Yes..its 10 years since Hyderabad emerged from the widely held image of a riot prone, under-developed, under-nourished, dirty town into a healthy and vibrant city with booming business supporting the equally booming job market. However, the events of last couple of years has put a brake on the boxoffice story. May be for the good! Its important that civic amenities and infrastructure adequately catch up with the bourgeoning real estate.
So here is the Real Estate growth story presented in numbers! You can see the scorching pace in 2006-07 and the fall that followed.
2.0 Price Movement before and after Telangana Agitation/ Commitee Report
Hyderabad apartment rates had peaked in 2006 /2007 (check above Table). Since then, there has been consistent price fall, every year. The Telangana Agitation started in Nov 2009. However, by that time itself, prices had dropped by 9% over the previous year. Even with concern over Telangana issue, prices remained more or less stable during the year 2010. The marginal fall of 3% occurred in early 2010. Since then, price has not fallen. In fact, by December 2010, there was marginal increase.
The land prices had peaked in 2006- 07 and those were the times when most developers went ahead and accumulated land. The land prices in core areas of the city has not fallen at all. This has virtually blocked any possibility of further price reduction for apartments. Even if new projects come up by buying land afresh, Builders can not reduce apartment rates, since land price remains high.
As long as land prices in core areas do not fall drastically, Apartment price would not come down even if State is split and Hyderabad goes to Telangana. Land price could come down only if there is uncontrolled and extensive violence resulting in exodus. That anyway do not seem a possibility, with the Central Govt. taking action to deploy adequate forces in the State.
Based on the above, in 2011, we can not expect any significant reduction in apartment rates. This is contrary to the expectation of potential buyers / investors.
3.0 Buyer Expectation
Consequent to the commencement of Telengana Agitations in 2009, majority of potential buyers had postponed purchases, expecting a price crash. However, the crash never came in 2010, though several properties remain largely unsold.
The buyers are postponing purchase even now, expecting a crash consequent to the Srikrishna Commitee Report and possible division of the State. The prices had only marginally declined during 2010 to levels beyond which further fall looks unlikley. Builders have reached the tipping point beyond which they could end up staring at loss and hence they have no way to go, except to hold on and wait for buyers to see the reality.
4.0 For Investors
There could be marginal fall due to any violent agitations but for buyers its difficult to time the market and enter. On the long run, Hyderabad will definitely match up with the hottest markets elsewhere in India and hence the right thing to do will be to buy in selected projects which are unlikely to fail. This is especially so, considering the upcoming Metro Project and the massive IT industry growth which from a few hundred in the year 2000, now supports ~1.5 Lakh employees. There are several IT infra projects in active pipeline in Gachibowli and Kokapet areas.
5.0 Villa Prices
Villa prices in Hitec City/ Gachibowli areas remain at Astronomical levels since land rates in core areas did not budge from the peak of 2006-07. Moreover, the availability is limited since developers had jumped to Highrise Model to maximize profit. Prices range from 2.75Crore to 3Crore per Villa in Gated Communities in Hitec City / Gachibowli.
One is forced to go to Borampet/ Mallampet areas (~16Km from Gachibowli) for price around Rs.55 to 60Lakhs for a Villa. Villas in Tellapur / Gopanapalli range from Rs.90 to 175Lakhs
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