A few years back, Hyderabad was offering the likes of
Bangalore stiff competition for attracting office space investments. Today, the
formation of a new state, a new government and a stabilized political
environment are yet to instill the confidence that is needed to revive
Hyderabad’s real estate fortunes. With the Telengana movement picking up pace,
other cities emerged as destinations for IT and ITES players and Hyderabad
lagged behind in the race.
Hyderabad’s superior infrastructure, affordability and
cosmopolitan ethos could have helped it score over many other cities which lack
these attributes. However, the city is still caught in a slump caused by the
partition of two states, and accompanying bifurcation of resources. The
bureaucratic machinery is still trying to sort out domicile issues, roles and
postings of the involved IAS/IPS officers, and proactive decision-making is
visibly lacking.
The Political Effect
Basis the prolonged uncertainty over the last few years, it
was expected that the creation of Telengana would usher a stable policy regime
into Hyderabad. However, it is evident that the kind of clarity that is needed
to fully revive sentiments is still to come. However, it is not practical to
expect overnight results – the successful creation of a new state and the
revision of administrative machinery takes time. It makes no sense to harbor
unrealistic expectations and come to any premature conclusions at this point.
On the plus side, the new state has a new party with a
dynamic chief minister who is very conversant and involved with the ground
realities. Both the party and the government are determined to make Hyderabad a
crown jewel for Telengana in terms of new initiatives and developments. This
involves building confidence, providing stability – and, obviously, attracting
investments. If this determination is followed through upon, it is not unlikely
that Hyderabad will once again offer direct competition to other key IT/ITeS
destinations in early 2015.
The Telangana government’s budget is expected to provide
more clarity on new initiatives and the status of many infrastructure related
developments. Corporates currently invested in Hyderabad are looking forward to
this clarity, which will help them take decisions on their expansion plans and
investments into the city over the coming months.
Commercial Real
Estate – Positive Prospects
On analyzing commercial leasing and absorption in Hyderabad
over the last few years, it emerges that Grade A commercial leasing picked up
from 6.8% in 2011 to 8.6% in 2014. In spite of the uncertain political
environment, Hyderabad still held a 9% share of total Indian office leasing. It
is quite possible that Hyderabad’s share could move into double digits over the
next few months.
Factoring in that Hyderabad will see approximately 2.4
million square feet of Grade A office space leasing in 2014, and using the rule
of thumb that every 100 square feet generates one job, Hyderabad will be
generating 24,000 jobs or more in 2014. This is not a bad run-rate by any
yardstick. There are firm indications that this trend will increase in the near
future, leading to faster and sustained job creation in Hyderabad to boost demand
for housing.
Residential Supply
When compared to other Indian cities, Hyderabad is the only
city which has displayed a less-than-robust trend in terms of new residential
launches over the past few years. In light of the anticipated pick-up in office
absorption and job creation, this effectively means that the supply of quality
residential projects will become a challenge in the coming months.
Also, unlike other cities, Hyderabad’s residential capital
values have not yet breached the 2008-2009 levels. In other words, price
appreciation has at best been moderate in Hyderabad. However, the prospects of
an improving market environment make Hyderabad an excellent mid-to-long term
property investment destination, especially factoring in the relatively low entry
points prevailing now.
Residential Zones –
End-Users And Investors
Hyderabad can be divided into five broad zones for
evaluating residential real estate investments:
Hitech City–Gachibowli: The most
lucrative and well-established zone. With maximum office supply absorption in
this zone, it has the maximum potential for capital appreciation and growth for
investors with a 5-7 years investment horizon.
Uppal-Pocharam: The execution of the
Hyderabad Metro will bring Uppal, the Infosys campus and the Raheja IT campus
in Pocharam closer to the city, and therefore attract more home buyers. Capital
values are currently as low as Rs. 2500/sq.ft., and the prospects of
substantial capital appreciation over a 8-10 year horizon are considerable.
Miyapur-Chandanaga: Being closest to
Hitech City and just 8 km away from the well-established zone, this corridor
attracts budget segment home buyers who cannot afford the rates in the Hitech
City-Gachibowli belt. An emerging location with good roads and social
infrastructure, it has potential to grow with well-established gated
communities in a specific budget range.
North-West Corridor – The Pharma
industry is doing well in East Hyderabad, and this will fuel growth of
investments into villa projects on Outer Ring Road. Capital values for such
units currently range in between Rs. 1.50-2. 5 crore; again, there is
attractive growth potential.
Jubilee Hills-Banjara Hills:
Residential prices in these areas, which are most premium apartments in Hyderabad locations, are still significantly lower than those being quoted in the suburbs
of Mumbai and Delhi. Here are some of the existing projects where high-profile
residents currently or aspire to live in these locations, which also see the
highest demand from expatriate HNIs. In terms of affordability, the price range
for most of these projects is very attractive.
Top Identified
Established & Emerging Projects
Like every other Indian city, Hyderabad has multiple
projects which people aspire to buy into and become part of a distinctly
upgraded lifestyle. Basis the demand and potential, here are the top six
high-profile projects with robust demand from buyers looking for the ideal address
and a property that has notable grow potential in terms of capital appreciation.
Source:
http://www.joneslanglasalleblog.com/realestatecompass/real-estate/2014/10/hyderabad-real-estate/
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