Telangana resolution to boost Hyderabad real estate market

Real estate prices are likely to pick up due to improved investor sentiment, says Crisil Research

Residential real estate demand is now expected to grow 8-9% and residential capital value at a faster pace in 2013 and 2014, compared with the 6-7% envisaged earlier, Crisil Research

The Hyderabad real estate market, which has been stagnant for the past four years, will see a recovery with the likely resolution of the Telangana issue, experts said.

The Congress-led United Progressive Alliance (UPA) Tuesday endorsed a plan to carve a separate state of Telangana from Andhra Pradesh. Hyderabad will be the joint capital of both states for a period of 10 years.

Residential values in Hyderabad haven’t moved since 2009 due to the Telangana agitation, driving investors to other cities such as Bangalore and Chennai.

Real estate prices are likely to pick up due to improved investor sentiment in the immediate term, according to Crisil Research. A resurgence in corporate investment will improve demand for commercial office space in the medium term, it said.

This will provide a boost to job creation and residential real estate demand, Crisil Research said.

Residential real estate demand is now expected to grow 8-9% and residential capital value at a faster pace in 2013 and 2014, compared with the 6-7% envisaged earlier, Crisil Research said.

Commercial lease rentals are, however, likely to increase only marginally in same period due to a large planned supply of office space.

“It is unlikely that end-user demand will increase immediately,” said Sandip Patnaik, managing director (Hyderabad) at real estate consultant Jones Lang LaSalle India (JLL). “However, within the next two-three months, demand will start picking up considerably and this will lead to better appreciation in many areas.”

According to JLL, the locations that will see the fastest uptick include those on and around the outer ring road, the central business district areas of Banjara Hills and Jubilee Hills, and locations such as Gachibowly, HiTec City, Kukatapally, Miyapur and ChandanNagar.

The number of new residences launched in Hyderabad increased 33% in the first half of calendar 2013 from the year earlier, according to a report released on 23 July by real estate consultant Knight Frank India. Approximately 8,500 units were launched and 8,100 residential units absorbed in the first half.

Source : Unnikrishnan.S; http://www.livemint.com