Hyderabad sees highest growth

Hyderabad: Across eight major cities in India, Hyderabad has reported the maximum increase of 39 per cent y-o-y in housing sales during January-March period of this calendar year as end-user demand surged despite the Covid-19 pandemic, says a recent research report by an online real estate brokerage firm PropTiger.com.

The city also has the lowest inventory overhang, time required to liquidate unsold inventories, of 25 months despite a sharp rise in new supply. Over the past few years, Hyderabad's residential property market, which was affected during the bifurcation into the two states of Andhra Pradesh and Telangana, has witnessed a steady growth in terms of sales, launches and price appreciation. The trend has continued in the first quarter of the 2021 calendar year. As per the research report "Real Insight – Q1CY21", housing sales in the IT city increased by 39 per cent to 7,721 units in January-March this year from 5,554 homes sold in the same period of the 2020 calendar year. The rise in demand was mostly driven by prominent localities of Hyderabad West like Sangareddy, Bachupally and Kompally. In value terms, builders sold properties worth Rs.8,400 crore during Q1 of CY21, up by 34 per cent from the same period last year. "The pro-business State government policies, such as the T-iPass and the ICT Policy, have provided ease of doing business, the effect of which has trickled down to the real estate market," the report said.

On the supply side, Hyderabad saw a jump of 95 per cent in new launches to 7,604 units in the first quarter of this calendar year. It was observed that the maximum new supply was concentrated in the localities of Nallagandla and Kompally. Nearly 49 per cent of the new supply was concentrated in the more than Rs.75 lakh price bracket in Q1 of CY21. Units priced between Rs.45–75 lakh had a share of 40 per cent in overall launches.

The share of units with 2BHK configuration has increased to 48 per cent in Q1 of CY21 from 28 percent in the same period in the previous year. "The primary residential market of Hyderabad performed very well during the first quarter of 2021 calendar year and has surpassed the pre-Covid sales numbers," said Mani Rangarajan, Group Chief Operating Officer of Housing.com, Makaan.com and PropTiger.com. After a huge setback during the April-June quarter of 2020, he said "The housing sales revived on pent up and festival demand, low interest rates and stable prices. The sales between July last year and March this year were strong, especially for trusted developers. However, the demand has slowed down since April because of the second wave of the pandemic." Although it is too early to assess the adverse impact of the second wave, it has definitely put a brake on the revival of housing demand. The real estate industry is more prepared this time to handle the situation. The kind of acceleration we have seen during the last one year in adoption of digital tools for marketing and sales is very encouraging, Rangarajan observed.

Due to the sharp rise in new supply, the unsold housing stock in the city rose 26 per cent y-o-y to 39,191 units. Considering the current sales velocity, the rise in the numbers of unsold housing units is not a concern. Among the eight major cities in the country, Hyderabad has the lowest inventory overhang of 25 months, which means it would take little more than two years for builders to sell all of these unsold units. The inventory overhang for all the eight cities is around four years on average and ranges approximately between 3 to 5 years for all cities other than Hyderabad.

Residential apartments costing more than Rs.75 lakh contributed 54 per cent to the total sales during Q1 of CY21. The units ranging between Rs.45-75 lakh accounted for 31 per cent of the total sales. In line with the national trend of growing preference for larger and quality homes from trusted developers, Hyderabad customers opted for 3BHK configuration. 3BHK contributed 48 per cent to the total sales, followed by 2BHK with 44 per cent. Housing prices appreciated by 5 per cent y-o-y during January-March 2021, driven by end-user demand in key locations. The weighted average price in the city is Rs.5,713 per square foot. Analysing the listings data on the Housing.com platform to get a sense of online demand, it was seen that that Kondapur, Kukatpally, Nizampet, Miyapur and Kompally saw maximum demand for buying homes in the first quarter of CY 2021. The maximum searches were for 1BHK followed by 2BHK although sales were the highest for 3BHK as noted above. Units priced between Rs.50 lakh to Rs.1 crore saw maximum traction in localities of Kondapur, Miyapur and Kompally. Kukatpally and Nizampet saw most of the enquiries for units priced below Rs.50 lakh.