Hyderabad's Commercial Real Estate Market Reaches New Heights in Q1 2026

Hyderabad’s commercial real estate market scaled an unprecedented peak in the January-March quarter of 2026, with office space transactions touching 5.86 million square feet, the highest ever recorded in a single quarter for the city, according to property consultancy Knight Frank India.

The figure represents a 48 per cent year-on-year jump from the 4 million sq ft transacted in Q1 2025, and positions Hyderabad as the second-largest office absorption market among eight major Indian cities tracked by Knight Frank, with Bengaluru leading the pack at 9.2 million sq ft, it said.

Average transacted office rents in the city rose 8 per cent year-on-year to Rs 77.5 per sq ft per month, even as new completions added 2.3 million sq ft to the market during the quarter.

GCCs Anchor Demand

Global Capability Centres (GCC) continued to be the dominant force driving leasing activity, accounting for 43 per cent of total office transactions at 2.5 million sq ft. This was a 53 per cent increase from the 1.6 million sq ft they absorbed in the same period last year. This demand has held firm despite heightened geopolitical uncertainty globally, Knight Frank said.

Third-party IT services emerged as the second-largest occupier category, contributing 29 per cent of leasing volumes at 1.7 million sq ft. This was the highest take-up for this segment across all eight major cities in the country.

The quarter also saw a sharp surge in flex workspace uptake, with absorption rising 457 per cent year-on-year to 1.42 million sq ft from just 0.26 million sq ft in Q1 2025. Large enterprises, particularly GCCs, were identified as the primary drivers of this shift.

Joseph Thilak, national director, occupier strategy and solutions (Hyderabad and Chennai) at Knight Frank India, said the record volumes reflected broad-based momentum rather than concentration in any single segment. “While GCCs remain the dominant occupiers of office spaces in Hyderabad, it is a balanced growth with all occupier profiles expanding their real estate portfolios,” he said, adding that strong demand-supply dynamics had also pushed rental values higher.

Residential Market Holds Steady

On the housing front, Hyderabad posted a marginal 1 per cent year-on-year increase in sales, with 9,541 units sold in Q1 2026. Residential launches stood at 9,975 units during the same period. The weighted average residential price rose 9 per cent year-on-year to Rs 8,211 per sq ft.

The Rs 10-20 million ticket-size band dominated sales with 4,061 units, accounting for 43 per cent of total volumes. However, the sharpest growth came from premium segments. The Rs 20-50 million category recorded a 36 per cent year-on-year increase to 2,192 units, while the Rs 50-100 million segment saw a 46 per cent rise to 415 units.

At the lower end, the sub-Rs 5 million segment contracted 29 per cent year-on-year to 335 units, reflecting a broader industry-wide trend of declining traction in affordable housing.

Thilak noted that while most high-volume residential markets across the country had recorded a slowdown, Hyderabad had maintained stable sales volumes, driven by steady end-user demand. “A clear shift toward premium housing has, however, led to reduced traction in the affordable segment,” he said.