Demand for residences to grow in Hyderabad

Hyderabad: The demand for residential properties in Hyderabad is all set to grow in the upcoming months even as it faced a slow recovery in the months preceding the pandemic. With a heightened demand from young buyers, rising sentiments of homeownership, offers and discounts from developers, and a lower rate of interest for housing loans […]

Hyderabad: The demand for residential properties in Hyderabad is all set to grow in the upcoming months even as it faced a slow recovery in the months preceding the pandemic.

With a heightened demand from young buyers, rising sentiments of homeownership, offers and discounts from developers, and a lower rate of interest for housing loans will propel the demand for residential houses. While apartments will still be most preferred, experts point out that the new generation of buyers are looking at villas and plots with similar weightage.

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“The Covid-19 accelerated the trend of youngsters buying homes as a haven and the results are visible in the residential real estate segment of Hyderabad. The IT/ITeS, pharmaceuticals together with BFSI, and the industrial segments have been driving the housing demand across the various sub-segments of the residential asset class. The average age of people investing in real estate currently is 35 years, significantly lower than the trend in the past few decades where the buyers’ demography was over 50 years of age,” says a report titled Telangana – A State on the Move by Credai-Anarock.

The report points at reforms like demonetization, RERA, GST, and IBC altering the residential real estate sector and the last two years before the pandemic saw a near equilibrium of supply and demand. However, post the Covid-19 pandemic, the segment saw some kind of slump and a retrieval of supply and demand was witnessed in the last two quarters of 2020.

“The supply was aggressively added as many developers had approvals for the projects which had been postponed due to the unprecedented crisis created by pandemic. The post-pandemic period also witnessed a revival in quarterly demand for residential assets and had achieved the pre-pandemic levels of 2019. As the supply had already gained momentum, the demand is expected to catch up soon,” the report says.

It also adds that there is a high possibility of a trend reversal in the short-term where the demand is likely to exceed supply resulting in the reduction of the available inventory and creating ground for an upward price revision.

Zonal break-up of demand and supply:

The report illustrates that the western and northern regions of the city have been the most preferred ones due to the concentration of employment zones. From 2020 till the third quarter of 2021, the western market continued to dominate with 60 per cent share while northern region accounts for a 34 per cent of the supply and demand each.

“It is imperative to decentralize the development and move towards other regions. While the physical infrastructure is already established in the eastern and southern regions, some incentives and focus by the government will be influential to generate interest from buyers, investors, and developers. This will help in reducing burden on the western and northern zones of the city,” the report informs.

Budget analysis:

The increased employment in high-income generating sectors like IT/ITeS, BFSI, and pharmaceuticals has resulted in an increased demand for houses in the mid-end and high-end segments. Buyers are looking at properties either in the price range of Rs 40 lakh to Rs 80 lakh or are willing to spend between Rs 80 lakh and Rs 1.5 crore. About 75 per cent of the supply has been infused in these segments.

Compared to last two quarters of 2020, the supply share of properties below Rs 40 lakh has dipped from 27 per cent in the third quarter of 2020 to 11 per cent in the same period in 2021. Meanwhile, the supply share of properties which are priced above Rs 1.5 crore and even above Rs 2.5 crore has increased from zero in Q3 2020 to 14 per cent in the same quarter in 2021.

For Info:

Split of demand and supply (between 2020- nine months of 2021) in Hyderabad

Zone Supply (% share) Demand (% share)

West 62 60

North 34 34

South 2 3

East 2 2

Central 0 1

Supply trend by budget:

Budget Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

Below Rs 40 lakh 27%             15%            5%                      4% 11%

Rs 40 L – Rs 80 L 61%             36%           61% 19% 42%

Rs 80 L – Rs 1.5 Cr 12%          47% 28%    63% 35%

Rs 1.5 Cr – Rs 2.5 Cr 0             1%            3%                       14% 11%

More than 2.5 Cr 0                   1%                   3% 0              3%

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