and Gachibowli, continued to lead the leasing activity, capturing 81 per cent and 16 per cent of the market respectively.
New office supply was constrained, with only 1.32 million square feet delivered in Q1, marking a drop of 41 per cent from the previous quarter and 55 per cent from a year ago. All new supply was concentrated in Madhapur. Approval-related delays were cited as the primary cause for the slowdown, with a larger volume of completions projected in upcoming quarters.
The overall city vacancy rate stood at 23.1 per cent. Madhapur maintained relatively low vacancies at 10.5 per cent, with select Grade-A developments reporting rates below 5 per cent. This trend, combined with limited upcoming supply, may lead to increased competition among tenants. Meanwhile, Gachibowli is gaining attention due to its growing inventory of Grade-A projects and lower rent levels.
Rental rates across Hyderabad increased by 3 per cent quarter-over-quarter and up to 13 per cent year-over-year, with Madhapur witnessing the highest appreciation due to sustained demand. Despite these increases, Gachibowli remained the most cost-effective submarket, with rents 20–25 per cent lower than those in Madhapur.
Infrastructure developments, including the ongoing Metro Phase II expansion, are expected to enhance connectivity and facilitate further commercial growth across the city.
