Hyderabad Real Estate Lands In ICU!

Hyderabad: The real estate sector in Hyderabad, which had a dream run for the past several years, has now landed in intensive care unit (ICU) as property sales have hit the nadir with a massive downfall of up to 90 per cent in some residential property segments.

Multiple factors led to the downfall. Property prices went through the roof in the city in the last couple of years. This led to a fall in the affordability factor. The 2023 Assembly polls in Telangana and this year’s Lok Sabha polls also took a toll on the sector. Further, the revival of Amaravati Greenfield capital project in Andhra Pradesh after the Telugu Desam Party (TDP)-led National Democratic Alliance (NDA) came to power there, also impacted as some real estate investors shifted their focus there. Further, this revenue churning segment for Telangana exchequer received the biggest jolt in recent months after Hyderabad Disaster Response and Asset Protection Agency (Hydraa) went on a demolition spree which, the agency said, was aimed at clearing the encroachments in lakes in the city.

“The less we talk about sales in Hyderabad’s residential real estate the better. Sales fell by almost 90 per cent in some segments. As if that’s not enough, some customers are asking for refunds or assurance of alternative properties for the bookings they made, fearing demolition,” a real estate developer told Bizz Buzz on the condition of anonymity.

According to real estate data analytics firm PropEquity, housing sales in Hyderabad plunged by 42 per cent to 12,082 units during July-September 2024 from 20,658 units in the same three-month period a year ago. The new launches were also down a whopping 54 per cent in these three months. Fall in new launches is a clear indication of slowdown in sales though delayed approvals for new projects by the Telangana government have also contributed to the fall. Sector insiders say the slowdown took a much bigger toll on small developers.

“Confidence levels among property buyers in Hyderabad came down drastically after some properties for which registrations were done, were demolished. As property buying involves high investment, people are reluctant to make new purchases now, fearing risk,” said Arani Sumanth Reddy, Chairman, National Realtors’ Association India (NAR India).

Further, the previous BRS government should also take blame for the downfall as it tried to artificially jack up land prices by holding auctions for the government land. Consequently, the affordability factor that Hyderabad enjoyed in the past evaporated into thin air as the City of Pearls turned into the second costliest city for properties after Mumbai.

Rise in construction cost also had an impact. “The cost of construction has gone up by almost 80-100 per cent after the Covid pandemic. Developers passed on this burden to customers. Interest rates on housing loans have gone up,” said Vijaya Sai Meka, president, the Telangana chapter of National Real Estate Development Council (Naredco).

On the adverse effect of Amaravati on Hyderabad realty, he said that there would be some impact.

“The Hyderabad real estate had grown phenomenally in the last five years after Amaravati was put on the backburner. With Amaravati proposal back on track now, there will be some impact. But the impact may not be deep as opportunities are yet to crop up in Amaravati. The new capital has no companies and no infrastructure as of now. However, developers look for an opportunity as they are basically investors. They go wherever business opportunities are available,” he added.

Sector insiders say that Hyderabad’s realty will land in more trouble if the Telangana government initiates more measures that will adversely impact the sector.

“This sector will need a couple years to come back on track if the State government takes some right measures. But the sector will need more time for recovery if it goes through any more adverse impacts,” another developer said.