Hyderabad, the capital of Telangana, emerged as a hub for manufacturing industries due to its strategic position in south-central India in the early 1900s. By the early 2000s, the manufacturing sector here was superseded by the service sector, especially the IT industry, after HITEC City (Hyderabad Information Technology and Engineering Consultancy City) – an IT and financial business district located in west Hyderabad, was developed in 1996. Â The city witnessed an economic boom and an influx of investments driven by the IT industry since the 2000s. However, the pace slowed down during 2008, owing to the global financial crisis and the political instability in the region due to bifurcation of the then state of Andhra Pradesh.
The formation of the Telangana state reinstated political stability in 2014 and its pro-development and business-friendly policies brought Hyderabad back on the radar of global companies and investors. The Telangana State Industrial Infrastructure Corporation Limited (TSIICL) was established in 2014 for developing physical and social infrastructure in industrial areas and potential growth centres. Also, the TS-iPass is in place, which offers single-window clearance and simplified procedures to establish industries in Telangana. The city has attracted nearly USD 12 billion private equity since 2000 and has received 51 percent of these investments between 2014 and 2020 alone.
The real estate development set in motion by the growing population due to a robust IT industry has resulted in the growth of the residential real estate market in recent years especially in the west of Hyderabad, where most of the commercial spaces are concentrated.
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The latest property market trends in the city suggest the following:
- New residential supply in the city registered 13 per cent sequential growth, with 16,482 units launched in Q2 2022.
- The majority (36 per cent) of the new units launched in the April-June quarter belonged to the INR 1-3 crore price bracket, with projects mainly being launched in locales such as Tellapur, Kollur and Gundlapochampally.
- The demand increased by 21 per cent in Q2 2022 as compared to the preceding quarter – the highest growth rate after Ahmedabad amongst the top-eight cities. A total of 7,907 units were sold in the quarter, with the western micro-markets such as Tellapur, Kokapet and Kollur leading the residential sales.
- Properties in the premium range (more than the INR 1 crore price bracket) witnessed maximum traction in Q2 2022, taking a 38 per cent share in the overall sales. Homebuyers in Hyderabad preferred apartments with a 3BHK configuration, which took a share of 50 per cent of the total demand pie.
- Prices for new supply and inventory in Hyderabad continued to firm up on the back of end-user demand throughout the pandemic. Although in the current scenario, our research suggests that the rising input costs have also had a significant impact in pushing the prices up by 7 per cent YoY in Q2 2022. Currently, Hyderabad has the highest property prices (INR 6,100-6,300 per square foot) after Mumbai amongst the top-eight cities.
- Strong growth in the new supply continues to push the unsold inventory levels, which stood at 82,226 units at the end of Q2 2022, registering an 80 per cent YoY growth. At the current sales velocity, developers in the city would take nearly 37 months to offload the existing unsold stock compared to 27 months at the end of Q2 2021.
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