Hyderabad real estate slows as investor confidence declines

HYDERABAD: The real estate market in Hyderabad, traditionally a popular choice for both local and international investors, has experienced a significant slowdown.

A report from PropEquity indicated that new property ventures in Hyderabad dropped by 54%, and sales declined by 42% during the July-September quarter compared to the previous year. This decrease was notably the highest among all metro cities in India. In 2022, 25,370 new housing units were launched during this period, whereas only 11,601 units were initiated this year.

Multiple factors have contributed to this slowdown, including an oversupply of properties, rising prices, and uncertainty in the market. Despite government permits and bank loans being issued for many residential projects, the Hyderabad Disaster Response and Asset Protection Agency (HYDRAA) later demolished some of these approved structures, leading to increased apprehension among prospective buyers. The resulting uncertainty has made investors cautious, fearing unnecessary risks. The move to remove illegal constructions on lakebeds was seen as positive, but the inconsistency in actions against approving officials has left many questions unanswered.

Since the formation of Telangana, Hyderabad's real estate had largely defied negative predictions. Investments, employment opportunities, and returns grew steadily over the past decade, aided by proactive government support. However, a noticeable stagnation has occurred over the last year. After the recent Assembly elections and the Congress coming to power, a sudden decline in property values was recorded, particularly around Hyderabad's outskirts, where land prices fell sharply from two crore per acre to about one crore.

Chief Minister A Revanth Reddy, who comes from a real estate background, had initially raised expectations that the sector would flourish under his leadership. However, property values plummeted, and new investments dwindled after he took office. The resulting slowdown has also impacted industries dependent on real estate, such as cement and steel, and diverted potential investors to other cities like Bengaluru.

During the state's bifurcation, Hyderabad's real estate was widely predicted to collapse. Yet, proactive measures by the then-ruling BRS party ensured that investments flowed in, stimulating job creation and economic growth. Past examples, such as the IT boom under different administrations, showed that the city could overcome political changes and thrive economically. Similar resilience had been expected in the real estate sector, but recent trends have raised concerns about its future trajectory.