Hyderabad is India's 6th largest metropolis and the 40th largest metropolitan area in the world, with more than 6.1 million people making it a happening place. The IT sector of Hyderabad had spelled bound investors and realtors and not for nothing, the 1500 acre IT Park at Secunderabad has made almost 50% IT buyers in the real estate boom.
Hyderabad has never had it so good. Its real estate prices in fact have never been this high in the last decade. If there is one indication that a city is growing and boasts of a booming economy with promise of more to come, it is in the demand for real estate and the price it commands.
Along with the boom in the number of IT and ITES companies in Hyderabad, the city is also witnessing a corresponding boom in its realty prices. Real estate prices generally fluctuate as per three parameters: demand-supply ratio, site location and the perception of the prime purchaser.
Real estate in Hyderabad has fared positively on all three counts. For the last two or three years, Hyderabad has seen an unprecedented demand for land,spurred by the arrival of IT and ITES companies. The growth of the IT industry has not only increased demand for both office spaces for the companies and residences for their employees , but has also catalyzed the growth of the retail space segment.
Demand for land has clearly far outstripped the supply, thus pushing up land values in pockets earmarked as the IT corridor and the nearest developed areas. Besides, with plans for the International Airport , Fab City, Outer Ring Road and Greater Hyderabad all gradually taking concrete shape, the perception that Hyderabad is happening is gaining currency nationwide, among multinational companies as well as developers.
As a natural corollary, land values in areas close to these are which figure high in plans for Greater Hyderabad have seen a sharp rise in prices.
This price rise is not completely new. Traditionally investing in land at Hyderabad has always been an attractive proposition, with an annual growth rate of about 15-25 percent. However, over the last three years, the rate has increased to a more robust 30-40 per cent. Experts cite several reasons for this above average growth rate.
M L Rao, Equate Consultants says political stability and an industry-friendly environment are the biggest drivers for real estate growth anywhere; the State has been fortunate on both counts, despite the change in the Government. So strong has the positive sentiment been that real estate prices that had been rising steadily till the N Chandrababu Naidu government fell, did not dip but merely stabilized after the Y S Rajasekhara Reddy government came to power.
With the fall of the N Chandrababu Naidu government and the emergence of the TRS as a popular entity, and the farmer friendly image the Congress government rode to power , real estate rates in the city plummeted by nearly15-20 percent.
Hyderabad wouldn't be a `happening' place, people feared. However, most developers adopted a wait and watch policy and simply sat on their land banks, refusing to sell at the low rates that consumers demanded. Developers were quick to admit that very few transactions actually took place during that time.
Land prices on the Srisailam, Warangal and Vijayawada highways suffered the worst dropping as much as 20-25 percent, on fears that Telangana would take Hyderabad with it. But not for long. Those who dared to wait have did actually tide over the crisis and are now catching the wave on the rise.
The decimation of the TRS in the municipal polls, coupled with healthy monsoons , reinforced the feel good factor and was immediately reflected in the land rates surging by as much as 25-30 per cent between September and December 2005.
Besides a stable government and excellent infrastructure, Hyderabad boasts of a reasonably comfortable power position and of development plans initiated by the Government that can only improve infrastructure facilities in a planned manner.
In addition to the increasing number of high net worth individuals and double income families, profits from the booming stock market and real estate business are being pumped into real estate industry itself. Sources also reveal that a large chunk of funds, to the tune of Rs 10,000 crores, that were allotted to contractors as advances for irrigation projects in the State are also making way into the real estate market.
With so much cash freely flowing in,it is clearly a sellers market, leading to unprecedented rates. In fact though the market has seen a 100 per cent rise in prices in the last 18 months, realtors say this is only the tip of the iceberg.
They say that by 2008, certain pockets of the city such as lands close to ORR Phase 1, Gachibowli, Vattinagulapally , Khajaguda, Manikonda, Nadagulla and Tellapur could well see another 100 percent hike. Other parts of the city such as Kukatpally , Kompally, Vijayawada and Mumbai Highways which have so far witnessed 30 per cent increase in the last 18 months, will see at least 40-60 percent increase in the next year and a half.
There will be no dip, experts predict. That must be music to those who have already invested, and is a wake up call to all those who havent, so far.
Private companies, foreign investors, domestic investors and even the state government are all realizing the immense potential in Hyderabad's real estate market. Thanks to the state government, the city has become a favored destination for foreign investors and large corporate houses. The Hyderabad realty market has never been so good in Hyderabad for real estate investors The state government must step in to check such cases so that the benefits of the real estate market can be shared by all.
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