Competitive property prices, increased office leasing activity, and robust infrastructure growth over the years. These factors have positioned Hyderabad as one of the most active residential markets in recent times. Would the good times roll in next year as well?
In retrospect, supportive government policies and strong political stability have worked in favour of this market. So much so, the city offers the lowest office rentals in comparison to other markets, including Chennai and Bangalore.
Consequently, this increase in commercial activity augurs well for residential real estate as well. The icing on the cake is that, unlike other major cities where capital values for residential realty have gone up substantially over the years, Hyderabad still has enough room to grow.
Interestingly, other than the IT sector, the Hyderabad residential market is also driven by the presence of other major industries such as pharmaceutical, electronics, and biotech, among others.
With market sentiment improving in Hyderabad, sales are also on the rise.
“Over 8,000 residential units were sold in the first six months of 2018, recording a rise of 30% as against the same period in 2017,” informs Rakesh Reddy, Director of Aparna Constructions. In terms of BHK configurations, Rakesh adds that 2 and 3BHK apartments are most preferred, with 2BHK leading the pack.
So, where is the maximum activity happening? According to Rakesh, “The real estate sector is booming in the suburbs of Hyderabad. Some of the sought-after suburban markets are Serilingampally, Tellapur, Chandanagar-Miyapur, Kokapet, Manikonda, Rajendranagar, and Nizampet. This is because these areas enjoy proximity to the IT corridors of Gachibowli, Kondapur, and Madhapur.”
Major infrastructure upgrades of 2018
Improvement in infrastructure has played a significant role in rejuvenating the Hyderabad real estate market. The Telangana government has proposed an investment of over Rs 20,000 Crore for infrastructure development in Hyderabad. Furthermore, the city’s Outer Ring Road has helped in its multi-directional growth.
Some of the ongoing key infrastructure projects that are expected to give a push to the overall realty market include:
- Construction of the River Musi Expressway
- Extension of the Hyderabad Metro Rail
- Additionally, the government also has identified 52 major junctions in the city to be developed as signal-free junctions
- Several underpasses are also planned from the Jubilee Bus Stand to Shamirpet-Turkapally, Uppal to Ghatkesar, Paradise Junction to Kompally and other locations across Hyderabad
- Some other prominent projects include the 20-acre Smartron Data Centre Campus, Aerospace Park SEZ, Gaming and Animation Park, Pharma City, and the Life Sciences and Medical Devices Park
Decline in unsold inventory
Unsold inventory in Hyderabad has been gradually declining over the past few years. The total unsold stock in Hyderabad has reduced by nearly 29% over the last three years.
The city scores far better than many other metros in terms of unsold real estate inventory and a high rate of absorption. This increased demand has even led to a steep rise in land prices along the western corridor.
Zooming in on RERA’s impact in Telangana
This year marks the first full year of the Real Estate (Regulation and Development) Act or RERA.
RERA’s implementation in Telangana and Hyderabad’s commercial growth are the twin factors that have enhanced the overall real estate climate and ease of doing business in the city. The Hyderabad real estate market is expected to witness new benchmarks in 2019 as the worst of the slump seems to be behind us.
Policy initiatives that enhance this business-friendly and investment-friendly environment are the key to the development of the real estate sector in Telangana. The availability of affordable housing will further bolster the market and widen the pool of potential buyers in 2019.
Nallagandla: This locality has emerged as a key residential destination for tech professionals in Gachibowli and Hitech City. With improved connectivity, it is now transforming into a premium destination for residential real estate.
Kompally: A developing residential hub, Kompally has become a preferred residential destination due to improved social infrastructure and affordable property prices.
Chandanagar: The potential for growth and affordable prices have helped Chandanagar carve a niche for itself in the residential market of Hyderabad.
The impact of the upcoming general elections
According to Rakesh, the early general elections next year should not have any bearing on real estate sales.
“In fact, Hyderabad has contradicted the trend of a market slowdown ahead of the election season. The real estate sector in the city is surging. There is a growing sense of political stability among investors and consumers. However, there will be a significant correction in land prices if the election results in a fractured mandate,” he added.
Affordable housing will set the pace in 2019
This year was probably the breakthrough year for affordable housing.
We expect affordable housing to continue to rule in 2019 as well.
Since affordable housing projects were given a significant boost in the Union Budget 2017-18, the affordable housing segment has quickly become the most incentivised segment for both developers and buyers. Expect more projects in this segment as developers look to entice new homebuyers.
The top five affordable projects of 2018 were:
- Lotus Homes by Modi Builders & Realtors Private Limited
- Modi Properties Paramount Avenue by Modi Properties & Investments Private Limited
- Hi Vision Residency by Hi Vision Developers
- Vasathi Anandi by Vasathi Housing Limited
- Sahabhavana by Andhra Pradesh Rajiv Swagruha Corporation Limited
The wishlist for 2019
The real estate sector has witnessed a significant revolution in the past year with several policy changes. The resulting transparency has forced developers and approval authorities to maintain high levels of compliance. Would 2019 bring in more of the same?
“For 2019, we are looking forward to approvals being processed more quickly with single-window clearance, resulting in reduced construction costs, thereby substantially reducing property costs,” says Rakesh.
Last year’s budget saw the affordable housing segment getting infrastructure status. If infrastructure status is granted to the entire sector in 2019, this will lead to financing being available to the developer at lower interest rates. In turn, this would make projects more affordable for homebuyers. Exciting times ahead!