Hyderabad: The real estate sentiment remains one of cautious optimism. Even as the current trends look weak in view of Covid-19, much of Hyderabad real estate market’s key stakeholders are hoping for normalcy to return, which will boost growth across all asset classes.
Though the short-term market sentiment indicates that the investors would prefer to wait till the pandemic comes under control and also look to gauge the impact of the forecasted recession on office space demand in 2020 before investing, the strong fundamentals of Hyderabad could help in faster recovery.
Low vacancy rates in Hyderabad, coupled with the double digit rental growth, have further allured investors. Hyderabad has witnessed a vacancy level of seven per cent in 2019, with the overall office leasing transactions at 12.8 million sq ft.
Rajani Sinha, chief economist & national director, Research, Knight Frank India, told Telangana Today, “Hyderabad has been amongst the leading markets in terms of attracting private equity investments in real estate sector. Over the last decade Hyderabad received $197 million in retail asset class and $2 billion in office segment. However, in the overall real estate investment slowdown in 2020, Hyderabad has not garnered investment in the current year.”
Since 2011, while Mumbai and NCR took the top positions in office space investments with over $5 billion and $2.8 billion, respectively, Hyderabad took the third position accounting for 15 per cent of the overall investments in the country, attracting 12 deals, worth $2 billion.
On the retail investments front, while Mumbai, Pune and Chandigarh topped the national charts with $951 million, $434 million and Rs 267 million, respectively, in the last one decade, Hyderabad stood fourth in the country attracting $197 million.
Samson Arthur, Branch Director — Hyderabad, Knight Frank India, says, “Hyderabad estate market had one of its most extraordinary years in FY 2019-20. It stood second in country amongst highest office transactions in a year. While the real estate sector in Hyderabad has continued to rise from repeated structural reforms and recessionary slowdowns in the past, the current pandemic is unprecedented and hence the real measure of impact is yet to unfold.”
Low vacancy level
The residential sector which was on a growth trajectory is likely to pause and reflect in view of the economic stress. The silver lining for both office and housing, in Hyderabad, is the low quantum of ready stock and thus less vacancy to deal with. Presently, prices across land and built-up spaces are softening in comparison to the escalatory trends of pre-Covid. Standalone and unregulated projects in both office and residential are likely to be affected the most while corporate and organised developers will innovate and adapt to the muted demand.
He added, “Currently, developers are focused on completing their ongoing projects. Future developments will be staggered with demand trends. Pricing is likely to stay softened until a full resumption of economy across key sectors and markets occurs. Ease of capital, return of labour, pricing trends of steel and cement will together impact future pricing.”
Advantage Hyderabad
A key index to observe in Hyderabad is the sentiment of real estate. Hyderabad is part of a young State with high aspirations. It has multiplied its IT/ ITES base in the last few years at a greater speed than before. This has resulted in strong consumer demographics, which has drawn global names in e-commerce and retail such as Amazon, Ikea, and Flipkart to the warehousing real estate sector.
