The anointing of Telangana as a new state has given ample reason for real estate developers in Hyderabad to rejoice. It is the general perception in realty circles in Hyderabad that with the political turmoil over Telangana done and dusted, real estate development with be on an upswing, resulting in a surge in the business of real estate developers.
With Hyderabad set to become the common capital for both Telangana and Andhra Pradesh for 10 years, it would result in a fresh frenzy of real estate activity within the city as well as on the outskirts. It is felt that Hyderabad with its top class infrastructure facilites will attract tremendous global investments. This would result in an wider sphere of development activity in the commercial real estate market, thereby paving the way for the overall development of the city, including the outskirts.
The real estate market in Hyderabad was adversely affected since 2009 due to the Telangana issue and the ambiguity regarding its bifurcation. There was hardly a 10% increase in property prices since 2008. As a result, the residential capital values had reached a point of stagnation, prompting developers to seek other lucrative markets like Bangalore and Chennai. With Telangana all set to become a reality, realty in Hyderabad will be the biggest gainer.
Telangana becoming a state would asuage the fears that property developers earlier had with regard to instability in attracting investments. With that hurdle crossed, capital values on residential property in and around Hyderabad is expected to grow by 6-7% annually in 2013 and 2014. Increase in prices is expected to be faster and a narrowing down of the gap is expected in residential capital values with respect to other cities like Bangalore, Chennai and Pune. However, due to the oversupply of commercial rental space, there is expected to be only a marginal rental appreciation.
Demand for commercial/residential property in and around Hyderabad is expected to surge within 2-3 months, with appreciation in value expected in many areas. Some of these areas are the Central Business District areas like Banjara Hills and Jubilee Hills, areas in and around Outer ring road, and places such as Hitech City, Kukatpally, Gachibowli, Chanda Nagar and Miyapur.
It was seen that 1,18,000 residential units were launched by developers in the past 3-4 years, in the region. Of these, as many as 33,000 houses remained unsold, mainly due to the volatile political situation prevailing with respect to Telangana. However, it was seen that there was a 11% increase in residential sales volumes in the first half of FY13 compared to the similar period of FY12. During this period, as many as 8,100 residential units were sold. A further 69,800 units were in various stages of completion, with 70% of them expected to be ready for possession by 2014 end.
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