How Hyderabad became the best-performing realty market amid a nationwide slowdown

[ecis2016.org] While housing prices have seen generous growth in the past five years, Hyderabad also has an inventory profile way better than other prime Indian residential markets. How did the city manage to achieve such a perfect score amid a nationwide lockdown?

Hyderabad’s property market has shown phenomenal resilience against testing times, in the past half-decade. While erstwhile booming housing markets in India reeled under the pressure of a demand slowdown that started in 2014, the capital city of Andhra Pradesh, also fondly referred to as the city of Nizams and is the biggest pharmaceutical hub in India today, stood out in contrast.

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Property prices in Hyderabad

The rise in rates in Hyderabad, coincided with the bifurcation of the state, with Telangana and Andhra Pradesh becoming two separate states in 2014. The fact that Hyderabad continued to feature among the best cities, in terms of quality of life, also meant that the demand for housing was not as badly impacted as in other cities.

[ecis2016.org] Cost of living in Hyderabad

According to ecis2016.org data, the average rate of property in Hyderabad as on September 30, 2020, was Rs 5,593 per sq ft, after undergoing a 6% increase in the past one year. With this price growth, Hyderabad has become the second most-expensive property market among the eight prime Indian residential markets that include Ahmedabad, Bengaluru, Chennai, MMR, NCR, Kolkata and Pune. Mumbai remains the most expensive property market in India, by a long shot.

Weighted average property price in the top 8 residential markets

 Source: Real Insight Q3 2020

Check out all property rates in Hyderabad

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“Unlike most other housing markets, price growth in Hyderabad has been significant in the past five years. Consequently, the city has now turned into the most expensive south Indian market and the most expensive realty market after Mumbai. Considering the prevailing circumstances, growth may remain muted in this parameter in the coming quarters,” says Mani Rangarajan, Group COO, ecis2016.org, Makaan.com and PropTiger.com.

Inventory stock in Hyderabad

Unlike other prime housing markets, developers in Hyderabad are not struggling with huge inventory stock either. At the end of September 2020, Hyderabad had an unsold inventory of 33,072 units, after seeing an annual decline of 9%. This is the lowest level in any big city during the quarter. In fact, the city contributed only 4.6% to the national unsold inventory, which currently consists of 7,23,068 units across eight prime residential markets. Inventory overhang is also the lowest in Hyderabad, where builders would take approximately 25 months to sell off the unsold stock at the current sales velocity.

Now, compare this with the unsold inventory in Bengaluru. There are a total of 72,754 unsold units in the city and these would take approximately 36 months to find takers. In case of Chennai, the inventory overhang is 39 months while the stock consists of 34,902 unsold  homes.

[ecis2016.org] Top localities to invest in Hyderabad

These impressive figures assume greater significance, when seen in light of the fact that housing markets globally are currently under tremendous pressure, because of the Coronavirus pandemic which has battered the economy and impacted consumption.

What makes Hyderabad different from other cities?

While some pin Hyderabad’s success on new infrastructure developments, others cite the city’s brand image. As the connectivity in the city improves owing to the Hyderabad Metro, the city has also retained its top position in Mercer’s Quality of Living Survey-2019, for the fifth time in a row.

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At a time when awareness about cleanliness is growing among home buyers because of the increase in pollution levels, Hyderabad has also managed to score better on this parameter. In the centre’s Swachh Survekshan 2020 survey, the Greater Hyderabad Municipal Corporation (GHMC) was voted the ‘Best Mega City in Citizen Feedback’.

More importantly, unlike property markets in the National Capital Region (NCR), Hyderabad has not been at the receiving end of any negative publicity because of large-scale project delays.

ecis2016.org data shows that over 15,000 housing units have been delayed by five years in this market, as compared to over two lakh homes in the Mumbai Metropolitan Region (MMR).

“Unlike the MMR or NCR, the sizes of housing projects in markets like Hyderabad and Chennai are smaller. Among other things, this also ensures that developers are able to meet project deadlines,” says Ramesh Babu, a Hyderabad-based realty agent.  “Since developers in this region are focused on luxury projects, the market does not face a problem of plenty either,” Babu adds.

Check out properties for sale in Hyderabad

Hub of commercial activity

Besides being a thriving residential market, Hyderabad is also equally successful as a commercial real estate market, data indicate. According to a report by property brokerage firm Cushman & Wakefield, Hyderabad and Bangalore were the most active commercial real estate markets during Q3 CY2020, accounting for 23.7% and 22.9% share in pan-India leasing activity.

According to another report by global brokerage firm JLL, Hyderabad’s office market is showing signs of recovery, with a healthy gross leasing of 1.9 million sq ft during the July-September 2020 period. Net absorption also grew by 31% from the previous quarter to 1.5 million sq ft in Q3 2020. The city saw new completions of 3.3 million sq ft during the quarter, with Gachibowli and HITEC City sub-markets being the highest contributors to new supply.

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Category: Lifestyle