Why Hyderabad real estate is literally racing ahead of its peers

Why Hyderabad real estate is literally racing ahead of its peers

Every housing market tells a distinctive story, be it of progress/success, capitulation, mixed sentiments and so on. There are intrinsic themes that run through real estate markets which are growth engines for every major city worth its salt. To put it in the context of the popular movie Gully Boy’s superhit rap number Apna Time Aayega, Hyderabad’s time is now. The city has been flourishing in terms of its real estate market and is racing ahead of other major cities in the country as per reports and studies.

Hyderabad has been consistently witnessing improvements across multiple real estate segments. When a few basic aspects are considered, experts highlight that the city has outstripped overall growth witnessed by some of India’s top housing markets, namely Delhi-NCR, Mumbai and Bangalore.

How Hyderabad’s real estate market is consistently witnessing growth

Hyderabad’s realty market figures show a story of hard-won progress, one that looks likely to continue for quite some time now. Here are some of the key aspects worth keeping in mind.

  • Studies highlight how Hyderabad is the top city in India with regard to absorption of office space in the quarter between January and March this year.
  • Bangalore comes in at a distant number two in terms of overall absorption volumes. This trend has also been seen in case of private equity investments made by firms based in Singapore and other global markets.
  • Having attained pole position in the investment list, Hyderabad has zoomed ahead of Chennai and Bangalore to become Southern India’s numero uno realty hub.
  • Office leasing volumes touched a whopping 3.5 million sq. ft. in Q1 2019, contributing more than 27% of overall leasing in India.
  • In comparison, Bangalore and Mumbai saw office leasing volumes of 2.5 million sq. ft. and 2.1 million sq. ft. while the NCR’s tally stood at 1.6 million sq. ft.
  • Hyderabad is expected to witness 30 million sq. ft. in new office space additions over the next couple of years.
  • 4,850 residential units were also added to the city’s overall inventory for Q1 2019 as compared to 3,680 units in Q1 2018. This indicates 32% of growth.
  • Sales volumes of housing units went up by 8% in this period with 5,400 units.
  • 5 new shopping malls are also expected to be completed in 2019-20 alone with more to follow.
  • Metro railway connectivity will boost large stretches in Hyderabad with regard to real estate development. Last mile connectivity will increase drastically along with lower commuting times. This will spur development of office, retail and residential markets throughout the city.
  • Private equity investments have touched close to $1.5 billion between 2015-2018 and $875 million was pumped in by private equity investors from Singapore like GIC, Ascendas and Xander. $750 million came in from Singapore based PE investors between 2017-18.

Ascendas, for instance, has been investing considerably in commercial real estate while GIC has also pumped in almost $77 million for the Waverock project helmed by ICICI Venture. PE investments have skyrocketed with Hyderabad getting more than $1.1 billion last year.

Real estate growth scales up government revenues

With Hyderabad’s real estate market in overdrive, the government is not complaining at all! Far from it! The authorities are happy with the revenues being realized by the stamps and registration department. The record high of Rs. 5,357.37 crore was achieved as revenue collection for the last fiscal. This is higher by 28% as compared to the year before FY2018-19.

Here are some of the figures worth checking out:

  • Revenues touched a whopping Rs. 1,211.9 crore and Rs. 1,816.77 crore for Medchal-Malkajgiri and Ranga Reddy district due to the real estate boom.
  • Hyderabad district contributed Rs. 452.80 crore.
  • Apartment sales helped the department notch up Rs. 1,448.73 crore while Rs. 1,719.65 crore was earned through sales of independent homes in and around the city.
  • Open plots contributed Rs. 1,367.29 crore while agricultural land accounted for Rs. 1,174 crore.
  • The real estate boom contributed mostly towards increasing revenues and Hyderabad was comparatively affordable as a metro even in comparison to other Tier-II and III cities such as Ludhiana, Vijayawada and Visakhapatnam as per experts.
  • Political stability and infrastructural growth are expected to keep the realty boom going.
  • Higher earners in real estate include Warangal, Nalgonda, Medak, Adilabad, Khammam, Nizamabad and Karimnagar among other areas.

What drives Hyderabad’s real estate market?

Hyderabad continues to benefit from high interest of corporates, MNCs and investors. Political stability has been a major factor behind the rapid growth of the real estate sector along with infrastructural projects like the metro railway network. Hyderabad is also improving in terms of overall traffic management and several big-ticket office leasing transactions have also boosted growth in the realty space. There is the metro railway that will come to the Raidurg region and this will improve connectivity in the IT hub while new roads are also being built. There are several new companies who are now looking to commence operations in Hyderabad which is leading to higher employment and housing demand in turn.

The office space segment will keep growing further, sparking demand in the residential segment as well. Additionally, this will rub off positively on the retail sector as well as per experts. IT and ITeS continue to be the key leasing growth drivers in the city along with the manufacturing and engineering segments. There were several deals seen in the IT corridor across Kondapur and Raidurg along with various SEZ transactions. Several US MNCs and other corporates have also been highly active in the office leasing space in recent times. A big SEZ has been added to the inventory in Hyderabad along with two IT projects at Kondapur and Raidurg and also a medium SEZ at Kokapet. A medium SEZ has also come up in the PBD (peripheral business district).

Co-working has also emerged as a major growth driver, contributing approximately 3% of overall leasing volumes. Several co-working companies are actively investing in commercial real estate which is also helping real estate developers shore up sales volumes and margins. Hyderabad is steadily becoming the most preferred market in South India for co-working operators. Real estate developers in the city also benefit from policies that heighten the overall ease of conducting business while the city also attracts companies in droves since it offers the lowest rental rates for offices in South India.

Additionally, Hyderabad has well-developed and rapidly developing physical and social infrastructure along with a skilled talent pool and ample land availability in tandem with good power supply and lower living costs. These are all factors that have contributed towards real estate growth in the city and the momentum looks set to continue in the future as well.

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