Finance biggies make Gachibowli a hotspot

Photo credit: Srinivas Setty

Gachibowli that houses ICICI, Franklin Templeton, Andhra Bank, APSFC etc, is sitting pretty with the twin advantage of present high rents due to limited supply and bright future prospects with increased launches.

Gachibowli is a submarket that includes Gachibowli, Nanakramguda, Manikonda, Raidurg and surrounding locations. It is the next popular IT/ ITeS destination of Hyderabad after Hitec City. IT-related developments in Gachibowli began with CMC setting up its campus in the late 90s and Microsoft opening its first campus in India in the early 2000s.

IT-related developments increased their footprint in this submarket further as the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) allotted land to financial companies at the Financial District at Nanakramguda, which was planned to attract banking and finance companies (BFSI) to Hyderabad. Companies such as ICICI, Franklin Templeton, UBS (now Cognizant), Institute of Chartered Accountants, Andhra Bank, Andhra Pradesh State Financial Corporation, APIDC Venture Capital etc are present in the Financial District.

As connectivity of Gachibowli started improving, the submarket witnessed IT campus developments, IT SEZ developments followed by residential and hotel development. Retail is currently restricted only to high streets as there are no malls operational in this sub-market currently.

There are many major IT campus developments for companies such as Microsoft, CMC, Wipro, Infosys, Computer Associates, Polaris, Infotech etc. It also has the most number of SEZ developments in the City, which are DLF Cyber City, TSI WaveRock, Divyasree Orion, Lanco Hills, Navayuga Inspire etc. In addition to this, there are multi-tenanted commercial buildings available for lease to occupiers such as Jayabheri Orange Towers, Technova, Ramky Selenium and Mantri Cosmos etc. Few of these buildings have witnessed pre-leasing by occupiers while many of them are expected to witness commitments in near to medium term.

The demand for office space is mostly from occupiers who opted for SEZ spaces. However, non-SEZ spaces haven’t seen as much demand in Gachibowli as on date. This is because occupiers opting for small- to medium-sized spaces in multi-tenanted buildings are not willing to come to Gachibowli due to unavailability of desired infrastructure such as eating joints for employees, bus stops, primary health care facilities etc.

Gachibowli has about 20 per cent of the of the Grade A office stock of Hyderabad, which is about five million sq ft of Grade A office space operational in this submarket. This submarket witnessed increase in rents in last two years due to limited IT SEZ supply. Rents in SEZ buildings have increased over this period that increased the average market rents in Gachibowli.

Retail in Gachibowli is currently restricted to high streets particularly the Old Mumbai Highway (OMH). Retailers such as Reliance, Ratnadeep, Café Coffee Day, Subway, Pizza Corner etc have opened their stores on the OMH. However, the Inorbit Mall at Hitec City is at a distance of just 6km from here. This currently serves the retail requirements of the resident of Gachibowli. Lanco’s Mega Mall within Lanco Hills SEZ is launched and is expected to be operational in the next three years.

The Rajiv Gandhi International Airport is well connected to Gachibowli by the Nehru Outer Ring Road. Gachibowli houses many educational institutions such as ISB and University of Hyderabad. It has two hotels Hyatt and Re:gen:ta One. Continental Hospital is constructing a 700-bed super-speciality hospital in Gachibowli, which is expected to be the largest healthcare facility in the City when operational.

As Hitec City is getting saturated, the next destination for occupiers will be Gachibowli as it has similar characteristics as Hitec City. The location also has large land parcels available for development of real estate. Residential sales are also expected to remain strong due to demand from the employees working in surrounding IT/ITeS firms. Availability of land for real estate and infrastructure developments, improved connectivity along with relatively reasonable pricing of real estate than Hitec City submarket is expected to improve the investment potential of Gachibowli in coming years.

Taken from Jones Lang LaSalle India report: Emerging Investment Hotspots – Mining Opportunities from the Complex Real Estate Terrain of India.