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Hyderabad leads India's office supply with 30% share
A JLL report says Hyderabad realty returning to normalcy faster than other cities
Painting a rosy picture about the real estate sector in Hyderabad, real estate consultancy JLL, in a report, said that the performance of the realty sector in the City of Pearls was far better than other cities in the first six months of 2020 despite the ongoing Covid-19 crisis. The report has further maintained that the sector is returning to normalcy in the city faster than other cities. According to the report, the city also led India's office space supply with a 30 per cent share during January-June 2020 (H1 2020), significantly driving the country's office absorption with an 18 per cent share during the same period.
JLL in association with industry body CII brought out the research report titled ' Hyderabad Real Estate - A road map amid the Covid -19 crisis'. The JLL-CII report was released during the virtual conference on 'Telangana's Real Estate & Infra Prospects in the Covid world' held on Friday.
"Hyderabad's positive reaction to the crisis has reflected in the city's real estate performance. The focus of the government on business-friendly policies has helped Hyderabad emerge as a one of the leaders despite the global pandemic," said Sandip Patnaik, Managing Director- Hyderabad, JLL.
Impressive investment in the infrastructure sector and the State's fast track execution has contributed to the city's real estate growth. An active real estate market and strong economic growth along with a thriving startup culture have helped the city to gain one of the leading positions globally, he added.
Demand dynamics in office space real estate remained strong as a few key office leases with large area were closed after the lockdown was relaxed in May 2020. "As the city opened in early May 2020, construction activity resumed in a few projects and a few office projects started operations by June 2020. A total supply of 3.7 million sq. ft was added in H1 2020. The city reported an absorption of 2.1 million sq ft in H1 2020 which dropped the city's vacancy rate to 9.2 per cent," the report said.
On the residential real estate front, Hyderabad witnessed significant traction in new launches even during the lockdown period. Most of these launches were in the northern and eastern submarkets. Despite the healthy volume of launches, good sales kept the city's unsold inventory at the lowest in the country. Construction resumed in many projects in the city, albeit at a slow pace due to reverse migration of construction labourers during the lockdown, it added.
Although Hyderabad is battling with a growing number of Covid-19 cases and the threat of virus spreading looms large, home buyers have started physical site visits. Further, low unsold inventory in the city coupled with good sales allowed top developers to hold base prices of the residential units intact despite Covid crisis. Many developers are also exploring new technology options to ease out the home buying process, the report said. "Hyderabad's resilience comes from the confidence of doing business in the city. Owing to its robust infrastructure along with ease of living, Hyderabad is a major destination for India's young workforce today," said Ramesh Nair, CEO & Country Head, India, JLL.
The JLL report however underlined the need for encouraging manufacturing and other sectors in the city. "Hyderabad's economy is largely dependent on the technology sector, which contributes 65 per cent of the State's economy. This IT-sector driven, unidimensional economic growth is not sustainable in the long run. Alternative economic sectors have to be explored. Projects such as Pharma City should be marketed well to attract new investments in other sectors. The manufacturing sector also needs to be promoted in the city with the help of enabling policy initiatives," it said.
New sectors such as automobiles, semiconductors, and data centre companies should also be encouraged to invest in upcoming locations to create new economic hubs around the city with all essential infrastructure, the research