HYDERABAD: Once among the top-performing cities for commercial real estate in India, Hyderabad is now witnessing an alarming slump in demand for office space. According to the latest data released by property consultancy firm Westian, the city currently has the highest office space vacancy rate among the country’s seven major urban centres.
Despite previously outpacing metropolitan rivals like Bengaluru, Mumbai, and Delhi-NCR, Hyderabad now finds itself at the other end of the spectrum. As of March this year, the city had 28.4 million square feet of office space lying vacant—17.5% of its total available stock of 162 million square feet. The slowdown has brought leasing activity to a crawl, with corporate interest showing a noticeable decline compared to the aggressive uptake seen just 18 months ago.
Vacancies at the top, construction at a standstill
This shift in market dynamics has prompted developers to pause upcoming projects. With limited demand for existing inventory, real estate companies have held back new investments. Consequently, allied sectors—cement, steel, construction labour, and related trades—have taken a direct hit. The livelihood of thousands who depend on these projects is now under threat.
While the vacancy rate has marginally reduced from the previous peak of 19%—mainly because no major new supply has entered the market—the stagnation paints a grim picture. Hyderabad now tops the chart in terms of vacant office stock, followed by Delhi-NCR. Only Bengaluru has a larger total inventory (280.5 million sq ft) than Hyderabad.
A boom turned bust
The drop marks a stark contrast to the boom period during the BRS administration, when Hyderabad became a hub for global and domestic corporates. Strategic policy decisions under then Chief Minister K. Chandrashekar Rao turned Telangana into an investment magnet, propelling the growth of sectors like IT, pharmaceuticals, aviation, defence, and auto manufacturing.
This growth translated into skyrocketing demand for commercial real estate, with tech giants such as Microsoft, Google, and Amazon setting up expansive campuses in the city. Startups too were drawn in by the business-friendly climate and infrastructure. As a result, the Hyderabad office market expanded rapidly over the past decade, driven by the synergy between state policy and private investment.
Policy shift, market response
However, the political transition in Telangana has coincided with a marked slowdown in capital inflows. For the past year and a half, investment sentiment has remained subdued, and the real estate market has reflected this uncertainty. Office leasing has dipped, and speculative development has stalled.
Interestingly, Westian’s pan-India survey noted that office leasing nationally grew by 34% in Q1 of 2025, reaching 17.96 million square feet, driven by demand from GCCs, IT and ITeS firms, as well as banking and insurance sectors. But Hyderabad appears to have been left out of this recovery wave.
Where it once led, Hyderabad’s commercial real estate now trails. And unless confidence returns to the market, the city may continue to see its office towers grow taller—but emptier.