Hyderabad Real Estate – A Roadmap amid the COVID-19 crisis

Hyderabad emerged as one of the leaders amidst this crisis, strongly driven by the confidence of doing business instilled by the Government of Telangana.

August 20, 2020

Hyderabad’s formal economy was one of the most resilient in urban India and resumed its stability after the lockdown rules were relaxed in May 2020 as was one of the first cities to restart its economic activities.

The city’s civic body made most of the lockdown period with a much appreciated out-of-the-box idea. The city administration capitalised on the lockdown period by expediting the existing infrastructure projects works along with the commencement of new projects. In addition the state government provided much required relief to real estate industry by issuing orders to extend validity of approvals and allowing payment of development and other related charges of real estate projects in instalments.

2019 – A Historical year for Hyderabad’s Commercial Real estate

The Hyderabad real estate market saw strong growth despite the countrywide economic slowdown in 2019. The market set new benchmarks when all other major real estate markets in India saw a dip in real estate activities. City’s office market showed a stellar performance over the year in 2019 with 13.2 million sq. ft of supply and net absorption of more than 10 million sq. ft. In the same period, residential traction also peaked as good quality housing projects were launched in the market. The city also attracted major attention from investors as it saw acquisitions and investments in marquee projects.

Office Market Highlights: 2019

Annual supply is double the city's

5-year average supply

Highest evert net absorption

9% y-0-y rental appreciation in IT hub

Hyderabad’s Real Estate (Re)acts to COVID-19

While the city remained shut during the nationwide lockdown, corporates in Hyderabad continued business by allowing work-from-home. Meanwhile, the state government utilised the lock downtime by upgrading its urban infrastructure at a fast pace, completing a few vital projects in a short time, which would not have been possible under normal conditions. Hyderabad’s positive reaction to the crisis is even reflected in the city’s real estate performance post the lockdown. Hyderabad also led India’s office supply with a 30% share in H1 2020, significantly driving the country’s office absorption with an 18% share during the same period. Further, the city reported strong sales with the least unsold inventory in India which can be offloaded within two years. 

To understand the depth of the crises and the reaction of stakeholders, JLL conducted a survey to understand the strategies of the top ten developers in various sectors and interviewed corporate leaders of companies in Hyderabad.

The results of these surveys and discussions on each sector is summarised in the following sections.

Office Real estate

Low vacancy coupled with strong pre-committed space left occupiers with limited options to expand or relocate. Top developers in the city did not agree to any rental discounts or deferment of rents, when occupiers renegotiated. However, a few top developers agreed on a discount of common area maintenance (CAM) charges, while many are still reviewing the request of the occupiers. ‘Extend and blend’ in the leases is emerging as a new arrangement of working among the developers and occupiers.

Residential Market Highlights: 2019

21% growth in annual sales

16% dip in unsold stock

9% appreciation of capital values y-o-y

Residential Real estate

Low unsold inventory in the city coupled with good sales allowed top developers to hold base prices of the residential units intact. Home buyers have started physical site visits. Many developers are exploring new technology options to ease out the home buying process in Hyderabad.

Opportunities in the Challenges
  • Hub and Spoke model for decentralisation of business hubs
  • Urban Infrastructure development in fringe areas
  • Diversification of economic base
  • Fast tracking of real estate approvals
  • Adoption of technology for urban management.

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