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Residential property insights of Hyderabad in financial year [Apr2020-Mar2021] – a perspective for Home buyers in Hyderabad

A lot of research has been done on Quarter 1 through Quarter 4 of financial year 2020-21 to see how the real estate market of Hyderabad is trending. The turmoil of pandemic unfolded with Jan and Feb of 2020 being the start of the COVID era. The Q1 of financial year starting April, May, June saw LOCKDOWN. Q2 of 2020 comprising July, August, September saw the unlock phase with the hope of vaccine being found and tested. Q3 with October, November, December saw the festivities along with the vaccines being developed and being tested for success. Q4 of the financial year in January, February, March brought mixed feelings of happiness and despair with vaccination drives, and COVID cases shooting through the roof.

Let us dwell upon what all this meant for Hyderabad, and some facts and figures the Home buyer in Hyderabad needs to look at while evaluating the overall residential property market in Hyderabad.

The background

The year 2020 from April to June brought the entire Economy to a grinding halt. The woes of migrant workers, the adverse impact to most industries globally, be it travel, tourism, entertainment, manufacturing or service-based industries. The entire global Economy took a hit!

While the new project launches declined all over the country, and builders focussed on completion of existing project, the New Launches actually rose in Hyderabad. Hyderabad contributed almost 19% to the new supplies of the Indian market in the Quarter of October-November-December 2020.

During the Quarter of October-November-December 2020:

• INR 45 lacs apartments in the affordable segment contributed to over 40% of the total launches in Hyderabad
• INR 40 lacs to 70 lacs segment mid-segment contributed to over 25% of launches
• This indicates that almost 70% launches were targeting Home buyers in Hyderabad offering 2bhk and 3bhk spacious homes in affordable to mid segment budget
• The bookings in Hyderabad saw an increase with demand that was only waiting to find a release, and with festive offers and discounts, the home buyers came forward with greater enthusiasm

Hyderabad is a star performer on ‘unsold inventory’

Hyderabad and Chennai fared very well on unsold inventory with lowest numbers. A city wise comparison of unsold inventories also helped Hyderabad real estate market.

While Inventory overhang increased across all the cities in India, Hyderabad continued to outshine all other cities in 2020 with an inventory overhang of only 30 months. This is lowest as compared to all other cities. The worst performing city is Delhi/NCR with an inventory overhand of over 65 months, which is painfully high!

Inventory overhang refers to the time (number of months) that a builder might take to sell one’s unsold stock of residential units. It is calculated at their existing (on-going) pace/velocity of sales.

Home buyers rethinking investment in favour of buying property in Hyderabad

One thing that pandemic did was to change the perception of investors, and increasing the affinity towards real-estate, which does NOT loose its innate monetary and emotional value.

Other factors that helped home buyers in Hyderabad tilt in favour of buying homes are:

• Cost-benefits of low home loans interest rates as indicated below:

• Wanting to own bigger spaces since ‘work from home’ became a reality, and newer more spacious home were being preferred
• Those who were contemplating on buying a 2bhk home in pre-COVID times opted for more spacious 3bhk homes
• The prices of new launches did NOT increase, and were far more competitive
• The design elements offered by builders factored in pandemic ready homes with better ventilation, better air circulation, use of technology and provision of amenities like more efficient homes (green homes, energy efficient lighting, bigger/spacious elevators, and touch-free technology) that made more sense in the post-COVID era
• All these factors resulted in demand for residential properties coming back in the micro-markets of Hyderabad

Home buyer sentiment in Hyderabad

The home buyer sentiment in Hyderabad improved over October-November-December 2020 with people in thinking that the Economy will get back on track.

The Hyderabad market indicators:

• New supply of over 22000 houses in financial year 2020-21
• Almost 16000 units got sold out, which is a healthy number, and indicates that there are takers for the new launch properties
• The unsold inventory of Hyderabad stands at over 35000 units, which is also because of fresh new launches. This is also a healthy trend
• Average price of apartments stands at Rs 5600 per sft, which gives scope for future price increase, and also being affordable as compared to other cities across India
• The per square foot prices actually rose in financial year 2020-21 by 5%, which is again a healthy sign for the real estate sector of Hyderabad
• The top localities in demand included virtually all the zones be it West, East, South, North or Central zones
• The demand was obviously higher in areas closer to the IT and financial corridor of Hyderabad in Western zones which comprises of areas like Nallagandla, Madhapur, Kondapur, Kokapet, Miyapur and Bachupally
• Areas like Kompally, Sainikpuri, Yapral also caught the imagination of new home buyers of Hyderabad

Factors that make Hyderabad a desirable real estate destination

• Population of over 80 lac, an area of over 8000 square kilometres, prime hub of IT/Pharma/manufacturing/tourism, and a high ease of living rank of 24 out of 49 big cities
• Hyderabad is a big IT industry, which is now bigger than the manufacturing industry
• Formation of Telangana State gave Hyderabad a higher thrust towards development
• Hyderabad has attracted investments of over 12 billion US Dollars since the year 2000. This shows the progress the State is making in becoming a growing employment hub
• IT industry gave a huge boost to the real estate industry, with Western Zone witnessing the highest growth
• Ever expanding metro rail services and the web of fly-overs, under-passes, and grade-separators are all working towards making Hyderabad free of traffic woes in the times to come

Real estate trends in Hyderabad

• The resilience of Hyderabad is evident from the fact that the new project launches have bounced back
• Hyderabad showed a growth in the launch of new projects. In fact, the new launches have grown to over 10% as compared to the launches in financial year 2019-20
• Approximately 55% of the new project launches were in the mid to affordable segment, which is Rs30 to 40 lacs, and Rs 40-70 lacs segment
• Proactive policies to increase business growth in Telangana like T-iPass and ICT Policy are abetting ease of doing business in Hyderabad/Telangana. This further continues to impact the real estate sector positively in Hyderabad
• After the lockdown was lifted, Hyderabad was one of the first cities in the country to see construction activity resuming. This is a big feather in the cap for the real estate resilience of Hyderabad
• It is heartening to see that 3bhk homes remain the preferred option for home buyers in Hyderabad, although 2bhk units are also in demand. It a matter of affordability rather than choice that people go for 2bhk unit
• With the pandemic, people have gotten a new found confidence in real-estate, and are now willing to upgrade from their pre-COVID preference. No wonder, those wanting to aspire for a 2bhk are now looking at a 3bhk apartment
• Unsold inventory in Hyderabad stands at over 35000 units in the financial year 2020-21. This is a healthy number considering the number of new launches the city has witnessed
• Even the inventory overhang of 30 months is the lowest for Hyderabad compared to the entire country
• In the last quarter of 2020, October-November-December, alone a total of over 12000 new homes were launched in Hyderabad owing to the renewed interests by the Hyderabad’s home buyers

Post-COVID reality in Hyderabad real estate market

The post-COVD era in Hyderabad brings hope, positivity and future readiness! New project launches across Hyderabad prove that the home buyer sentiment is on the upswing. The new launches are visible in all prominent residential property mini-markets. The growth is being seen in all the zones, although the Western zone remains more promising due to the IT corridor.

• We can witness over 100+ new project launches in the 2bhk and 3 bhk apartments in the affordable as well as luxury segment
• Squareyards.com alone lists over 123 new launch projects in Hyderabad
• The standalone building apartment segment is also soring, and these units get sold much faster due to their locational and price advantage!
• Demand for new homes and the low unsold inventory from the last year also indicates positive sentiment
• Other positive indicators include 1) Home buyers now preferring homes in areas that low-density, 2) Millennials getting keen on buying a home post-COVID stood at 31%, which is a huge jump from only 17% in the pre-COVID. This means that COVID has gotten the priorities of millennials changed! No wonder they are now inclined to buying their own 2 and 3 bhk apartments in Hyderabad

Conclusion

The overall sentiment and indicators on Hyderabad real estate are favourable in the financial year 2021-22. The resilience of the city, the civic infrastructure, the employment avenues, and the resultant per capita income of the residents of Hyderabad will only get better in future.

The attitude change of home buyers post COVID, particularly, the millennials getting inclined towards owning a roof of their own itself tells a story of home buyers in Hyderabad! Knight Frank India opines that the Hyderabad will be ‘one of the fastest cities recovering from the economic crises’ triggered by the pandemic.

Hyderabad real estate market is likely to see normalcy returning post July 2021. With sentiments running positive, the future of real estate in Hyderabad seems promising!