Driven by a thriving IT sector and excellent infrastructure, Hyderabad has become a hotbed for real estate, for both domestic and international investors. Let’s delve into the current state of the Hyderabad real estate market, explore the factors shaping its future, and get valuable insights to invest, buy, or sell properties.
The Hyderabad real estate market is at a fascinating crossroads in 2023, poised to shape the city’s skyline in remarkable ways. With its dynamic and ever-evolving nature, Hyderabad’s real estate sector has garnered attention as one of India’s most promising investment hubs.
The city has witnessed a surge in IT expansion & infrastructural development, and a burgeoning job market – all contributing to its rapid urbanisation. From swanky residential complexes to state-of-the-art commercial spaces and retail avenues, Hyderabad’s real estate market offers many opportunities for homebuyers, investors, and entrepreneurs.
Table of Contents
Current State of the Hyderabad Real Estate Market
Recent trends indicate a surge in residential and commercial real estate demand, driven by the city’s expanding job market, infrastructural developments, and a burgeoning population.
Highlights of the Hyderabad Real Estate Market
In the second quarter of 2023, Hyderabad’s residential real estate market experienced a substantial 10.7% quarter-on-quarter growth in demand, reflecting a strong and sustained interest from potential buyers. This period also saw an 8.1% quarter-on-quarter decrease in supply, indicating a shrinking inventory of active listings.
Notably, certain localities in the northwestern part of the city – including Gachibowli, Kondapur, Kukatpally, and Miyapur – remained the top micro-markets that witnessed the highest housing demand. The overall property rates in Hyderabad’s residential market have surged by an impressive 16%, underlining the city’s attractiveness for real estate investments.
Factors Driving the Hyderabad Real Estate Market in 2023
In 2023, several key factors are driving the Hyderabad real estate market, shaping it into a vibrant and dynamic sector, such as:
Fast-paced Infrastructure Development:
The Telangana government’s commitment to develop Hyderabad’s infrastructure is evident. Notably, the construction of the Jawaharlal Nehru Outer Ring Road (JNORR) – mirroring Beijing’s 8-bangles Ring Road – promises swift connectivity across the city.
Additionally, the Metro Rail initiative holds the potential to seamlessly connect the city’s western and eastern zones, especially their vital economic zones, industrial corridors, and IT hubs –
making Hyderabad an increasingly promising destination for real estate investment.
Hub of Commercial Activity:
A study of the real estate market revealed that in the third quarter of CY2020, Hyderabad and Bengaluru emerged as the most popular commercial real estate markets, accounting for 23.7% and 22.9% of pan-India leasing respectively. Also notable were new developments of 3.3 million sq ft centred in Gachibowli and HITECH City submarkets.
Advancement in Infrastructure:
Recent reports reveal that Telangana State has allocated a substantial 63% of its budget to infrastructure and economic development. This investment covers urban and suburban construction, roads, sewerage, bridges, civic amenities, and real estate. Plans include:
- Underground drainage system
- Robust road network
- Water grid
- Enhanced ring road system for improved citywide commuting
Government Support in the Industry:
The Telangana government’s proactive measures have transformed Hyderabad into an international city and a business-friendly hub. Initiatives like the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS) Act aim to create a favourable business environment and enhance Hyderabad’s investment appeal.
These policies, including reforms like RERA and GST, have boosted real estate values and benefited both sellers & buyers. RERA has improved investor confidence by ensuring transparency, mandatory registration, and strict penalties.
Quality of Life:
Hyderabad’s allure extends beyond technology; it offers an exceptional quality of life with favourable indices for cost of living, healthcare, and safety. A 2017 media survey ranked Hyderabad as the safest city in India for women due to its robust security measures, including extensive CCTV coverage and dedicated police patrols.
This secure environment appeals to young professionals working in IT, finance, and ITeS sectors that often require night shifts, as it provides a sense of safety and convenience for their daily commutes.
Upcoming Infrastructure Projects
Hyderabad’s real estate market is poised for a transformative phase, thanks to many upcoming infrastructure projects scheduled for completion in 2023 and beyond.
- One of the most eagerly anticipated projects is the Hyderabad Metro’s Phase II expansion, which will add substantial connectivity to the city.
- Converting 52 significant junctions to signal-free zones will transform the city’s traffic conditions
- Subways and underpasses to be built in significant junctions like Jubilee Bus Stand to Shamirpet-Turkapally, Uppal-Ghatkesar, Paradise Junction-Kompally, and other primary locations
- Critical projects like Aerospace Park SEZ, Gaming and Animation Park, Smartron Data Centre Campus, Pharma City, and Life Sciences & Medical Devices Park
- Construction of Musi River Expressway for beautification and development projects that include riverfront development and pedestrian-friendly pathways
Hyderabad Real Estate Market – Residential Trends
- The city has recorded 5,274 residential property units in month of Feb 2023, valued at ₹2,816 crore
- According to Knight Frank India, house sales registrations declined by 3% YoY in Feb, and registration income collections fell by 1% YoY.
- The city’s residential market is divided into four districts: Hyderabad, Medchal-Malkajgiri, Rangareddy, and Sangareddy.
- Properties priced between ₹2.5 and 5 million (₹25 and 50 lakhs) accounted for 51% of all registrations in Feb 2023
- Demand for properties under ₹2.5 million (₹25 lakhs) remained steady at 18% in Feb 2023
- Property sales registration with a ticket size of over ₹1 cr grew to 10% in Feb 2023, up from 8% last year
- Homes sized 500-1000 sq ft rose by 18% in Feb 2023, up from 14% in Feb 2022
- While homes sized 1,000-2,000 sq ft remained the highest in Feb 2023 with a 68% share, it was below the 73% seen in last year Feb 2022
- Medchal-Malkajgiri area had the highest home sales registrations at 43%, followed by Rangareddy at 39% in Feb 2023. Hyderabad district accounted for 15% of overall registrations.
- The average price of transacted residential properties increased by 3% YoY in Feb 2023.
- Sangareddy district experienced the most significant YoY increase of 9% in Feb 2023, indicating higher-value property sales in the area.
Hyderabad Real Estate Market – Commercial Trends
- In Q3 of FY 2022, Hyderabad saw exceptional growth in net absorption of commercial real estate, driven by the IT and BPM industry expansion
- The city has recorded a gross leasing volume (GLV) of 2.2 million square feet (MSF) in Q3 FY 2022, marking a remarkable 180% YoY increase
- The IT-BPM industry played a significant role, contributing 34% share in this quarter. Professional services and flexible workspaces contributed substantially, with 24% & 13% shares respectively.
- Hyderabad’s commercial real estate sector saw 12% growth compared to FY 2021, with an absorption of around 5.2 MSF in FY 2022
- In 2023, the city added over 8.2 million square feet of new office space, its most significant supply in six years, accounting for 34% of new office space across India’s top 7 markets
- Hyderabad ranked second in net office absorption in 2023, with a 21% share, absorbing 4.03 million square feet
- The average citywide office rental rate in the year 2023 was ₹61/sq ft/month
- IT-ITeS occupiers were the primary demand drivers, constituting 39% of total leasing, followed by manufacturing and industrial occupiers at 22%, and co-working providers at 21% of the office leasing market.
Emerging Submarkets in Hyderabad Real Estate Market
Hyderabad’s real estate landscape is continually evolving, with several emerging submarkets garnering significant attention. Gachibowli, Kondapur, Nallagandla, Kokapet, Narsingi, and Tellapur on the city’s periphery have witnessed remarkable growth. The expansion of the IT corridor towards these regions, coupled with improved connectivity through the Outer Ring Road (ORR), has fuelled their popularity.
In addition, neighbourhoods like Kompally and Shamirpet in the northern part of Hyderabad are emerging as promising investment destinations. The availability of schools, educational institutions, healthcare facilities, and improved infrastructure have played pivotal roles in their growth.
Real Estate Investment Opportunities in Hyderabad
The city’s robust IT and corporate sectors continually attract talent from across the country, creating consistent demand for rental properties. Areas like Gachibowli, HITEC City, and Madhapur are particularly lucrative for investors looking to earn steady rental returns. From residential to commercial and retail spaces, the city’s diverse real estate offerings provide a wide range of choices for investors seeking long-term or short-term gains.
Hyderabad offers fertile ground for luxury real estate projects such as SOBHA Waterfront. This project offers a unique blend of comfort, luxury and convenience. Its strategic location provides easy access to central business districts, educational institutions, healthcare facilities, and entertainment hubs in Hyderabad.
Challenges and Risks in Hyderabad Real Estate Market
Investing in the Hyderabad real estate market offers promising opportunities, but it also comes with challenges and risks that potential investors should consider carefully.
These changes can significantly impact the real estate landscape, such as changes in land-use regulations, zoning laws, or property taxes, which can either boost or hinder investment prospects.
The city can experience fluctuations in property prices due to economic conditions, demand-supply imbalances, or global economic factors. Such volatility can affect the return on investment and the time it takes to realise profits.
The region’s overall economic health, infrastructure development, and geopolitical stability can influence real estate investments. For instance, any adverse economic conditions or political instability in Hyderabad can affect property values.
Sustainability and Green Initiatives in Hyderabad
With its rapid urbanisation, Hyderabad has recognised the significance of adopting green building practices to improve the quality of life for its residents. Green building practices, such as eco-friendly materials, energy-efficient design, and renewable energy sources, have gained prominence in Hyderabad’s real estate sector.
Furthermore, green certifications like LEED (Leadership in Energy and Environmental Design) and IGBC (Indian Green Building Council) are becoming sought-after benchmarks for real estate projects in Hyderabad. These certifications underline the commitment to sustainability and assure buyers about the environmental integrity of their investments.
Future Outlook for Hyderabad Real Estate Market
A blend of optimism and cautious consideration characterises the future outlook for the Hyderabad real estate market beyond 2023. Forecasts indicate that the market is poised for substantial expansion, with its growth primarily fuelled by ongoing infrastructure development, the burgeoning IT and corporate sectors, and a steadily rising population.
It will be imperative to strike a delicate equilibrium between supply and demand to avert the risk of market overheating. Developers must stay flexible and responsive to evolving consumer tastes, which increasingly prioritise sustainability and innovative living solutions.
In conclusion, the current state of the Hyderabad real estate market is marked by dynamic growth, driven by a few elements such as infrastructure development and Hyderabad’s emergence as a technology hub. While opportunities abound, potential investors & homebuyers need to remain vigilant and well-informed.
Monitoring regulatory changes, sustainability initiatives, and innovative real estate developments will be paramount as the market evolves. Making informed decisions and exploring a wide range of options will be vital to navigating this thriving yet competitive landscape.
1. Is it a good time to invest in Hyderabad real estate?
Yes, it is a good time to invest in Hyderabad real estate, but it largely depends on individual circumstances & goals. The city's real estate market has been showing promise due to factors like infrastructure development and the growing IT sector.
2. Why Hyderabad real estate is so costly?
Hyderabad’s real estate is costly due to several factors – including rapid urbanisation, burgeoning IT industry, and increased demand for residential & commercial properties. The city's overall economic growth and infrastructure development also significantly drive property values up.
3. Is Hyderabad real estate in a bubble?
No, Hyderabad's real estate market is not a bubble, but market conditions can change. Bubbles occur when property prices significantly exceed their intrinsic values, leading to a speculative frenzy. To determine if a bubble exists, regularly monitor property price trends, demand-supply dynamics, and investor behaviour. Also, consult with local real estate experts to assess the latest situation.
4. What is the best place to buy a home in Hyderabad?
The best place to buy a home in Hyderabad is one of the highly sought-after areas like Gachibowli, Somajiguda, Jubilee Hills, Banjara Hills, and HITEC City. These areas are popular due to their proximity to IT hubs and upscale amenities. The choice should consider commuting needs, schools, healthcare facilities, personal preferences, and lifestyle.