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Growth story of Hyderabad residential market gearing up to a new level
Residential market registered a steady 4 per cent YoY increase in sales to 16,267 units for 2019
Hyderabad: Hyderabad residential market registered a steady 4 per cent YoY increase in sales to 16,267 units for 2019, while launches saw 150 per cent year-on-year (YoY) jump to 13,495 units, in response to continued steady uptake of residential units, said real estate consultancy firm Knight Frank.
In the 12th edition of its flagship half-yearly report - India Real Estate - which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2019 (H2 2019) period, the agency said, "Office transactions in Hyderabad clocked an all-time high of 1.2 mnsq m (12.8 million square feet (mnsqft)) in transaction volumes in 2019, registering a significant 82 per cent YoY growth.
The supply of new office spaces also saw a massive 181 per cent YoY increase to 1 mnsq m (10.9 mnsqft) in the same period."
Hyderabad overtook Bangalore in terms of leasing volumes in H2 2019 (Jul – Dec) period demonstrating strong commercial trends in the market.
Residential market highlights
Residential project launches in Hyderabad registered a 150 per cent YoY jump to 13,495 units in 2019. Launches in H2 2019 hit a six-year high of 8,065 units, registering a massive 375 per cent YoY jump.
West Hyderabad, which includes Kukatpally, Madhapur, Kondapur, Gachibowli, Raidurgam andKokapet, saw the highest number of launches in H2 2019 at 5,176 units.
Residential sales in Hyderabad saw a strong 9 per cent YoY growth in H2 2019 and a steady 4 per cent YoY growth in 2019 on account of strong growth in commercial segment activity.
With respect to demand, the INR 8-10 million (INR 80-100 lakh) ticket-size continues to be the most popular residential segment in Hyderabad.
However, in recent times, with the growing office market, there is an increase in middle and senior management personnel in the city who's consumption is prominent in the INR 10-15 million (INR 1-1.5 crore) ticket size apartments.
West Hyderabad continues to be the most preferred location across different price segments. Weighted-average price of homes in Hyderabad witnessed a 10 per cent YoY growth to INR 48,438 / sq m (INR 4,500 /sq ft) in H2 2019.
This strong price growth can be attributed to low supply (seen from until earlier this year) and steady demand. Unsold inventory came down by -39 per cent YoY to 4,397 units in H2 2019 whereas quarters-to-sell (QTS) stand at 1.1, as of H2 2019.
Samson Arthur, Branch Director – Hyderabad, Knight Frank India, said, "The growth story of Hyderabad residential market is gearing up to a new level.
With demand, supply and investments showing an upward movement, the city's residential market remains an attractive proposition for all stakeholders.
Backed by a solid performance from the office market, Hyderabad is likely to see a corresponding surge in housing projects. Despite a price rise, it is interesting to see the sales velocity remaining steady.
The fundamentals for this market remain strong, with an ability to attract further investment from institutional lenders and presence of national developers.
In contrast to the story of India's housing market, Hyderabad is trending as a preferred destination primarily due to demand from IT office growth, immigrant attractiveness and affordable property market."
Office space transactions in Hyderabad clocked an all-time high of 1.2 mnsq m (12.8mnsq ft) in 2019. Hyderabad stood first among the top eight cities of India in half-yearly transactions (at 8.9 mnsq ft) in H2 2019, beating Bengaluru.
The growth in transaction volumes can be attributed to the increased activity of the IT/ITeS industry and of the co-working sector.
The share of IT/ITeS sector in the office space consumption pie of Hyderabad has jumped up from 44 per cent in H2 2018 to 58 per cent in H2 2019.
In terms of the total transacted area, there is a significant 173 per cent YoY growth in IT/ITeS transactions for H2 2019.
The increased presence of IT markets can be attributed to two factors: one is the distinct shift of occupiers toward value-based offerings and the other being infrastructure constraints and price rise in cities like Bengaluru that is increasingly encouraging the IT / ITeS companies to consider Hyderabad for their expansion and consolidation of office space.
Co-working companies accounted for 0.13 mnsq m (1.36 mnsqft) of office space transacted in Hyderabad in H2 2019, a significant 15 per cent of the total H2 2019 transactions.
Demand continues to remain concentrated in West Hyderabad, mainly in and around the HITEC City. Transactions in Peripheral Business District (PBD) West went up by a whopping 544 per cent YoY in H2 2019.
