Knight Frank, Real Estate Consultant
Hyderabad: The Hyderabad property market, which came out of serious political instability in the recent history, is likely to show a muted growth for now but is expected to see a revival in the next two-three quarters.
Though the office space interest has been on the higher side, the residential sector demand has not inched up to the anticipated levels, tracking the general weakness across the metros in the country.
In its recent report, real estate consultancy Knight Frank stated notwithstanding the steep drop in residential sector absorption during the first half of 2014, the demand is expected to pick up in the second half of the year as the festive season kicks in.
The first half of 2014 saw residential sales volumes in the city plunge by over 27 per cent to 7,300 units, according to the report. The city sees creation of 15,000-20,000 residential units annually, which is around 20 per cent of the average for any metro, as the demand here is mostly led by end-users.
The drop in sales came even as most of the city's realtors went all out to offer special discounts to promote sales. However, the report stated the price discounts to diminish progressively in the coming years.
"Enquiries are not translating into real buying on the ground. No new big projects had been proposed by developers in the last six months tracking the buyer sentiment," said a source from a leading commercial real estate firm. However, he expects revival from the second half of 2015 calendar year.
With a prolonged uncertainty over the bifurcation of the state, investors have flocked to the neighbouring Chennai and Bangalore markets to establish new ventures there, he added.
Speaking to Business Standard, Jones Lang LaSalle Hyderabad managing director Sandeep Patnaik said "apprehension" among buyers about the prospects was delaying the market revival here.
According to him, the political uncertainty has never been a key drag here as Bangalore had been the most uncertain politically in the last four years.
However, commercial real estate and residential market in Bangalore stood ground with a total 12 million square feet office space leasing in the last 5-10 years, he said. Hyderabad is expected to add 3-4 million square feet of office space this fiscal year, led by a strong demand from the IT and ITeS sector.
Patnaik further said buyers were awaiting a concrete development plan to step with ease in the market. This, he said, could come from positive vibes sent to the potential investors by the state government.
Confederation of Real Estate Developers of India (Credai) president Shekar Reddy, said the city had a dearth of quality office space for the IT sector. "Many IT sector real estate dealers keep saying they are facing a huge shortfall in quality built-up for office purposes," he said.