HYDERABAD: For all those who thought Hyderabad was a costly city to live in, the latest statistics signify otherwise.
The city is ranked second in India, among 15 considered, for declining real estate prices in the year 2011, with the Economic Survey 2011-12 report tabling a decline by 14% in residential property cost in the twin cities, while a separate survey by the National Housing Bank has put the reduction rate at 8% for the quarter Oct-Dec 2011, as compared to 2010.
“Yes, there has definitely been a drop in prices by 5-8% in Hyderabad.
But if one asks for the drop in real estate prices in Hyderabad for the year 2011, one has to look at it more as a necessity of investors to postpone their purchases due to the unstable political situation prevalent last year and absence of any major infrastructural developments, rather than just lack of demand.
Such factors did lead to a 20 per cent decline in volume of sales, which ultimately affected the pricing,” said P Prem Kumar, managing director of Doyen Constructions and president of the Andhra Pradesh Real Estate Developer Association (APREDA), who added that even projects for commercial purposes have found less takers, with only half of the available 5 million sq ft of space in 2011, being actually sold off.
Echoing his sentiments, ML Rao, joint secretary of the AP Realtors Association (APRA), who also runs Equate Realtors, a real estate consulting company, felt that the real estate scenario in Hyderabad was a bubble waiting to burst anyway, what with prices in peripheral regions being excessively inflated to create an artificial demand.
“Prices in main areas like Banjara Hills, Kondapur, Jubilee Hills etc haven’t risen majorly over the past 10 years.
Instead, if one notices, it is outer areas like Shamshabad, Patencheruvu etc where prices were inflated earlier, have suffered now due to lowered demand.” Statistics provided by the National Housing Bank report supports this claim, with prices declining by atleast 10% in the North Zone region (Serilingampally, P a t a n c h e r u v u , Ramachandrapuram, Kukatpally) in Oct-Dec 2011, as compared with July- September 2011.
Prices in other zones, including the Old City, have come down only by 3-5%, as compared to the previous year.
LUXURY FLATS TAKE THE BEATING
But even as the real estate scenario in Hyderabad witnesses plummeting fortunes, the lower end residential buildings in the range of `30- 50 lakh continue to be firm favourites.
“It’s the luxury residential segments which have been hit the hardest, especially properties greater than `80 lakh,” pointed out Prem Kumar.
He felt that the Government Order No.
45, which has made it mandatory for all large-scale projects to keep aside 20% of land for residential projects designated for Economically Weaker Sections (EWS) and Lower Income Groups (LIG), has proved to be a dampener for the developers of the same.
“Not a single new, major project has been initiated in Hyderabad over the past 12 months due to this and the other factors mentioned earlier”, he rued.
Added Sumit Sen, a realtor and owner of Prajay Engineers Syndicate, “Many bigger projects are today unviable to execute, forcing realtors to sell the space at throwaway prices, or take in more loans to keep themselves afloat.
Even the so called decline in real estate prices is mainly due to the discounts being offered.” But this very problem is what is expected to turn the tables this year for the realtors.
With no new projects coming up, and a few emerging realtors shutting shop quietly, the market is expected to even out, levelling the mismatch in supply-demand existing now.
“2012 will be better than 2011.
There will be no new projects to boast of and space for office, commercial and residential purposes will be limited.
Thus while the buyer interest continues to remain, the narrower choice of living spaces on offer will make the market competitive and shoot up prices,” Sen hoped.
Both Sumit and Rao conceded that the ripples of the same are already being experienced in the city, with January sales and prices this year recording higher growth than 2011.
“Bigger projects will give way to smaller, more economical ones this year.
The number of constraints will force it so, but the condition of price reduction will either improve or remain same,” opined Rao.
APREDA’s property fair to be held later this month, is part of the morale boosting drive by the realtors in the city to regain lost ground, before the fiscal year ends.