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Thursday, Nov 14, 2019

As realty numbers stand still, how is Hyderabad still growing?

Policy reform, pro-industry measures and a focus on investment have helped the city boom.

real-estate Updated: Sep 14, 2019 20:38 IST
An increase in office space investment has helped generate employment, leading to a rise in demand for residential realty.
An increase in office space investment has helped generate employment, leading to a rise in demand for residential realty. (AFP)
         

There is no stopping for Hyderabad. Even in a period of stagnancy for the real-estate sector, Hyderabad has consistently registered high growth, year after year. According to a recent report by property consultants JLL India, investments in Hyderabad have surged more than five times, to nearly Rs 101 billion, over the past four year.

There is no stopping for Hyderabad. Even in a period of stagnancy for the real-estate sector, the city has registered growth, year after year. According to a recent report by property consultancy firm JLL India, investments in Hyderabad have surged more than five times, over the past four years.

Hyderabad saw a burst in investment in 2018, attracting three times as much private equity than the previous three-year period, says Satish Vadaga, Hyderabad city lead at Anarock Property Consultants.

Experts point out that multiple factors have come together to make realty so resilient in this city — primarily, a focus on infrastructure, political stability, and policy reform.

“Hyderabad saw a long slump from 2008, as demand for a separate Telangana state was escalating. Investments were really slow at this point, so that did leave a lot of potential space for growth,” points out Samson Arthur, Hyderabad director at property consultancy Knight Frank India.

Data from JLL India shows that there was an annual decline of around 11% in the new residential project launches between 2008 and 2013. After the formation of Telangana in 2014, came stability and a government aggressively pitching for investment. This resulted in a sharp turnaround in residential project launches, with a year-on-year increase of 16% till 2018.

“The current government has introduced pro-industry measures such as the single-window clearance for building permissions and more recently a plan to penalise officers delaying legitimate building projects. But even more than that one needs to consider the significant role played by some politicians like KT Rama Rao, who pitched hard for Hyderabad as the next IT destination city and drew in different multinational companies by making good on their promises,” Arthur highlights.

Office boost

Vadaga agrees that Hyderabad’s growth and development are products of the IT boom in the city. “Increased office leasing activity in the last few years has positioned this as one of the most active commercial markets in the south,” he says.

Along with the increased commercial space investment, which has also resulted in increased employment opportunities, the city still offers affordable residential rates, and ongoing and promised infrastructure projects have seen builders invest in large-scale residential projects across the city.

“We believe the surge in demand for homes in Hyderabad will continue in the years to come,” says Ashish R Puravankara, managing director at Puravankara developers. The company launched a residential project close to the airport in 2016 and has seen consistent value appreciation because of multiple infrastructure projects and better connectivity with the city centre, about 30 km away.

These infrastructure projects include, most notably, the Outer Ring Road and PV Narasimha Rao Expressway, an upcoming high-speed Metro project connecting Hyderabad airport to Raidurg, which is 30.7 km away, and a 30-acre-plus business park planned within the notified airport area.

Improved connectivity within the city has led to newer parts of the city witnessing investment activity, points out Jayashree Kurup, head of editorial content at property aggregator Magicbricks.

“The government proposal for setting up new information technology (IT) parks to decongest areas like Madhapur and Gachibowli and the proposed airport-Metro network are driving momentum towards the southern belt and areas like Rajendranagar, Attapur, Kismatpur and Budwel,” she says.

As demand grows and prices eventually escalate, it will be interesting to see how long the intensity of growth in the city stays at the same pace, Vadaga adds.