The real estate sector in Hyderabad is currently witnessing mixed trends. Demand is on the higher side for office spaces. Demand is currently higher than overall inventory availability of office space in the city. Prices continue to be steady along with a firming up of rentals as well.
However, there has been a major slump in terms of launches of new projects on account of widespread uncertainty pertaining to the implementation of the Real Estate (Regulation and Development) Act or RERA, 2016. According to Knight Frank India, new launches dropped to only 2,500+ units in the first half of this year. In comparison to the H1 and H2 periods in 2016, launches went down by a whopping 55% and 56% respectively as per its reports. Knight Frank India also highlighted how the lack of major clarity on RERA implementation in Hyderabad is the biggest reason behind the lower number of project launches in the city.
Property sales remained quite steady in the first half of 2017 and prices continued being steady as well. This trend is expected to remain for the near future as well. According to industry experts, a majority of new launches are taking place across segments, which have relatively higher prices and are located in the western part of Hyderabad. Western Hyderabad contributed more than a whopping 80% to the total new launches in H1 2017 and almost 69% of total home sales also took place in western Hyderabad.
The number of launches have come down and with steady sales being witnessed for presently unsold inventory, it should take even lesser than a couple of years for clearing the available real estate stocks. Around 19-20 states have already announced their decision to implement RERA but the uncertainty regarding the same in Telangana has put off real estate developers who were considering the launches of new projects. Developers are only saying that they are still to figure out the impact of GST on the real estate sector in Hyderabad.
A decline of 44% was also witnessed in terms of completion of new office space projects in H1 2017 as compared to H1 2016. The vacancy levels in coveted office space locations is around 2-4%. The contribution of IT and ITeS sectors to this market dropped to 51% in H1 2017 on account of the lower availability of high quality IT spaces. There has also been a marked increase in demand from the BFSI and other service sectors in the city. Rentals are also witnessing year-on-year growth of around 14%.
