Hyderabad, October 12, 2026 — Hyderabad continues to anchor Telangana’s economic momentum in 2026, with robust tax collections led by GST, a thriving Global Capability Centre (GCC) ecosystem driving commercial real estate, and solid overall growth that outpaces national averages. While residential real estate presents a more nuanced picture of high launches and inventory build-up, the city’s services-led expansion—centred on IT, pharmaceuticals, finance, and emerging data infrastructure—reinforces its position as one of India’s key urban growth engines.
Telangana’s Gross State Domestic Product (GSDP) for 2025-26 reached ₹17.82 lakh crore at current prices, registering 10.7% growth, up from 10.6% the previous year and well above the national rate of around 8%. The state’s share of India’s GDP edged toward 5%. Services dominate, accounting for roughly 68.6% of output, with Hyderabad, Rangareddy, and Medchal districts contributing the bulk through IT parks, corporate hubs, and related activity. Per capita income stood at approximately ₹4.19 lakh, nearly 1.9 times the national average.
GST and Tax Revenues Post Strong Gains
Goods and Services Tax has emerged as the principal driver of Telangana’s own-tax revenue growth. In the first half of FY2026-27 (April–September 2026), collections under GST, VAT, and profession tax rose 16% year-on-year to ₹44,372 crore from ₹38,269 crore. GST alone contributed ₹25,049 crore, up 19% from ₹21,061 crore, and accounted for 56% of the combined total while driving nearly two-thirds of the overall increase. VAT revenues, primarily from petrol and liquor, grew 13% to ₹18,824 crore.
September 2026 highlighted the momentum, with Telangana recording GST collections of ₹5,327 crore—an 18% rise over the corresponding month last year—among the highest growth rates recorded by major states. Post-settlement State GST figures also reflected healthy expansion. Hyderabad continues to generate the overwhelming share of these receipts; in August 2026 the city accounted for over 91% of the state’s GST (₹3,956 crore of ₹4,341 crore), itself up 20.5% year-on-year. April–August Hyderabad GST stood at ₹18,892 crore versus ₹15,535 crore in the prior period.
Broader revenue indicators support the trend. By August 2026, Telangana’s revenue receipts reached ₹77,536 crore, or 32.14% of the annual budget estimate— a better pace than the corresponding period a year earlier. Tax revenue remained the backbone. Full-year FY2025-26 data showed commercial taxes collections of around ₹93,840 crore (GST component near ₹60,840 crore), up from ₹75,149 crore in FY2024-25, with solid contributions from excise, stamps and registration, and other heads.
Office Market and GCC Ecosystem Lead Real Estate Charge
Hyderabad’s commercial real estate has been buoyed by its rapid emergence as a GCC powerhouse. The city hosts more than 515 GCCs—roughly 20% of India’s total—employing over 3 lakh professionals. It added more than 70 centres in FY25, the highest among major destinations, and is targeting around 100 additional GCCs. GCC office leasing climbed from about 1.9 million sq ft in 2021 to 4.5 million sq ft in 2025, with H1 2026 alone recording roughly 3.05 million sq ft of GCC absorption. Analysts project an additional 8–12 million sq ft of office demand over the next three to five years from GCCs, IT-ITeS, BFSI, flex operators, and related services, potentially creating more than 75,000 high-skilled jobs.
Overall office metrics underline the strength. Gross leasing hit a record 12.44 million sq ft in 2025. Net absorption remained resilient—8.5 million sq ft in 2025 and year-to-date 2026 figures reaching approximately 7.32 million sq ft by the third quarter, with Q3 alone contributing 4.1 million sq ft in some reports (leading or ranking near the top nationally). Grade A stock stands around 125 million sq ft (about 15% of India’s inventory). While new supply pushed citywide vacancy higher in Q3 2026 (to roughly 21.6%), Grade A+ space stayed tighter. Average rents remain competitive at around ₹75 per sq ft per month in key corridors, below the pan-India average, supporting further expansion in Gachibowli, Madhapur, and surrounding micro-markets. BFSI and flexible workspace have gained notable shares alongside traditional IT-BPM demand.
Residential Market: Premium Strength Amid Inventory Pressures
The housing market presents a more mixed picture. Knight Frank data for the first nine months of calendar 2026 showed Hyderabad recording 29,125 housing sales—up 2% year-on-year and the highest for the period since 2018—with launches at 32,577 units (+6%). Demand was particularly strong in the premium segment, with homes priced at ₹1 crore and above forming a significant share. Price growth remained moderate at around 3%.
Other assessments of the first half of 2026 pointed to volume softness: sales declined 13% year-on-year to 26,068 units (the weakest half-year since 2022), even as launches surged 37% to 49,656 units. Unsold inventory rose 21% to about 1.43 lakh units, implying an overhang of roughly 29 months. The average ticket size increased about 10% to ₹2.03 crore, and the total value of homes sold reached ₹52,913 crore. Some third-quarter readings indicated a sales recovery (reports of around 15% year-on-year growth in certain datasets), with new supply heavily skewed toward higher-priced homes. Western corridor micro-markets such as Kokapet, Narsingi, Gachibowli, and the Financial District continue to see the strongest price appreciation, with select pockets recording 18–22% year-on-year gains and premium core areas in the 8–12% range.
Broader Drivers: Data Centres, Pharma, and Long-Term Ambitions
Supporting the growth story are expanding data-centre and AI infrastructure investments. Hyderabad’s operational data-centre capacity stands at roughly 150 MW in 2026 (up sharply from under 61 MW in 2022), placing it among India’s top hubs, with a much larger near-term pipeline and a state target of 5 GW by 2029. Major commitments include large-scale AI campuses such as HyperVault’s planned 1 GW facility. The pharmaceuticals and life-sciences sector remains a national strength, with Telangana accounting for a substantial share of India’s bulk drug and overall pharma output as well as a significant portion of global vaccine production.
IT exports, largely driven by Hyderabad, reached ₹3.13 trillion in 2024-25, reflecting multi-fold expansion over the past decade. The state has articulated ambitious longer-term targets, including a $1 trillion economy by the mid-2030s and $3 trillion by 2047. Analysts note that sustained high growth rates will be required to meet these goals, with GCCs, digital infrastructure, and continued services expansion as key enablers.
Outlook
Compared with the last few years, 2026 has so far delivered clear acceleration in GST and broader tax collections, multi-year gains in GCC-driven office absorption, and resilient overall GSDP growth. Residential real estate faces near-term inventory challenges from elevated launches, yet pricing has held and premium demand remains intact, underpinned by employment growth in the western corridors. Challenges persist around non-tax revenue mobilisation and the need to balance supply in housing, but the fundamental drivers—talent, infrastructure, cost competitiveness, and policy support—continue to favour Hyderabad’s trajectory as Telangana’s economic engine.
Data compiled from Telangana state accounts, commercial taxes department releases, Socio-Economic Survey and Budget materials, and reports by Knight Frank, Anarock/FICCI, Cushman & Wakefield, CRE Matrix/CREDAI, and contemporaneous coverage. Figures may be subject to revision.
