City of high potential

Hyderabad is regaining prominence as one of the leading destinations for real estate in South India. Political stability, the state government’s proactive policies, growing occupier demand, improved infrastructure, quality educational institutions and the availability of a large talent pool have helped bring back attention to the city’s real estate market.

According to market watchers the resurgence of investment activity coupled with new government initiatives has prompted the revival of leasing activity over the past couple of years. According to CBRE India’s latest report ‘The Comeback of Hyderabad’it will be the city to watch over the next few years

Commenting on the positive real estate scenario in the city Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd. said, “With  various investor friendly policies initiated by the state government, and the planned infrastructure development, Hyderabad will be a destination of choice for a number of corporates looking to expand or enter the South India realty market. The proposed infrastructure development planned for the city, is creating a conducive environment and will spur further investment inflow into the city and the state.”

According to the report, the IT/ITeS boom several years ago, coupled with the development of HITEC city, had made Hyderabad the preferred location for technology firms to set up their operations. While this growth was punctuated by  political instability surrounding Telangana, the city is right back on track now. In 2008, office stock stood at 23 million sq. ft. By 2015, this had doubled to approximately 47 million sq. ft.

Affordable residential market

Traditionally recognised as an office market, Hyderabad is also witnessing renewed interest for residential, retail and industrial & logistics space in the recent past. With the influx of IT professionals, demand for quality residential has also witnessed an uptick. When compared to other markets in South India such as Bangalore and Chennai, Hyderabad is an affordable market for residential buyers, especially in the premium/luxury and high end/mid-end segments.

Demand drivers

Ram Chandnani, Managing Director, Advisory & Transaction Services India at CBRE said, “The year 2015 witnessed a marked recovery in occupier demand on the back of strong leasing activity, the timely completion of new commercial developments and investment flows across prominent suburban and peripheral markets. Industry sectors such as IT/ITeS are likely to remain the dominant demand drivers for office space in the Hyderabad, with banking / financial services, pharmaceuticals and outsourcing sectors being the other active sectors that are likely to generate demand for corporate real estate space.”

Increasing retail footprint

As in the case of other cities, commercial development and growth not only influences residential real estate, but also pushes the development of retail. Over the past decade, Hyderabad has witnessed its fair share of demand for high quality organised retail. 

Total organised retail space in Hyderabad city stood at 2.7 million sq. ft. as of June 2016, majority of which is concentrated in Western and Central Hyderabad. 

This is likely to go up by almost 4 million sq. ft. of additional supply in key markets over the next two years, inducing the entry of global retailers into the city.

Various National highways passing through Hyderabad make it a central point for warehousing activity, while the city’s location is ideally suited for the export and import industry. 

Rents in Hyderabad are the most affordable in the whole of Southern region and occupiers who left the city during the political crisis are once again revisiting their options here. 

The Telangana government recently passed the Telangana State Industrial Project Approval and Self-Certification System (TS-IPASS) Bill, which provides speedy processing and clearance for various licenses and certificates required for establishing industries through a single-window system.

This is expected to boost industrial / manufacturing / warehousing growth in and around the city.

Thus, the potential of real estate development in the city is huge and is yet largely unrealised making it a city to watch out for on the realty landscape.  — TNS