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 By the early 2000s, the manufacturing sector here was superseded by the service sector, especially the IT industry, after HITEC City (Hyderabad Information Technology and Engineering Consultancy City) – an IT and financial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. 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.
The latest property market trends in the city suggest the following:
- Hyderabad has become one of the favourable IT hubs in the country, given its pro-business policies and upcoming quality infrastructure. In line with this, the office leasing activity in the city is closer to Bengaluru, which is leading the commercial real estate absorption amongst the top metros.
- The growing employment opportunities have also catapulted the residential activity in the city, which is evident from the property market trends, where Hyderabad surpassed its southern counterparts Chennai and Bengaluru in both demand and supply, especially post-pandemic.
- The new supply is at an all-time high for the second consecutive year, with 82,801 units launched and registered a 70 per cent YoY growth. The city took a significant share of 19 per cent in overall new launches amongst the top eight cities.
- Maximum new units were launched in the western locales of Tellapur, Kollur and Gundlapochampally. Developers focused on the 3 BHK and 2 BHK units, which took 51 per cent and 35 per cent of the overall new supply.
- Unlike the other top eight cities, Hyderabad continues to witness high demand and consecutive supply for units in mid-and-high-end segments. Of the total new supply, 45 per cent was concentrated in the INR 1-3 crore price range.
- Residential demand in the city grew by 59 per cent YoY in 2022, the highest growth recorded in the top eight cities after Mumbai and Ahmedabad. It surpassed the pre-pandemic levels of 2019 by 15%.
- In line with the supply, the INR 1-3 crore price bracket took the highest share of 40 per cent in the overall sales tally in 2022. The majority of homebuyers in Hyderabad preferred apartments over villas with the 3 BHK (50 per cent share in sales) and 2 BHK (41 per cent) configurations.
- Western micro markets such as Tellapur, Kollur, Gundlapochampally, Puppalaguda and Kokapet continue to record maximum traction in the city. While the presence of IT hubs in the west has pushed the demand in these locales for apartments and villas, residential plots are garnering more interest in northwest suburbs, the airport area and along Pune highway.
- The surplus new supply in Hyderabad has led to the highest growth of 72 per cent YoY in the unsold inventory in 2022 amongst the top cities, which stood at 1,13,064 units at the end of 2022. The inventory overhang increased to 38 months compared to 35 months at the end of 2021.
- Hyderabad recorded a marginal price growth of 4 per cent in new supply and inventory prices in 2022. It has emerged as the second-most expensive residential market after Mumbai, among the top eight cities.
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