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  • Writer's picturearistechhyd

What factors contributed to Hyderabad Real Estate Market becoming costliest in India?

Updated: May 9


Hyderabad Real Estate
Cyber Towers


Hyderabad ranks among the best places in India for quality of life and affordability. However, Hyderabad Real Estate Market stands as the second most expensive real estate market among the eight major housing markets in India, following Mumbai.


After experiencing a significant price surge over the past eight years, the residential real estate market in Hyderabad has surpassed other major markets in South India, making it the costliest housing market in the region. In the city, renowned as the pharmaceutical capital of India, the average price for new homes and unsold inventories falls between Rs 5500 and Rs 6500per square foot.


An increasing number of prospective homebuyers are choosing Hyderabad as their destination, relocating with their families. Hyderabad has consistently been featured in lists of the 'best cities to live in' for several years.


A Growing Real Estate Industry:


Hyderabad's costs have been going up since the split of Andhra Pradesh in 2014, attracting more investors to the city. Surprisingly, expenses continued to rise even during the slowdown caused by the Coronavirus. There is a high demand for homes in the City of Nizams, where modern skyscrapers coexist with historic minarets and domes.


The primary factor is that the cost of living in the southern city is higher compared to other major Indian cities. Hyderabad has consistently been recognized as the best place to live in India for the fifth consecutive year, according to Mercer's Quality of Living Survey.


This aspect is duly taken into account in the income forecast for the June quarter of 2022. Data shows that 7,910 units were purchased in Hyderabad from April to June 2023, a significant increase from the 2,430 units in the same period in 2021, driven by employment stability boosting the demand for residential real estate.


Chances for Young People


The presence of major corporations and international companies in the city is creating new job opportunities, attracting more young individuals to relocate to Hyderabad. Despite the nationwide impact of the expanding pandemic, Hyderabad's real estate market has been steadily progressing.


While all eight of the country's major cities, including Delhi, Bangalore, and Mumbai, are reported to have come to a complete halt in constructing residential and commercial complexes, Hyderabad has shown the most progress, achieving 90% completion in the shortest time. In the last six months, national home vacancies have dropped by 43%, and sales have decreased by 54%. However, Hyderabad accounts for 64% of the reported sales.


Development of Infrastructure to Support Real Estate Growth


The city of Hyderabad has initiated infrastructure projects to facilitate industrial expansion. Key areas of infrastructure development, including roads, flyovers, cityscape enhancements, and improved water supply, are being given priority. Since 2007, the Hyderabad development plan has successfully completed eight major projects.


The Telangana Government's proposed metro rail project received approval from the Union Ministry of Urban Development. Following the completion of Phase I in 2019, the Telangana government announced Phase II, involving the establishment of a Special Purpose Vehicle (SPV) named "Hyderabad Airport Metro Limited (HAML)," jointly promoted by HMRL and HMDA. The planned blue line extension from Raidurg to Rajiv Gandhi International Airport aims to make travel to the airport more convenient.


The Nehru Outer Ring Road (ORR) in Hyderabad, an eight-lane expressway with a circumference of 128 kilometers, stands out as a significant development for connectivity. It links Hi-Tech City, Financial District, Rajiv Gandhi International Airport, Knowledge Park, and the State Police Academy.


A City Open to Investment


Hyderabad is a sought-after investment destination due to its promising returns. The city has consistently surpassed demand with its robust infrastructure, attracting substantial investments in both residential and industrial sectors. Its exceptional socio-economic infrastructure caters to the needs of global IT industry leaders and IT professionals.


Major companies like Blackstone, Brookfield, and Acendas have already invested in Hyderabad, with more planning to follow suit, indicating a positive outlook among investors. Hyderabad leads in construction, absorption, pricing, office spaces, retail, hotels, investment transactions, and transparency, contributing to the surge in prices due to the market's favorable characteristics.


Conclusion


The Hyderabad Urban Development Authority is steering the city to transform into the new Silicon Valley. Both the Telangana State Government and its predecessor, the Andhra Pradesh State Government, have made substantial efforts to enhance the city's existing infrastructure.

With a surge in demand for larger homes due to widespread permanent work-from-home policies adopted by many organizations post-pandemic, Hyderabad is catering to clients seeking additional space with optimal solutions. Escalating production costs and a growing preference for spacious, luxurious homes are additional factors contributing to the rise in real estate prices in Hyderabad.

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