Telangana landing

Demand from end users is currently healthy,and is expected to be good in the future. The city’s floating population comprises a major segment of the end buyer segment. As long as they have employment opportunities here,they will always find it a sensible decision to buy a home here. Besides,demand from investors rides mostly on speculations on growth prospects. For this segment to buy more aggressively,it’s really important for the state to have clarity as soon as possible. But Hyderabad has built its own equity and its growth will be unhindered in the future,despite any change in the political scenario. The recent entry of Facebook and Google’s ambitious expansion plans in the city are strong indicators of the same. The city’s infrastructure and ongoing projects such as the metro rail and ORR will hold it in good stead for a long time to come.

Real estate has presented different patterns in the last three years. From the highs of 2007 and early 2008 and the lows seen in all of 2009,it has gradually picked up in 2010. It continues to be stable now. Surely,those people who genuinely require properties will take a plunge next year,enthused by the attractive rates builders are offering.

Says George Johnson,city head,Hyderabad,Jones Lang LaSalle India,the initial wave of the Telangana debacle coincided unfavourably with the recent economic downturn,bringing about considerable disruptions in Hyderabad’s real estate market. The primary impact was on the residential and land segments. Matters improved in the last two months of 2010,when the first stirrings of economic revival also brought with them renewed positivity in the real estate market. “At present,Hyderabad’s property sector awaits the final decision that will be taken by the government after the elimination of all,but for two proposed options,on the issue. The real estate market will benefit most if Hyderabad is given a separate status with the final verdict,’’ he said.

It is also interesting that while the demand for office space remained modest in Q3 2010 after witnessing a strong growth in H1 2010,healthy pre-leasing activity continued to be witnessed in the city. Occupiers are leasing space to expand within the city in the short term,which is about three to five months.

Besides this,they are also locking in space as a hard option to capitalise on the current low rents. This trend is benefiting developers as they are getting an assured occupancy in their buildings in a market where supply currently exceeds demand. “The demand is shifting again towards SEZs as it was in 2008,with the sunset clause of the STPI benefits expected in the near term’’,Johnson points out. The overall net absorption of office space in Hyderabad was recorded at 2.45 million sq ft until the third quarter of 2010. Pre-leasing activity remained strong in the market,with companies like JPMorgan Chase,Mindtree and Invesco pre-leasing space in the city. The IT sector remained a strong contributor to this demand. Total office stock in the city was recorded at 20 million sq ft,with a vacancy of about 10 % in Q3 of 2010.

The supply in the city is gradually moderating,resulting in decreasing vacancy. This clearly suggests a closing window of opportunity for occupiers to lock in space at the current low rents as the market will turn in favour of the landlords in the short term. Meanwhile,some of the leading developers outside Hyderabad feel that the Telangana trouble may further erode business confidence in Hyderabad. One needs to look at alternative investments. The real estate in Vizag,for example,especially in the residential sector,is multiplying and so are the investments. This is also the right time to invest in property in Visakhapatnam,which is the upcoming IT hub on the east coast of the country.