Residential sales in Hyderabad remained modest in 4Q10. Although the city witnessed many launches, sales did not pick up. Market sentiment, especially among investors, stayed low as political uncertainty persisted. The initial wave of the Telangana debacle coincided unfavorably 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 quarter of 2010, when the first stirrings of economic revival also brought with them renewed positivity on the real estate market. As things stand now, Hyderabad’s property market awaits the final decision that will be taken by the Government after the elimination of all but two proposed options on the issue. The real estate market will benefit most if Hyderabad is given a separate status with the final verdict.
To get into the statistics – Hyderabad recorded sales of approximately 1,382 residential units in 4Q10, with a total of 5,734 units sold during the entire year of 2010. These sales were primarily supported by end-user demand. The Prime Western precinct continued to witness high sales volumes, and most of the projects that were in the final stages or ready for occupancy saw growth in sales.
A net increase of 1,656 residential units was recorded in 4Q10 owing to the few new launches. The absorption rate of residential units in Hyderabad rose to 23.0% in 2010 from 21.0% in 2009. The vacancy rate stood at 48.9% in 4Q10 as compared with 51.0% in 3Q10 and 56.4% in 2009.
During 4Q10, one project – Uma Lake View at Banjara Hills – was launched in Prime Central and six were launched in the Prime West micro-market. These six projects were Lanco Hills–Domina and Hanging Gardens Aparna Hill Top at Chanda Nagar, Hema Durga Towers at Hafeezpet, Power Welfare Society at Narsingi and Tranquil Towers at White Field.
Capital values for residential properties in Hyderabad remained stable at their 3Q10 levels across all the city’s micro-markets. The last price contraction was recorded in the Lanco Hills project in 1Q10. A few projects like Aparna Sarovar and Ramky increased their prices to coincide with an improvement of market sentiments. The sale prices in the secondary sales market remained uniformly stable.
We expect demand for residential real estate in Hyderabad to improve further in 2011 as home buyers are encouraged by the low capital values now prevailing in most projects. Of course, a lot also hinges on the political situation.
