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The Property Market of Hyderabad

Today all eyes are on the one and only city of Hyderabad which is showing a reversal in trend compared to that of the overall property market in the country. Despite all odds, the city is currently boosting a good deal of activities. Capital and rental values both have firmed up substantially from their 1995 levels and a similar trend is likely to continue in the near future. Though the market attracted some demand during the general property boom (1992-95), the real growth started only after 1995, thanks to the Andhra Pradesh's proactive approach and invest ment-friendly policy measures.

In the last two years, the property prices in Hyderabad and its outskirts have spiralled. The prices which were hovering around Rs 500 per sq ft in 1991-92, soared to Rs 1,200 per sq ft in 1995 and have recently touched a whopping Rs 2000 per sq ft. Most of the demand came from the IT companies which preferred the city to any other cities in the country. The failure of Information Technology Park in Bangalore due to infrastructure related snags have also shifted lot of demand to Hyderabad which is currently providing the most suitable base for such activities. With majors like Microsoft, Oracle, Bann Info, Wipro, D E Shaw, Citicorp, Intergraph, Satyam Computers, Metamor Graphics, etc entering the city territory the entire structure of the market has trans formed.

The state government is putting up the Indian Institute of Information Technology (IIIT) in association with Microsoft, Oracle, Satyam Computers and Metamor Graphics. This will certainly hone the edge of the city in terms of IT education in the country. Further the state government has also earmarked a Rs 1,500 crore Hitech city in order to provide conducive base to IT companies. According to experts, today Hyderabad offers a basket of incentives. Besides proactive sops from the government agencies, factors like lower cost of living compared to any other metros, shorter travel times to the work place and easy availability of skilled manpower from various institutions, make the city quite attractive.

This apart Hyderabad is strategically located - almost equidistant to all the metros and is well backed by its high quality medical facilities as well as hospitality sector. The Goldman Sachs recent report on Structural Reform in India Series have placed the state of Andhra Pradesh on the top of the list. In the post reform period of 1991-1997, out of the total proposed investment in the country, around 20 per cent has been targeted at Andhra Pradesh. The state government is giving special attention to build the necessary infrastructure. Lot of infrastructure projects are coming up on build operate transfer (BOT) basis.

Another significant development is in terms of computerisation of land registration in the state, which has cut down the delay in the process of registration substantially. Areas like Jubilee hills, Madhapur are experiencing mixed growth (commercial as well as residential), while Nallagundla and Miyapur are witnessing a completely residential growth. During 1995 lot of private builders entered into the market to grab the plots auctioned by the Hyderabad Urban Development Authority (HUDA) as they were much lower than the market value. Since the city is newly developing the construction cost is much cheaper compared to other major cities in the country. A quality construction will cost Rs 450 per sq ft. Jubilee Hills and Banjara hills were the areas that attracted most of the developments. Besides, areas like Ameerpet, Punjagutta, Bbegumpet, Marredpally, Himayatnagar, Ashoknagar have been witnessing lot of activities.

The city has got a well developed retail sector with quite a few MNC brands making their way into this market in the last 5 years. Abid and Punjagutta are the important shopping areas with retail values of Rs 2500-4000 per sq ft. The rental values (retail) range from Rs 30-35 per sq ft, while rental for office space in prime areas Rs 15-20. Old commercial properties in Abid and Basheer park command a rental of Rs 10-12 per sq ft. In case of residential sector prime areas are commanding a rental of Rs 8-10 per sq ft, whereas there are properties which are commanding premium rates of Rs 14-16 per sq ft.

All seems to be positive for this market. However, few problems like disputed properties, lack of clear titles may come in the way of its development. Roads are the other areas that need attention. Besides, Hyderabad has been devoid of a national policy of land acquisition. However, the state government is in a process to frame a suitable policy.