Hyderabad has officially been named India’s fastest-growing city according to the latest India Prime City Index report from Knight Frank India. The report, which assesses various growth parameters across six major Indian cities, highlights Hyderabad's remarkable progress driven by significant infrastructure improvements and increasing real estate demand.
One of the key factors contributing to Hyderabad's rapid growth is its rising population of High-Net-Worth Individuals (HNWIs) and Ultra-High-Net-Worth Individuals (UHNWIs). These groups are increasingly flocking to the city, attracted by its vibrant business ecosystem and supportive policy initiatives. Gulam Zia, Senior Executive Director at Knight Frank India, emphasized this point, noting, "India’s emergence as a global economic powerhouse is underpinned by the exceptional performance of select cities like Hyderabad, which are transforming rapidly."
Bengaluru takes the second spot on the index, largely because of its skilled workforce and thriving tech sector. The city is known for its talent pool and entrepreneurial environment, making it easy for businesses to flourish. Interestingly, Bengaluru boasts the highest workforce participation rate of 76%, alongside the lowest unemployment rate, which stands at just 1.8% among the cities examined.
Meanwhile, Mumbai maintains its position as the country’s financial hub, displaying consistent growth across various metrics. The city's high-rise skyline continues to be the backdrop for significant business activities. Simultaneously, Delhi-NCR is recognized for its superior physical infrastructure, headlined by the expansive Delhi Metro—which serves approximately 6.8 million passengers daily, covering over 350 kilometers.
Notably, Delhi's enhancements to urban infrastructure include major projects such as the Eastern Peripheral Expressway, exemplifying the city’s commitment to improving connectivity and living standards. The region's healthcare infrastructure is also noteworthy, featuring numerous top-tier hospitals, which have contributed to health outcomes for residents.
The demand for quality residential space has surged, with Hyderabad reporting the highest growth of 10% (CAGR) in residential launches over the past decade. 2023 alone saw residential property prices rise by 11%, reflecting the city's growing desirability among both investors and homebuyers. The strong performance has placed significant pressure on the local real estate market to keep up with the increasing pace of demand.
Besides Hyderabad, other cities like Ahmedabad also occur prominently within the rankings, particularly concerning advancements in digital services and information security. This commitment to modern governance mirrors the trend seen across many parts of India as cities strive for technological innovations.
Real estate trends indicate similar developments across key Indian markets. For example, during the third quarter of 2024, the industrial sector saw tremendous demand growth, with Delhi recording a 33% increase quarter-on-quarter. This upsurge resulted from net absorption of approximately 1.83 million sq ft alongside 2.47 million sq ft of gross absorption. Leading areas like the Delhi-NH8 corridor, Faridabad-Palwal, and Ghaziabad-Noida were hot spots for warehouse expansions, emphasizing logistical needs arising from e-commerce and third-party logistics (3PL).
According to JLL, the driving force behind this expansion was dominated by the 3PL sector, alongside contributions from other industries, including e-commerce and engineering. Notably, Grade A warehouse space has become increasingly sought after, leading to significant rental increases of 4.9% year-on-year. The demand for high-quality spaces has forced vacancy rates to maintain low levels—6.8% for Grade A spaces, even amid increasing overall vacancy rates, which slightly ticked up to 19% due to the influx of new supply.
Looking forward, infrastructure development projects like the Delhi-Mumbai Industrial Corridor (DMIC) and various dedicated freight corridors (WDFC, EDFC) are set to significantly influence warehousing demand. These initiatives, along with the booming e-commerce sector, are expected to keep vacancy rates below 15% for the coming years, creating optimism among institutional investors.
Besides these urban developments, policies aimed at enhancing the socio-economic profile of cities are also paving the way for sustainable and inclusive urban development. Observations from the Knight Frank report underline how urban areas, especially those like Bengaluru and Hyderabad, are capitalizing on their workforce strengths and infrastructural advancements.
Overall, India’s real estate market is witnessing tremendous dynamism across the board, driven by city-specific strengths and strategic investments the nation is making to reposition itself globally. Construction and investment trends indicate nothing less than exciting times for India's urban centers, pointing toward increased real estate activities propelled by both domestic and international interests. With these promising trends, one could say it’s just the beginning for the Indian real estate sector as it strives to reach new heights.
