2nd ICT policy to boost realty across Telangana
Plan for smart cities to fuel property demand in tier-2 & 3 cities
Hyderabad: The second ICT policy 2.0 unveiled recently by Telangana government is likely to provide a great impetus to the real estate sector in the State. It aims to create over 40 smart regions in the State benchmarking with the best smart cities in the world. If these locations are developed in the next five-year period, the real estate boom will definitely be witnessed beyond Hyderabad and across the State, according to real estate sector experts.
The new Information and Communication Technology Policy for 2021-26 is aimed at doubling the IT exports from Telangana to Rs 3 lakh crore from Rs 1.45 lakh crore in FY21 and increasing IT jobs to 10 lakh from around six lakh now. The policy thrust areas include electric vehicle, mobile manufacturing, telecom equipment, semi-conductors and IT hardware. So, the real estate experts anticipate a huge demand for the commercial space which will in turn fuel demand for the residential real estate sector in coming years.
As per CBRE's 'Future is Flex' report, Hyderabad holds 5.7 million sq ft of flex (hybrid of office and industrial space) stock. With an increased focus on hybrid working models by enterprise clients, tier-2 and tier-3 markets are also expected to witness an increase in flex demand. Tier-2 activity is expected to be dominated mostly by domestic operators during the next couple of years.
Preetham Mehra, Executive Director and Head of Government Practice, CBRE India, said: "The policy will not only lead to the State's commercial stock expansion but also open avenues for other realty sectors including residential, warehousing, and retail segments. This will infuse investor interest even beyond Telangana and positively impact the overall infrastructure sector of the State."
He adds, "With distributed development as the mantra for taking IT to tier-2 and tier-3 cities, industrial parks have lately become crucial to encourage investment opportunities. While the established corridors in western Hyderabad continue to witness maximum demand in the foreseeable future, we may expect demand trickling to other cities based on the new initiatives of the State government."
IT Minister KT Rama Rao has announced that over 50,000 jobs would be generated in the IT/ITES sector in tier-2 and tier-3 cities across the State by making these cities IT hubs of the future. Finance Minister T Harish Rao recently laid the first stone for Siddipet Industrial Park as a plug-and-play facility for budding entrepreneurs.
Under the new policy, the government proposed to develop 5 lakh sq ft of plug-and-play space in phase-1 and 10 lakh sq ft in phase-2, particularly for electronics sector. The government also wants to develop new ICT Hubs with plug-and-play model through PPPs to attract investments to tier-2 and tier-3 cities in the State. With these proposals, office space will be built up soon across these cities of the State.
Confederation of Real Estate Developers Association of India (Credai) Telangana hails the new policy. According to Ch Ramchandra Reddy, Chairman, Credai Telangana, the development of office space in other cities brings affordability across the State and removes congestion at capital city. After one year of developing office space, gradually demand will be witnessed for residential space also.
Santhosh Kumar, Vice-Chairman of real estate consultancy Anarock Group, estimates the cost of development of 15 lakh sq ft of plug and play space at Rs 200 - 250 crore, excluding land cost. However, it will depend on the timeliness of the venture as the input costs are on the rise. Since these will be spread across geographies, the development can be accomplished in 24 to 30 months on average.
He told Bizz Buzz, "Hyderabad has continuously recorded office supply in the range of 1-4 million sq ft in the past few years. Nearly 6 million sq ft of office space is under construction and is likely to be delivered in the next few years. Work from home will create a rising demand for plug-n-play locations across the urban locations."
"Investors globally are keenly observing this pattern of changing workplace practices and are exploring opportunities in the shared economy segment. As flexible workspaces gain momentum, we anticipate demand for the new-age managed offices in tier-2 and tier-3 cities to rise with many players of the sharing economy already exercising options in such markets," he added.