As the political dynamics shift at the Centre, N Chandrababu Naidu, the Chief Minister-designate of Andhra Pradesh, has expressed his views on shifting the state capital to Amaravati, a project close to his heart since 2014. Naidu has a history of impressive infrastructural development — he made Hyderabad what it is today. So, does the 430-odd-year-old city have cause for concern? Not so much, say experts.
Given Andhra Pradesh's importance in forming the central government, here's how the real estate market, especially in Telangana capital Hyderabad, has reacted to the election results.
According to real estate consultancy firm ANAROCK, the Hyderabad real estate market has seen values rising by almost 45% between 2021 and 2024. Not only this, but Naidu's strong political comeback is also opening up doors for a greater emphasis on infrastructure and pro-business policies. Some of these could mean drawing more IT firms and other industries to Andhra Pradesh, leading to the development and pick-up of commercial real estate, ANAROCK analysis says.
Fresh development initiatives and improved connectivity may also increase investment in remote locations around Hyderabad, propelling residential sales.
Also read: Government may spend around ₹4 lakh crore over 5 years on the expanded PMAY scheme
ANAROCK's research says, "Hyderabad's residential market has exhibited robust growth between 2021 and Q1 2024, with a cumulative total of approximately 218,800 new residential units launched and 154,300 units sold. 2023 witnessed a peak in activity, recording nearly 76,300 units launched and 61,700 units sold, representing a significant increase of 48% and 143%."
"Property values in Hyderabad also saw a substantial rise between 2021 and Q1 2024. On average, prices appreciated by 45%, reaching ₹6,350/sqft in Q1 2024 from ₹4,372/sqft in 2021," says Prashant Thakur, Regional Director & Head – Research, ANAROCK Group.
West Hyderabad, the zone with the highest concentration of office space, has seen even more robust growth. "Average residential capital values in this region have increased by 52% in the same period. The average price per square foot stands at ₹7,200," says Thakur.
Further, ANAROCK says, "Land prices in Hyderabad have appreciated by over 30% in the last three years. This had influenced prices rises across asset classes in the city."
The Andhra Pradesh Effect
Regarding the volume of residential real estate launches in Hyderabad, the situation may rationalise as investors and buyers scout for competitive opportunities in Andhra Pradesh, which is expected to witness a surge in development along the new growth corridors.
"Andhra Pradesh's potential development can be a double-edged sword for Hyderabad real estate. However, the overall impact is likely to be positive as Andhra Pradesh's growth could spark a ripple effect, attracting businesses and investors to the entire region. This could lead to increased demand for office and commercial space in Hyderabad, especially along key corridors like the Hyderabad-Vijayawada highway. This area is already being primed for development with infrastructure projects and industrial parks, making it a potential growth engine for Hyderabad real estate," says ANAROCK.
The outlook is not all sunny — there are challenges, too. "Some out-migration of businesses or residents to Andhra Pradesh is possible, especially if AP offers lucrative incentives. This could draw some investments away from Hyderabad, leading to a temporary correction in Hyderabad's real estate prices and a potential dip in the commercial real estate market," the research said.
However, the presence of a large talent pool and developed infrastructure of the city, with enhanced connectivity, could make it difficult for companies to venture into a new state in the short term, the research further stated, adding, "While Hyderabad's established infrastructure, strong IT base, and cosmopolitan character are unlikely to diminish significantly, the impact on the city's real estate market will be influenced by how development unfolds in Andhra Pradesh," the research added.
Also read: The comeback of Chandrababu Naidu — a look at TDP chief's fall and rise
Since the bifurcation of the erstwhile Andhra Pradesh into Telangana and residual AP, Hyderabad is the nearest mega-cosmopolitan centre for both states, making it an attractive destination for the population of nerby cities and towns. "It is a preferred location for the people from Andhra Pradesh, as the city offers opportunities for higher education, employment, entertainment, advanced healthcare needs and shopping for special occasions," the research added.
Experts do not find it surprising that there is a significant influx of housing buyers from the adjoining state. "Hyderabad's real estate boom has strong fundamentals driving it. The city's IT-ITeS sector, infrastructure development, and overall business ecosystem are likely to sustain demand for quality housing and commercial spaces. The city's economic activities are well diversified and not limited only to the services sector. Equally strong and able industrial, manufacturing and logistics sectors, along with healthcare and education, drive the demand for real estate in the city. Property price appreciation might be moderate going forward. However, a drastic decline seems unlikely, given the strong underlying demand. Overall, the long-term outlook for Hyderabad's real estate market remains positive. Nevertheless, national market trends and the evolving situation in Andhra Pradesh bear watching," the report said.
However, given the focus on Amaravati, it is essential to see whether the real estate market's development and growth prospects will continue for Hyderabad. Since Naidu has already proved his mettle in developing Hyderabad as a major city with world-class infrastructure and successfully attracted major IT-ITeS, pharmaceutical and industrial companies to the state, will the story repeat in Amaravati?
Also read: Niranjan Hiranandani expects Mumbai slum redevelopment to gain momentum
Given Andhra Pradesh's importance in forming the central government, here's how the real estate market, especially in Telangana capital Hyderabad, has reacted to the election results.
According to real estate consultancy firm ANAROCK, the Hyderabad real estate market has seen values rising by almost 45% between 2021 and 2024. Not only this, but Naidu's strong political comeback is also opening up doors for a greater emphasis on infrastructure and pro-business policies. Some of these could mean drawing more IT firms and other industries to Andhra Pradesh, leading to the development and pick-up of commercial real estate, ANAROCK analysis says.
Fresh development initiatives and improved connectivity may also increase investment in remote locations around Hyderabad, propelling residential sales.
Also read: Government may spend around ₹4 lakh crore over 5 years on the expanded PMAY scheme
ANAROCK's research says, "Hyderabad's residential market has exhibited robust growth between 2021 and Q1 2024, with a cumulative total of approximately 218,800 new residential units launched and 154,300 units sold. 2023 witnessed a peak in activity, recording nearly 76,300 units launched and 61,700 units sold, representing a significant increase of 48% and 143%."
"Property values in Hyderabad also saw a substantial rise between 2021 and Q1 2024. On average, prices appreciated by 45%, reaching ₹6,350/sqft in Q1 2024 from ₹4,372/sqft in 2021," says Prashant Thakur, Regional Director & Head – Research, ANAROCK Group.
West Hyderabad, the zone with the highest concentration of office space, has seen even more robust growth. "Average residential capital values in this region have increased by 52% in the same period. The average price per square foot stands at ₹7,200," says Thakur.
Further, ANAROCK says, "Land prices in Hyderabad have appreciated by over 30% in the last three years. This had influenced prices rises across asset classes in the city."
Also read: Chandrababu Naidu to take oath as Andhra CM for fourth time, Pawan Kalyan to be his deputy
The Andhra Pradesh Effect
Regarding the volume of residential real estate launches in Hyderabad, the situation may rationalise as investors and buyers scout for competitive opportunities in Andhra Pradesh, which is expected to witness a surge in development along the new growth corridors.
"Andhra Pradesh's potential development can be a double-edged sword for Hyderabad real estate. However, the overall impact is likely to be positive as Andhra Pradesh's growth could spark a ripple effect, attracting businesses and investors to the entire region. This could lead to increased demand for office and commercial space in Hyderabad, especially along key corridors like the Hyderabad-Vijayawada highway. This area is already being primed for development with infrastructure projects and industrial parks, making it a potential growth engine for Hyderabad real estate," says ANAROCK.
The outlook is not all sunny — there are challenges, too. "Some out-migration of businesses or residents to Andhra Pradesh is possible, especially if AP offers lucrative incentives. This could draw some investments away from Hyderabad, leading to a temporary correction in Hyderabad's real estate prices and a potential dip in the commercial real estate market," the research said.
However, the presence of a large talent pool and developed infrastructure of the city, with enhanced connectivity, could make it difficult for companies to venture into a new state in the short term, the research further stated, adding, "While Hyderabad's established infrastructure, strong IT base, and cosmopolitan character are unlikely to diminish significantly, the impact on the city's real estate market will be influenced by how development unfolds in Andhra Pradesh," the research added.
Also read: The comeback of Chandrababu Naidu — a look at TDP chief's fall and rise
Since the bifurcation of the erstwhile Andhra Pradesh into Telangana and residual AP, Hyderabad is the nearest mega-cosmopolitan centre for both states, making it an attractive destination for the population of nerby cities and towns. "It is a preferred location for the people from Andhra Pradesh, as the city offers opportunities for higher education, employment, entertainment, advanced healthcare needs and shopping for special occasions," the research added.
Experts do not find it surprising that there is a significant influx of housing buyers from the adjoining state. "Hyderabad's real estate boom has strong fundamentals driving it. The city's IT-ITeS sector, infrastructure development, and overall business ecosystem are likely to sustain demand for quality housing and commercial spaces. The city's economic activities are well diversified and not limited only to the services sector. Equally strong and able industrial, manufacturing and logistics sectors, along with healthcare and education, drive the demand for real estate in the city. Property price appreciation might be moderate going forward. However, a drastic decline seems unlikely, given the strong underlying demand. Overall, the long-term outlook for Hyderabad's real estate market remains positive. Nevertheless, national market trends and the evolving situation in Andhra Pradesh bear watching," the report said.
However, given the focus on Amaravati, it is essential to see whether the real estate market's development and growth prospects will continue for Hyderabad. Since Naidu has already proved his mettle in developing Hyderabad as a major city with world-class infrastructure and successfully attracted major IT-ITeS, pharmaceutical and industrial companies to the state, will the story repeat in Amaravati?
Also read: Niranjan Hiranandani expects Mumbai slum redevelopment to gain momentum
First Published: Jun 11, 2024 4:35 PM IST
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