Written by Naveen Gadde:
Hyderabad has rapidly emerged as one of the fastest-growing real estate markets in India. Recording a 49 per cent growth in housing sales in 2023, the historic city has emerged as a magnet for real estate developers and investors. In the first half of this year, Hyderabad recorded a five-year high in housing sales value with Rs 58,481 crore. In June 2024 alone, the city recorded the sales of residential properties worth Rs 4288 crore. With regards to office leasing, the city recorded a healthy 2.5 million square feet (MSF) of office space leasing, surpassing the average quarterly leasing activity of 2023 by 11 per cent.
The demand for office space has been also driven by the Banking, Financial Services, and Insurance (BFSI) sector, which accounted for 36 per cent of gross leasing, followed by the IT sector at 23 per cent. In its turn, flexible workspace operators accounted for as much as 20 per cent of the leasing activity, nearly double the average volumes seen in the previous year.
Seemingly, the growth in Hyderabad real estate is mirroring the real estate trend across major cities such as Delhi-NCR, Mumbai, Bangalore, Pune, Kolkata, etc., and all of them are experiencing a positive growth story. A number of factors such as increasing economic prosperity and associated maturing of purchasing power amongst Indian citizens, rising customer aspirations, fiscal policies controlling economic inflation, regulatory measures implemented by RERA that’s restoring people’s trust on the real estate, and various Government policies promoting real estate segment are contributing to the nationwide real estate boom. However, the following are some of the Telangana- and/or Hyderabad-specific trends that have made the city of pearls an attraction for developers and investors.
FDI in Telangana: Overall, Telangana has been doing extremely well in showcasing its potential as an investment destination to global investors. Consequently, the state has doubled its FDI inflows to USD 3billion, and have broken into the top 5 states to receive investments in the country. Being the state capital, Hyderabad is at the centre of the investment, with businesses like that of Amazon’s showing deep interest in the city. The incoming of businesses naturally boosts the commercial, retail, and even residential real estate in the city as it creates more economic value and generates more high quality employment.
Strengthening Business Environment: The growing FDI is also reflective of the corporatization that the city has experienced over the years. Hyderabad, once known primarily for its rich history and culinary delights, has transformed into a thriving metropolis at the forefront of India’s technological revolution. This metamorphosis has catalyzed a remarkable surge in the city’s real estate sector, attracting both domestic and international investors. The city’s evolving IT industry has powered its economic growth.
Government reports have revealed that Telangana has witnessed a staggering 31% increase in IT and IT-enabled services exports in 2022-23. The expansion of IT ecosystem has the city’s urban landscape, giving a boost to office leasing and promoting residential developments around key office hubs in Hyderabad.
The rise of Hyderabad-based HNWIs: The surge in premium and luxury real estate is evidence of growing interest of high-net-worth-individuals (HNWI) in Indian real estate. However, Hyderabad has done incredibly well in developing its own treasure of HNWIs. As per an International Industry study conducted by Henley and Partners, as of December 2022, Hyderabad had recorded 78% growth in millionaires, ranking 10th globally in HNWI growth, with Bengaluru being the only Indian city to feature above in the International list. This growth is reflective of the increasing economic prosperity and better purchasing power of citizens, creating a local reserve of ‘individuals with investable wealth of $1 million or more’.
Positive Business-centric policies: Various government policies, both from the state and centre, has benefited the overall economic environment in the state of Telangana. The passing of the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS) Act has given a boost to the industries. It is estimated that the act contributed to the state gaining an investment of Rs 3.30 lakh crore in past decade.
Increasing customer trust on the real estate sector: From a real estate perspective, the implementation of RERA has provided a more stable and transparent environment for real estate transactions. Its initiatives have bolstered investor confidence and streamlined business processes in the sector. Notably, housing projects in Hyderabad have achieved an impressive 74% completion rate, instilling confidence among investors and homebuyers alike.
Looking ahead, the city is poised for further growth, with projections indicating the addition of more than 1.3 lakh housing units over the next two to three years. This expansion is expected to drive significant revenue from property sales in 2024. The office and commercial real estate sector has been equally positive. The city accounted for 31% of total office space acquired by Global Capability Centres across the country in the first half of 2024. With robust fundamentals and strong tailwinds, Hyderabad will remain a magnet for real estate developers and investors in the near future.
(The author is the founder and MD of Navanaami. Views are personal)
