Hyd realty to zoom soon

Knight Frank says US rate hike will boost market

Hyderabad: It may be a strange correlation, but a reputed realty consultancy firm looks to US interest rate hike as a trigger for boom in the Hyderabad real estate business. According to Gulam M Zia, Executive Director of Knight Frank, “…the Hyderabad real estate market will get revived in one year time-frame once the US Fed hikes interest rates.”

Zia said that the growth in the US economy would reflect directly in the job creation through growth in software sector and India will be the major beneficiary in general and Hyderabad in particular. The realty firm has released its first half-year 2015 report that points out the growth of IT corridor and financial district that will generate huge demand for housing sector in Hyderabad, however it may take a year to be visible.

Zia said that the overall growth in real estate industry is possible only when the developers improve their credibility and restore confidence among the buyers. Until then, the industry will have to face ups and downs, he felt. As of now, the Hyderabad realty business still appears gloomy, but the easing effects like rate cuts, ‘Make in India’, and software boom will bring in rewards in the future, says Knight Frank report.

Although there is a rise in the housing prices in Hyderabad in the H1 2015, the realty consultancy firm says it is just a technical as there is an acute supply crunch that helped in reducing unsold inventory and to sustain price growth. The report released on Thursday said that the prices of residential dwellings are showing an upward growth of 2.5 per cent (YoY) for the first half-year 2015.

However, Vasudevan Iyer, Knight Frank, Hyderabad Director, said the housing market is still reeling under subdued and considerable fall in the new launches have added to problems of the realtors. The report added that the unit launches were down by 31 per cent on year-on-year basis, while over 11 per cent of unsold inventory got sold out in the process.

The realty industry, expected to revive once the TRS government took the reins after bifurcation, has measurably failed as the developers are still looking for clear indications of revival before they commit new investments, the report pointed out. Coming to area-wise development, the report said that Gachibowli still commands prominent position, while Kothaguda, Nanakramgud and Kondapur also appears to be significant locations for realty growth.

It further pointed out, that the west of Hyderabad accounts for the largest share of under-construction inventory, followed by North, South, Central and East markets respectively. Coming to office market, Iyer said though city real estate industry was boosted with IT and ITeS business earlier, but now other sectors like e-commerce, healthcare are also taking lead.

For instance, Care Hospitals have purchased about 0.30 mn sq.ft space in Alexandra Medical Centre, which is a largest transaction in the H1 2015. “The Hyderabad market is consolidating in office space segment during H1 2015, but due to dearth of quality office space, the market has failed to sustain the momentum,” he said. In fact, the average deal size of office space plummeted to its lowest level since 2012, due to scarcity of quality office space with large floor plates, he added.