Hyderabad Real Estate: Back in Reckoning?
PropEquity, India's leading Real Estate data analytics and research firm released a report which puts residential real estate investment in Hyderabad.
PropEquity, India's leading Real Estate data analyticsand research firm on Monday released a report which puts residential real estate investment in Hyderabad into a high opportunity quadrant on a medium to long term.The report highlights Hyderabad as one of the most lucrative destinations for real estate investments at the current valuations.The residential real estate scenario in the city has witnessed a complete reversal of trends post 2008.Average annual new launches have declined by 50% while the capital values have remained stagnant.
The city witnessed a strong growth in residential supply as well as capital values until first half year of 2008. Residential weighted average capital values escalated from approx. INR 1,000 per sq. ft. in the year 2000 to INR 3,100 per sq. ft. by Q3 2008 exhibiting an annual appreciation of approximately 15%.Post the slump triggered by the global financial crisis, the city has failed to replicate the growth rate of pre 2008 years. The political turmoil on Telangana issue could not have happened at a worse time for Hyderabad real estate. The period after the year 2008 has been characterized by fewer project launches and declining or at best stagnating capital values.The weighted average capital value has witnessed a decline from INR 3,100 per sq. ft. in Q3 2008 to INR 2,980 per sq. ft. by the end of Q1 2012 exhibiting a negative annual return of 1.4%.
At the current valuations, the city is one of the most undervalued compared to other prominent cities with comparable growth drivers.Capital values in some of the central locations such as Soumajigudda, Begumpet, Jublie Hills and Banjara Hills are comparable or in some cases lower than existing capital values of peripheral locations of other comparable cities such as Gurgaon, NOIDA, Navi Mumbai, Thane, Pune and Chennai. Capital values are very close to their fundamental levels and the percentage downside risk from current levels would be lower compared to other major cities. A higher inventory overhang would be deterrent to any immediate appreciation, but robust commercial driver, upcoming metro and improved infrastructure is expected to drive absorption rates in medium term.
Samir Jasuja, Founder and Chief Executive Officer of PropEquity, says "The average capital values of residential units in the prime locations of Hyderabad are comparable or in some cases lower than the average capital values existing in peripheral locations of Gurgaon, Navi Mumbai and Thane. The comparison reveals the fact that the average capital value in Hyderabad is going at a discount of approximately 30%."
The residential real estate capital values in the city of Hyderabad are undoubtedly at lucrative levels. None-the-less, the risk of political uncertainty and marginal fall in capital values due to any violent agitations cannot be over looked. The main challenge for the buyers would be timing the entry into the market. On the other hand, stagnant capital values coupled with increasing input cost have already squeezed developer's margins. Developers are keen to generate quick cash flows. To lure home buyers, developers would resort to affordable segment projects at lucrative capital values coupled with freebies and interesting schemes.
Gaurav Pandey, Senior Vice President & Head - Research and Consulting, says "In case pessimistic macroeconomic scenario sustains, the region may witness a price correction of 5% to 10% in short term. However, in medium term investments in the city's real estate can generate an annual return of 12% to 15% from current levels in addition to rental income from assets.In the given economic scenario, investing in Hyderabad makes more sense primarily on account of valuations. In the long run, Hyderabad can undeniably compete with the hottest real estate markets in India. To summarize, the long term opportunities overweighs short term risks."
PropEquity is India's first online real estate intelligence platform that tracks over 45,000 projects of 8,200 developers over 40 cities and features over 5 years of catalogued data on the platform.
P.E. Analytics, the company behind PropEquity is built on pure innovation. The products created by the company are unique in Indian context and have been validated by the market and marquee customers. The company's endeavor is to create an information service enterprise through continuous innovation and integration of real time data, analytics and cutting edge technology to achieve higher transparency. Its key beneficiaries include over 100 Real Estate PE Funds, Developers, Institutions, Retail and other industries that need research, data and analytics. It currently has 250 employees.
PropEquity's offering include Collateral Risk Management, Realty Index, B2C - One Click Report and Catchment Area Analysis.
P.E. Analytics has been founded by Samir Jasuja, a serial entrepreneur with over 18 years of domain experience in Real Estate, PE & Financial Services. Catch us live at NDTV Profit's "The Property Show".
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Press Release Contact
Name: Gaurav Pandey
Designation: Senior Vice President
Name: Gaurav Pandey
Designation: Senior Vice President