HYDERABAD: After a prolonged period of stagnation, the real estate sector in Hyderabad is slowly recovering from over a year of subdued activity. Industry experts highlight that both buyers and investors are cautious while pooling their funds in the property.
One of the significant factors cited for the slowdown is the Hyderabad Disaster Response & Assets Protection Agency (HYDRAA), which has caused uncertainty and panic among buyers, including NRIs, who traditionally view the city as a lucrative investment destination. Additionally, a shortage of investment from sponsors, elevated loan interest rates and affordability concerns have further hindered the market.
Buyers, investors, builders adopt ‘wait & watch’ approach
K Johnson, a Hyderabad-based real estate expert, told TNIE: “The real estate sector has faced a setback over the past year as buyers, investors and builders adopt a ‘wait and watch’ approach. HYDRAA has significantly impacted market sentiment, creating fear among locals and NRI buyers. Other factors include the change in proposed projects such as the Pharma City and the cancelled Raidurg-Shamshabad Metro project. The rates of flats have reduced to upto 10% due to cash crunch and there is still uncertainty in the market. The construction of projects has also slowed down and the builders have been finding it difficult to pay their loans and vendors”.
Stakeholders said that although the government assured that no action would be taken by HYDRAA on the approved projects, the instilled fear in the minds of buyers continued to linger.
Vijay Sai Meka, president of the National Real Estate Development Council (NAREDCO) Telangana, acknowledged the slowdown in the real estate market, attributing it to factors such as HYDRAA, higher loan interest rates, and reduced property affordability, which have impacted performance over the past three months.
“HYDRAA created fear among buyers, impacting property sales and deliveries in recent months. However, following government clarifications, property inquiries and site visits have increased since October,” Vijay said. He added that rising material and labour costs, higher land rates, and a slowdown in IT sector recruitment have also affected the housing market. “We are optimistic that trends will improve in January after Sankranti, bringing renewed traction to the real estate sector,” he noted.
Vijay noted that while commercial sales declined over the past year, they are now improving, with Hyderabad surpassing Bengaluru in terms of commercial leasing.
He also highlighted the need for reduced property registration charges and incentives for women buyers to encourage investments and promote gender inclusivity in property ownership.
Slowdown coincided with the change in governance
V Rajashekhar Reddy, president of CREDAI, emphasised that the slowdown coincided with the change in governance, leaving stakeholders in an observational phase. He called for measures to boost ease of doing business, including reducing permission fees, expediting approval processes, and strengthening social infrastructure in emerging residential areas.
Elaborating on the overall situation of real estate in the city, Rajashekhar said, “We have seen a significant growth in the real estate post Covid times, in both residential and commercial spaces. As of today, Hyderabad has at least three lakh potential buyers and with the new IT investments and industries setting up in the city, Hyderabad real estate market definitely holds a strong future in the next five to 10 years. As far as the affordability of houses, only 20-25% of the areas can be said to be beyond the affordable limits, and the rest of the city limits still has affordable prices to offer”, Rajashekar added.
Rajashekhar also advocated for the expansion of the real estate market beyond West Hyderabad, particularly in the eastern regions like Uppal, under the ‘Look East’ policy. “By focusing on developing social infrastructure—schools, hospitals, markets, and public transport—the government can shift buyer interest to promising locations like Shamshabad and Mokila,” he added.
Experts also said that the government should make lands available for the real estate development and also establish small pockets of residential housing instead of concentrated bulk development.