The congestion in ‘A’ cities like Delhi, Mumbai, Bangalore and Chennai is driving interest in Hyderabad. Realty in the city is literally on fire with big-ticket deals and awards of acres and acres to attract mega projects. The reasons that are pushing Hyderabad realty to the next orbit are scope for expansion into satellite towns, cost advantage and linked infrastructure development.
The growing commercial office space segment of the real estate market in Hyderabad, driven primarily by the IT sector, is steadily moving towards new locations especially to erstwhile suburbs. While development of satellite pockets around the city seems to be the common thread linking all three metros down South, Hyderabad paints a unique picture in realty trends, attracting companies to set up base in the city like no other emerging metropolis.
The market for commercial space is expected to grow at a frenetic pace. The reason is that while prices in certain areas have matched average price levels in other metros, the average price in Hyderabad is still a good 30% lesser than the average price in Bangalore and about 10-11% lesser than those in Chennai, says Andhraproperties.com CEO P S Sudhakar. Rental prices in areas like Ameerpet are still as low as Rs 20 per sq.ft per month.
Some realtors in the city maintain that Hyderabad’s traditional cost advantage is waning due to the flow of IT and allied companies into the city, leading to rise in prices. Land and office space prices have more or less equalised across Bangalore, Chennai and Hyderabad when it comes to the central business district, and few other areas, says Shyam Chandan from Chesterton Meghraj, Hyderabad.
Rental prices for fairshell properties in the Central Business District that lies along the road from Jubilee Hills to Begumpet have risen by 25% in the last few months, touching Rs 28-29 per sq.ft per month. Rental costs in areas like Madhapur are in the range of Rs 37-39 for warmshells and Rs 28-29 for fairshells. “The sale price for a built facility is about Rs 3,000 per sq.ft, just about the same as in other cities in India, Indu Projects MD Syam Prasad Reddy.
Hyderabad, over the years, has continually managed to draw big names like Infosys and Microsoft to set up campuses in the city. And the state government’s ability to provide global companies large tracts of land at concessional rates is a major reason for these companies coming the city’s way. However, as a fallout of this, land prices around these campuses skyrocket. In fact, prices in areas like Gachibowli and Madhapur are expected to touch Mumbai levels in a few years, says Sudhakar
It then seems quite paradoxical then that market pundits continue to be bullish on Hyderabad’s ability to draw companies and developers alike, to invest in real estate in the city. The commercial office space market is expected to grow at a healthy rate for at least the next two-three years, says Reddy.
About 15 million square feet of developed office space is expected to enter the market over the next two years.The reasons for the buoyancy are many. For one, the influx on new property will make sure property prices don’t rise above the current level. Prices are expected to stabilise over the next few years, and either plateau at rates prevalent in cities or stay a touch lower, says Mr Chandan.
Also, Hyderabad’s low cost of living, excellent road infrastructure, the new international airport at Shamshadbad and the proposed metro rail corridor amongst others, have today come to become the differentiating factor for companies to choose Hyderabad over other cities as a destination for setting base. Smaller companies which do not get government patronage come to the city because the bigger companies are moving here and also because of Hyderabad’s other cost advantages, says Mr Reddy.
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