Affordable housing segment makes its presence felt in Hyderabad

3 min read

Affordable housing segment makes its presence felt in Hyderabad

What is the common connection between the Jet Airways saga playing out now, Anil Ambani and R.Com controversy sometime earlier and the Indian real estate sector 3-4 years earlier? They were/are a veritable mess! The Indian real estate segment was plagued by an uncertain future in the absence of demand, piled up inventory, low sales figures, several brands going bust or failing to deliver on their promises and an all-time low point as far as customer sentiments were concerned.

However, the grimy times are a thing of the past as the Indian real estate sector has well and truly recovered over the last few years and is currently on track towards steady and balanced future growth. The Indian Government has taken pro-active steps towards infusing some life back into the realty segment and these measures seem to have worked, going by recent market trends.

Key factors behind the new revival of Indian real estate

While there are several macro and micro elements that have contributed towards the revival of Indian realty, some of the more prominent ones can be listed here as follows:

  • RERA (Indian real estate’s own Swachchata Abhiyan)
  • Demonetization
  • Benami Property Act
  • Infrastructure status for affordable housing
  • Housing for All by 2022 mission
  • PMAY (Pradhan Mantri Awas Yojana) incentives/subsidies
  • Incentives for affordable housing developers
  • Cut in GST rates from 12% to 5% for under-construction projects and from 8% to 1% for affordable homes

2019 Union Budget was a superhit for realty sector

The 2019 Union Budget was a veritable blockbuster (and they don’t make loads of them these days!) if one takes the reactions of the real estate industry into account. The 2019 Union Budget increased the zero taxation threshold to Rs. 5 lakh while also offering capital gains exemption on two housing units up to Rs. 2 crore once in a lifetime.

In another move tailored to boost demand for second homes, the Budget proposed zero taxes on notional rent assumption in case of self-occupied second homes. The TDS threshold on rentals was also enhanced to Rs. 2.4 lakhs from Rs. 1.8 lakhs previously.

What’s Hyderabad got to do with it?

Hyderabad’s real estate market has been riding the new wave of affordable housing as well. Reports state that Hyderabad is witnessing steady development of its peripheral zones on account of growing affordable housing demand. Multiple projects in this space are coming up or are being planned for areas on the outskirts which will help in decongesting the city in the future.

Areas like Kompally, Patancheru, Shadnagar and Bachupally are some of the biggest beneficiaries of the increased thrust on affordable and mid-range housing projects. Real estate players and buyers are finding the mid-income or affordable categories win-win propositions, fuelling heady growth in these segments.

Key trends worth noting

It’s not just conjecture without substance! Hyderabad’s real estate market is truly on the cusp of skyrocketing future growth, driven majorly by affordable homes. Here are some of the key trends that you might do well to note:

  • Reports state that in H2 2018 itself, an overwhelming 43% of new launches in the city were priced between Rs. 25-50 lakhs on an average.
  • 50% of new launches in this period were priced between Rs. 50 lakhs and Rs. 1 crore.
  • The remainder of new launches were priced between Rs. 1-4 crore or even more.
  • This indicates growing investments in Hyderabad’s affordable housing sector as per experts.
  • People in Hyderabad are seen to prefer homes which are larger and developers are revising/tweaking carpet areas accordingly.
  • The cut in GST rates is expected to encourage the development of more affordable housing units in the near future, while boosting sales volumes and demand likewise.
  • New launches in the affordable housing category should go up considerably in 2019 for Hyderabad provided GST benefits are passed onto buyers.
  • Carpet area issues have been solved with standardized regulations for approval to fast-track project development.
  • As per several studies, Hyderabad was India’s most affordable housing market last year followed by Kolkata and Pune.

Experts feel that affordability levels have gone up considerably throughout the country on account of better interest rates on home loans and stable real estate pricing. Over a period of 2-3 years, property prices in India’s top cities should witness growth of 3-5% while annual household incomes should also go up by 8-9% approximately based on reports.

Hyderabad market report for 2019

So far, Hyderabad has proved to be a lambi race ka ghoda (literally a horse which lasts the course). Without getting anymore into animal analogies, let it suffice to say that the city has been performing exceedingly well right from the beginning of 2019 onwards.

Here are some of the key market indicators to be considered:

  • 4,850 units were added to Hyderabad’s real estate inventory in Q1 2019 as compared to Q4 2018 where 3,940 units were added.
  • This indicates growth of 23% in new supply additions and shows that the market is seeing steady recovery.
  • In Q1 2018, 3,680 units were added in new supply while Q1 2019 had supply levels going up by a whopping 32%.
  • For Q1 2019, sales figures went up by 8% in the city with 5,400 units sold.

While Hyderabad had a positive report card for the first quarter, the country’s top 7 cities cumulatively did well in this period with sales volumes rising by 12%. New supply of residential units also went up by 27% on a quarterly basis. Affordable housing, as expected, accounted for 44% of new housing supply while unsold inventory also came down by a marginal 1% in the first quarter of 2019. As per reports, Pune, Mumbai Metropolitan Region (MMR), National Capital Region (NCR) and Bangalore contributed approximately 87% of the new housing supply in the country cumulatively for this period. New launches across the top 7 Indian cities went up by a massive 91% as compared to Q1 2018. Sales volumes also increased by more than 58% overall for these cities and 78,520 units were sold cumulatively in Q1 2019.

Thus, as can be seen, affordable housing is making its presence felt in Hyderabad and so is the mid-income housing category. With the city witnessing steady influx of professionals from other cities for professional purposes and rapid infrastructural growth, real estate markets are poised for solid growth over the next few years. We hope our hard working techies are listening!

Resident Editor