25 per cent fall in property rates likely in Hyderabad
By ENS Economic Bureau | Published: 31st July 2013 10:01 AM |
Property buyers in the city can now raise a toast with Telangana being declared as a separate state and as prices are expected to fall.
However, industry experts, say prices are already at rock-bottom in the city. While a further fall is not ruled out in the immediate short-term, they are likely to appreciate in Hyderabad, which has been declared as the common capital for 10 years.
“Property prices are likely to fall by 20-25 per cent across the city and we anticipate developers to start disposing of unsold inventory. In upcoming locations like Miyapur, near the Outer Ring Road, Shamshabad, Medchal and Uppal, we expect a further 5 per cent fall in prices,” said C Sudhakar, managing director of Chakilam Constructions, a residential property developer.
According to him, who typically used to develop for or five properties at any given time a few years ago, is now handling one project at a time, thanks to slowdown in consumption. Also, of the property developed over the past four years, he has an unsold property of about 30 per cent.
“Commercial property market too has been dull over the past few years. This is both because of the market slowdown and the political uncertainty in the state. Now this will change because of clarity,” he said. But opinions differ and developers tell a different tale.
“There won’t be any drop in prices as they are already at rock bottom compared to any other metro. Moreover, the city has robust infrastructure and now that a decision has been taken, this will help attract investments, which have been deferred. So industrial growth will be back on track. If anything, rates will only pick up, now that there’s clarity. For the next couple of months, the market could be dull but the industry will start picking up thereafter,” Dasarath Reddy, president of AP Real Estate Developers Association and founder of Primus Developers, told Express.
He said prices had already dropped low when Telangana was announced first in December 2009, but have appreciated by 25 to 30 per cent in the past 18 months due to inflation which increased the cost of construction.
The decision to bifurcate the state augurs well for developers as they anticipate increase in demand as buyers have delayed their buying decisions for over three years. According to property consultant Knight Frank, developers are holding an unsold inventory of about 33,000 unsold residential units in the primary residential market till June 30, out of 1,18,000 units launched in the last four years. Developers will take more than two years to absorb the current unsold inventory as growth has been slower than the supply.
Nearly 8,500 units were launched in the second half of the current fiscal, an increase of 33 per cent over last year. Similarly, 69,800 residential units are under various stages of construction in Hyderabad. About 70 per cent of these are expected to be ready for possession by the end of next year.
Prime residential locations like Jubilee Hills and Banjara Hills have seen an increase of about 7 to 10 per cent during 2012-13 due to limited supply there. Jubilee Hills and Banjara Hills command high capital values ranging between Rs 7,000 and Rs 7,500 per sft, which is very high compared to other micro markets. In other locations like Madhapur, Gachibowli, Kondapur and Kukatpally, prices appreciated to the tune of 9 per cent.