Realestate Market in Hyderabad 2020 - Padmasri Townships

The year 2019 did not see the much needed light in real estate sector. It continued to remain bleak. It continued to struggle with a funding crisis in the midst of issues plaguing the NBFC and banking sector. This situation has been further worsened by the Indian economic slowdown in the July-September quarter of 2019-20. This has resulted in a poor demand of housing sector. However, there has been an increase in demand in the commercial spaces especially the co-working segment that is taking the office space by storm.

So far in the Indian real estate sector two major reforms have come into force – the Real Estate Regulatory Authority (RERA) and the Goods and Services Tax (GST). The current real estate situation is such that there is a huge unsold inventory of 4.5 lakh housing units, even while the overall housing requirement in the country remains high.

Let’s see what the year 2020 holds for the real estate sector in India.

How will the housing segment fare in the upcoming year 2020?

This has been the most talked about topic among builders and consumers.  Well, according to the current situation, the housing sector has shifted to the end-user sector from the investor sector. The investor:end-user ratio was 60:40 around 6-7 years ago in metro cities like Mumbai and Delhi. However, with the demand in real estate sector falling and the developers defaulting, most investors have ceased to consider real estate as an asset investment class and moved out. Investor participation in the overall demand has fallen to as low as 5-10 per cent. Buyers these days are unwilling to take any risk and they prefer ready-to-move-in projects. Considering the market conditions, it has been estimated that this trend for preferring ready-to-move-in projects is going to dominate the housing demand up to the next few years despite the improvement in the economic outlook.

Of all the legislative measures taken in 2016 and 2017, an important but neglected ‘Affordable Housing’ was brought into the limelight. However, the government has made a strong push for affordable housing (less than ₹50 lakh) segment. As of now, this segment accounts for around 50 per cent of the total residential housing sales. A large number of small and medium-scale developers are getting into this segment, but the government may have to announce some strong measures to drive further demand.

Numerous measures to promote private sector participation have been taken in the past year – such as awarding infrastructure status to affordable housing, 100% deduction on profits for affordable housing projects, increasing the livable area of the units and relaxed completion timelines, amongst others. However, despite these measures, the segment needs a stronger thrust, in order to be completely viable for private participation. Availability of land, relaxation in development norms, faster approvals for affordable housing projects, better alignment between central and state policies are some of the factors that need to be addressed to allow the segment to achieve its full potential. As these gaps are plugged in, trends such as the use of technology to rationalise construction costs, access to formal sources of capital, wider funding avenues, entry of credible developers are some key trends that will define the segment by 2020. (Source: Real Estate 2020 Footprint for the Future published by CBRE)

Commercial Real Estate in 2020

While the real estate housing sector had been bleak in the past year, the commercial segment has seen quite an improvement. A rise in the IT/ITE sectors in India that is moving towards high value segments like artificial intelligence, data analytics and product development, supporting the rise in demand for office space. Total office transaction in H1 2019 was a strong 28 million sq ft on the back of an all-time high of 48 million sq ft in 2018. Rentals and leasing of office space have also been rising with companies like WhatsApp, Apple, Facebook expanding their presence in India. There is a large office supply lined up for next year too, hence the rental growth may moderate in 2020.

However, in the midst of a rise in the commercial real estate segment in India, Hyderabad needs a special mention. With many companies shifting their base to Hyderabad, the city is growing as an affordable alternative for state-of-the-art office spaces. As per the reports, in the past year, Hyderabad has been a close second to Bengaluru in terms of office transactions. But it can be safely estimated that with the pro-active State government and appropriate infrastructure, Hyderabad’s commercial growth will continue going forward.

Hyderabad real estate forecast 2020

Marked by the Telangana Government’s initiative of ‘Look East’ policy to expand Hyderabad toward eastern side of the city, areas like Uppal, Nagole, Pocharam, Boduppal, Keesara, Bhuvanagiri, Ghatkesar, Yadgirigutta, Bogaram, Sagar Highway and the surrounding localities are gaining momentum in real estate development. Until now, due to the fast-paced IT expansion in the western corridors of Hyderabad, those areas have seen major development, but the eastern parts of Hyderabad have remained neglected. But this move will help in the development of areas located in the east zone of the city. There are some prominent IT firms like Genpact located in Uppal and Infosys and Raheja with their campuses in Pocharam. This area has proper mode of commute through metro connectivity from Nagole to Hitech City and proximity to the ORR. The eastern side therefore becomes the next best alternative in the city for development and for real estate investment before the area spurts into development and the prices of property escalate. 

Areas located in the outskirts of Hyderabad like, Bhoodan pochampally,  Kollur, Kothur, Patancheru, Nandigama and Shadnagar, Srisailam Highway, Kalwakurthy, Tukkuguda, Chevella, Shankarpally, Isnapur, Adibatla, Bhanur, Moinabad, Thimmapur are some of the best places for investment options in residential plots. There are multiple gated community residential plot projects coming up in these areas by reputed builders at affordable rates. As these areas are still under developing stage with proposed pharmaceutical and industrial plants, prices are estimated to rise in 2020 and after. Purchasing a plot in these localities now will promise high returns on investment.

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