Hyderabad clocks highest growth in sales, lowest inventory overhang among top 8 cities in Q1 CY 2021: PropTiger report

Across eight major cities in India, Hyderabad has reported the maximum increase of 39% year-on-year in housing sales during the January-March period of this calendar year (2021) as end-user demand surged in spite of the COVID-19 pandemic, says a recent research report by leading online real estate brokerage firm, PropTiger.com. The city also had the lowest inventory overhang (time required to liquidate unsold inventories) of 25 months, despite a sharp rise in new supply.

Over the past few years, Hyderabad’s residential property market, which was affected during the bifurcation of the state into Andhra Pradesh and Telangana, has witnessed a steady growth in terms of sales, launches and price appreciation. The trend has continued in the first quarter of the 2021 calendar year.

 

Source: DataLabs, PropTiger Research

 

Demand

• According to PropTiger.com’s recent research report, ‘Real Insight – Q1CY21’, housing sales in the IT city increased by 39% to 7,721 units in January-March 2021 from 5,554 homes sold in the same period of 2020.
• The rise in demand was mostly driven by prominent localities of Hyderabad west like Sangareddy, Bachupally and Kompally.
• In terms of value, builders sold properties worth Rs 8,400 crores during Q1 2021, up by 34% from the same period in 2020.

“The pro-business policies of the state government, such as the T-iPass and the ICT Policy, have provided ease of doing business, the effect of which has trickled down to the real estate market,” the report said.

“The primary residential market of Hyderabad performed very well during the first quarter of the 2021 calendar year and has surpassed the pre-COVID sales numbers,” said Mani Rangarajan, group chief operating officer of Housing.com, Makaan.com and PropTiger.com. After a huge setback during the April-June quarter of 2020, he said ‘the housing sales revived on pent-up and festival demand, low interest rates and stable prices’. “Sales between July 2020 and March 2021 were strong, especially for trusted developers,” Rangarajan said.

However, demand has slowed down since April 2021, because of the second wave of the COVID-19 pandemic. “Although it is too early to assess the adverse impact of the second wave, it has definitely put a brake on the revival of housing demand,” Rangarajan added. He noted that the real estate industry was more prepared this time to handle the situation. “The kind of acceleration we have seen during the last one year, in the adoption of digital tools for marketing and sales, is very encouraging,” he observed.

 

Demand analysis on the basis of ticket size and unit configuration:

• While analysing the demand in different price brackets, the report found that apartments costing more than Rs 75 lakhs contributed 54% to the total sales during Q1 of CY 2021.
• Units ranging between Rs 45 lakhs and Rs 75 lakhs accounted for 31% of the total sales.
• In line with the national trend of growing preference for larger and quality homes from trusted developers, Hyderabad customers opted for 3BHK configurations. 3BHKs contributed 48% to the total sales, followed by 2BHKs with 44%.

 

New launches

• On the supply side, Hyderabad saw a jump of 95% in new launches to 7,604 units in the first quarter of CY 2021.
• It was observed that the maximum new supply was concentrated in the localities of Nallagandla and Kompally.
• Nearly 49% of the new supply was concentrated in the more than Rs 75 lakhs price bracket in January-March 2021. Units priced between Rs 45 lakhs and Rs 75 lakhs had a share of 40% in overall launches.
• The share of 2BHK units increased to 48% in Q1 2021 from 28% in the same period in the previous year.

See also: Affordable housing keeping Indian real estate afloat: PropTiger.com report

 

Unsold inventory

• Due to the sharp rise in new supply, the unsold housing stock in the city rose 26% year-on-year to 39,191 units.
• Considering the current sales velocity, the rise in the numbers of unsold housing units is not a concern.
• Among the eight major cities in the country, Hyderabad has the lowest inventory overhang of 25 months, which means it would take little more than two years for builders to sell all of these unsold units.
• The inventory overhang for all the eight cities is around four years on average and ranges approximately between three to five years for all cities other than Hyderabad.

 

Inventory overhang

City	Inventory overhang (in months)
Ahmedabad	42
Bangalore	37
NCR	68
Chennai	40
Hyderabad	25
Kolkata	36
Mumbai	62
Pune	41
India	47

Source: DataLabs, PropTiger Research

 

Price trend

Housing prices appreciated by 5% year-on-year during January-March 2021, driven by end-user-demand in key locations. The weighted average property prices in Hyderabad was Rs 5,713 per sq ft.

See also: Cost of living in Hyderabad

 

Virtual demand

• Analysing the listings data on the Housing.com platform to get a sense of online demand, it was seen that Kondapur, Kukatpally, Nizampet, Miyapur and Kompally saw maximum demand for buying homes in the first quarter of CY 2021.
• The maximum searches were for the 1BHK configuration, followed by 2BHK, although sales were the highest for 3BHK configuration as noted above.
• Units priced between Rs 50 lakhs to Rs 1 crore saw maximum traction in the localities of Kondapur, Miyapur and Kompally.
• Kukatpally and Nizampet saw most of the enquiries for units priced below Rs 50 lakhs.