Hyderabad has seen a 67% increase in residential unit sales in 4Q14-3Q15 compared to the same period a year ago. This proves that buyers are no longer fence-sitters. As the city moved past the global financial crisis (GFC) and later, the formation of Telangana, developers are no longer holding back launches and buyers are also returning to the market.
No. of units sold
This has led to a significant increase in the number of units launched. Moreover, improved economic activity seen during the last six months has led to a better market sentiment. Corporates are also coming in as the political environment has improved. As the government goes all out to bring investments, heightened economic activity can be expected to further bolster the residential realty market.
In the last three quarters alone, launches have picked up strongly – increasing by more than 1.5 times since last year. The overall city-wide numbers are expected to break the same benchmark very soon. Capital values have also witnessed a significant rise in Hyderabad of about 5-10% y-o-y, after many years of seeing sub-5% rate of appreciation. The city is likely to witness further price rise going forward, given its good quality of life and state-of-the-art infrastructure.
As of 3Q15, the western sub-market has already gone past the previous highs of 2008 in terms of launches. This is the most active and dominant sub-market being the key IT hub of Hyderabad, which spans from Nizampet in the north to Narsingi in the south and Madhapur, Kondapur and Gachibowli as its epicentre of development. HITEC City and Gachibowli are its main precincts. More than 85% of the new launches in the past three quarters of 2015 were seen in this micro-market.
The area has a good mix of housing options that range from affordable apartments starting at Rs 3,500 per sq ft to the exclusive luxury villas at prices of Rs 13,500 per sq ft. Local, regional and national players are all present here.
The metro rail is going to become operational in phases over the next two years. Due to this, the important East-West corridor will see more commercial and residential development. As the existing commercial hubs of HITEC City and Gachibowli get saturated, the eastern sub-market – with its comparatively lower rates – will provide for a new alternative and spur growth in an otherwise-dormant side of the city’s real estate market.
Moreover, Telangana’s chief minister has requested local developers to form a consortium and develop satellite townships along outer ring road (ORR). The Tellapur integrated township project is also being resurrected. These developments, along with the metro, will all have long term impacts here.
Authored By: Ashutosh Limaye, National Director – Research, JLL India
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