Hyd realty poised for big leap

Telangana government has been extending immense support to the city's real estate sector since the formation of the State. It has brought out several progressive policies to push the sector into a higher growth trajectory

Hyderabad is one of the most happening real estate hubs in India. The rise of the IT, pharmaceutical and finance sectors is driving the phenomenal growth in this key sector. It goes without saying that more opportunities mean a higher demand in the residential real estate sector. Thanks to unlimited job opportunities and world-class infrastructure, the city of pearls is indeed experiencing a boom in the residential projects compared to other metro cities including India's commercial capital, Mumbai. Even the Covid pandemic could not make a dent into the growth of Hyderabad's realty story.

Growth drivers

There are multiple reasons for the phenomenal success of the Hyderabad realty. Competitive property prices, increased office leasing activity and robust infrastructure growth over the years have positioned Hyderabad as one of the most active residential markets in recent times. Furthermore, supportive government policies and strong political stability have worked in favour of this market. Here is a list of growth drivers that are fuelling real estate sector's growth in the fast-growing Hyderabad.

Govt's support

Telangana government has been extending immense support to the city's real estate sector since the formation of the State. It has brought out several progressive policies to push the sector into a higher growth trajectory.

Recently, the State government rolled out Telangana State Building Permission Approval and Self-Certification System (TS-bPASS). Modelled on the lines of highly successful Telangana State Industrial Project Approval and Self-Certification System (TS-I PASS) Act that facilitates hassle-free approval process for the industrial and business units, TS-bPASS brought in revolutionary changes in the way approvals are granted for the real estate projects. It has created a business-friendly environment that will uplift Hyderabad's status as an investment destination. Besides other industries, Hyderabad real estate market is also expected to benefit from TS-b PASS. The Telangana government is sincerely working to implement a true single-window approval system for the realty sector. This will go a long way in putting the Hyderabad realty sector in a higher orbit of growth. The credit for transformational change in Hyderabad and its real estate sector goes to the proactive Telangana government.

IT sector

For many, the software sector comes to mind when it comes to Hyderabad. It's true that Hyderabad has now emerged as a global hub for the information technology (IT) space. The presence of global tech giants such as Microsoft, Google, Amazon, Facebook, and many more signifies the importance of Hyderabad on the global IT map. The city has an excellent start-up ecosystem thanks to T-Hub, an incubation centre set up by the Telangana government. Progressive policies of the State government in encouraging the IT sector over the past five years resulted in the State registering a 17 per cent annual growth rate in the industry compared to the eight per cent national average. More efforts are underway to drive the growth of IT sector in Hyderabad to next level. Growth in Hyderabad's IT sector will immensely benefit the real estate sector, especially residential property segment.

Pharma, Biotech

Apart from IT, there are several other equally important sectors. Hyderabad is the bulk drug capital of India and has carved a niche for it on the global pharmaceutical landscape. It also emerged as the global vaccine manufacturing hub. Covaxin, the only indigenously developed vaccine for Covid, has been developed here. The city also has a biotech hub in Genome Valley. This shows how pharmaceutical industry is playing a great role in the growth of Hyderabad.

To take the pharmaceutical industry in the city to next level, the State government initiated a mega industrial cluster called Pharma City in Ranga Reddy district adjoining Hyderabad. Spread over 19,333 acres across Kandukur, Yacharam and Kadthal mandals of Ranga Reddy district, this upcoming massive pharma cluster will soon be the next destination for global investors, both in pharma and real estate.

Infrastructure

Infrastructure plays key role in the growth and expansion of any city. Hyderabad witnessed a remarkable transformation after a world-class airport, Rajiv Gandhi International Airport (RGIA), came up in Shamshabad area. It is India's sixth-biggest airport in terms of traffic and handles around 15 million people per annum. The airport's world-class facilities make the experience even better for passengers.

Besides, Hyderabad is also now home to 158-kilometer eight-lane Outer Ring Road (ORR), plenty of flyovers, several underpasses and above all Hyderabad Metro of global standards. These infrastructural landmarks are the lifeline of the city, fuelling its growth day in and day out. More such landmarks are at various developmental stages. Thanks to these landmarks, the Hyderabad's real estate is heading in one direction only: Growth and more growth.

Other growth drivers

Over the decades, Hyderabad emerged as an ideal cosmopolitan city for lakhs of people who came from different States and settled here.

Education hub: Hyderabad has also been recognised as the hub of technical education with highest number of students in the country and produces a good number of quality graduates who are recruited by multinationals. The city is also a major centre for research in pharma, biotech and defence-related science and technology.

Being an important seat of learning in South India, the city has two central universities; three deemed universities, and six State universities. Osmania University is one of the oldest universities in India. Other major institutes of excellence include the University of Hyderabad, Jawaharlal Nehru Technological University-Hyderabad, International Institute of Information Technology (IIIT-Hyderabad) and Indian Institute of Technology, Hyderabad.

Apart from several top management schools, the city also has the Indian School of Business (ISB), a top global B-school.

Women's safety: Hyderabad can be rated as the best city when it comes to women's safety. With an aim of curbing eve-teasing in all aspects, in all forms, at all places, the State government introduced She Teams to provide safety and security to women in Telangana and to make Hyderabad a Safe and Smart City.

To further enhance the security of citizens, the Telangana government spent a lot of money on installing CCTV cameras and providing patrol vehicles to police, thus making police service available round the clock across Hyderabad. These measures have drastically reduced crime rate in the city.

What experts say

Expert agencies of global repute are extremely bullish about the Hyderabad real estate market and its growth potential. This shows the inherent strengths the City of Pearls has when it comes to property market.

According to a report by JLL, a global property consultancy, Hyderabad's office space market will continue its growth trajectory in 2021 thanks to its strong market fundamentals in the form of sustained IT sector growth, increasing demand from sectors such as e-commerce, healthcare, FMCG and the growing presence of institutional investors. The year is expected to witness close to 38 million square feet of new office space completions, while net absorption is likely to hover around 30 million square feet.

On the residential real estate market also, JLL projected a bullish view. As per the JLL's Home Purchase Affordability Index, even if residential prices in certain markets move upwards in 2021, the mortgage rates are expected to remain at historical lows and annual house hold incomes will increase as the economy recovers. This will result in improved home purchase affordability.

Knight Frank, another global property consultancy, in its report on the Hyderabad office market said 60percentoftherespondents it surveyed believed that office leasing activity would increase in Hyderabad in coming months.

The way forward

In most States, the small districts remain underdeveloped because of lack of connectivity to the nearby major cities. However, Telangana government has taken the initiative to improve employment opportunities and boost small-scale businesses/ agriculture from surrounding districts by the construction of Regional Ring Road that will develop road connectivity. This will give a big fillip to the real estate market in Hyderabad.

With the State government taking up projects to develop Hyderabad on all the sides and policies like 'Look East', there will be growth in the all corners of Hyderabad. This will ease out the pressure on the western part of the city. However, more infrastructure projects should be taken up keeping future requirements in mind.

The Telangana State Industrial Infrastructure Corporation (TSIIC) is developing industrial parks in all the districts of the State and decided to develop industrial clusters based on the parameters like demand and the availability of the products in the surrounding areas of the cluster locations by availing government of India grant under MSE-CDP scheme for the newly developing clusters and upgradation of existing industrial parks. All these activities augur well for the real estate sector.

Hyderabad's real estate market has witnessed a steady growth on the back of solid fundamentals. It delivered an impressive 50 per cent return on investments during the last five years. The consistently performing commercial sector has had a positive impact on its residential real estate.

While Covid-19 slowed down this momentum, the recovery rate of Hyderabad real estate is much better compared to other industries in the city and other cities in the country.

The corporate world loves the capital city of Telangana. With employees coming to Hyderabad from around the country, the city's residential market is all set to experience a boom which will last for a long period. There is no doubt about it.

(The author is Chairman and Managing Director, Ark Group, and National Vice President, Credai. Views expressed here are his own)