The ongoing political crisis over Telangana has pushed Hyderabad’s residential market into hibernation over the last two years, with nearly 28% of the total units launched lying unsold till date, a study by Knight Frank Research has indicated.
According to the Knight Frank study on ‘Residential Traction @ Glance – Hyderabad,’ the unsold inventory levels in the Hyderabad market are higher that the other metros like Mumbai, Chennai and Bangalore. “Hyderabad shows the highest quarters to sell (QTS) ratio among the six metros. QTS refers to the number of quarters required to exhaust the existing unsold inventory in the city. As per our analysis, the QTS ratio for Hyderabad stands 9, which indicates that it would take more than two years to absorb the current unsold inventory,” the report said. While the QTS for Mumbai is 7, that for Chennai and Bangalore is between 5 and 6, the report added.
Blaming the prevailing political uncertainties for the long-drawn slump, the report indicated that the buyer sentiment in Hyderabad is low hitting the absorption of residential units. “Despite competitive capital values as compared to other metros, the Hyderabad market has failed to pick up the anticipated pace. Political instability over the Telangana issue is the primary reason for this. Since the residential sector is highly sentiment driven, the Hyderabad market has failed to attract buyers,” the report said.
However, pockets closer to the IT/ ITeS hub of Madhapur and Hi-Tech city have gathered momentum both in terms of supply and demand, the report pointed out. “Nearly 69,800 residential units are under various stages of construction in the Hyderabad market. About 70% of this is expected to be ready for possession by the end of 2014. Of the total units under construction, the western locations of Madhapur, Gachibowli, Kukatpally, Manikonda, Kondapur, Hi-tech city and Nallagandla account for a significant 59% share. The high quantum of residential supply in these locations is due to the strong demand, availability of large land parcels and proximity to the commercial hub,” the report said.
On the future outlook, the report said that the demand for residential units is expected to remain steady in the coming quarters. “Unlike other metros, buyers prefer a ready-to-move in property. Hence, demand is expected to remain steady in the coming quarters, especially in the western zone,” it said.
It further pointed out that the low prices of residential properties provides a good opportunity for end-users as well as investors as the capital values of the units are not expected to go up drastically due to ample unsold inventory in the market.
The report said that the development of the Outer Ring Road (ORR) is also expected to push developers to launch projects in far flung locations at lower prices, without compromising on connectivity in the coming months.
