Hyderabad Real Estate: A City in Waiting
The vitality of real estate is intrinsically linked to the prosperity of businesses within a city. This business health is heavily influenced by effective governance and a population optimistic about the future. In Hyderabad, the influx of new industries has decelerated, despite the city's years of preparation and extensive land allocation for this very purpose.
Beyond the current political climate, a significant factor contributing to the lethargy in Hyderabad’s property market is the existing support for 50-65 lakh housing units. With substantial land acquired in 2007 at prices of 25-35 crore per acre in upscale Hyderabad, coupled with escalating construction expenses, these figures become impractical.
Premium Segment Slowdown
It's widely acknowledged that premium segment construction in Hyderabad has experienced sluggish progress. While leading mid-tier developers in the city have largely sold their inventory, they are adopting a cautious approach before initiating new projects, primarily due to pricing challenges becoming a major factor recently.
Commercial Real Estate Challenges
Even in the commercial office space sector, challenges persist. Consider Knowledge City, for example, where land was purchased at 18-20 crores per acre. The minimum required rents have become unrealistic, with IT rents currently soaring around Rs 40 psf. Globally, companies are observing how governments adapt to dynamic circumstances.
Genuine Buyers Dominate the Market
A recent survey indicates that the Hyderabad market is now primarily composed of genuine home buyers and genuine commercial real estate users. Speculative investors seeking to park money for future gains have virtually disappeared.
Funding Challenges for Builders
The current market realities are impacting developers seeking funding. Recently, an established builder with 15 years of experience and no available stock sought private equity but was unable to secure interest from 17 different PE funds.
