After struggling through some tough times and sluggish growth for a while, the Hyderabad real estate market may finally be seeing signs of a revival, especially in the residential segment. CNBC-TV18’s Vishwanath Pilla and Ashwin Mohan reports.
Hyderabad's real estate market has remained flat for the last eight months. But no more, it is showing signs of a recovery. And there are three reasons for this revival.
First: An election result that gave a clear mandate against bifurication of Andhra Pradesh. The congress government is against splitting the state into Andhra and Telangana. And this has prompted investors to resume investing in real estate.
The second: Easing of interest rates
Third: Withdrawal of the 5% stamp duty on property up to 1,200 square feet.
The builders did their part. They reduced prices by 15-25%, and altered the product mix, giving buyers better choice and perceived value for money.
Prajay Engineers Syndicate, for instance, converted a portion of its high-end Villa project into affordable housing - selling two-bedroom flats at just Rs 10 lakh.
Ravinder Reddy, Director, Prajay Engineers Syndicate said, “Villas are moving little slowly currently, that's one of the reason why we have brought in a new product in this project, which was not envisaged earlier. With change in environment in the market, we have brought in a product that is readily available."
Sales in Hyderabad has fallen dramatically compared with the last year. Problem compounded by banks becoming cautious on home loans.
But with a revival in interest, even banks are seeing a rise in home loan enquiries.
Anil Girotra, ED, Andhra Bank said, “We are also informed by our builder clients that they started receiving lot of enquiries from the people. So it looks like the activity is going to grow."
However, experts say this revival is skewed towards residential property. Commercial real estate is yet to see a significant recovery. A report by James Lang Lasalle says mall vacancies have climbed 5-15%, and office rentals have fallen 20-25% compared to 2008. Currently, demand for office space in Hyderabad is just 2 million square feet, a pittance, when compared to the supply of 7 million square feet. And this is a cause for concern.
Source: CNBC-TV18
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