The Current Downfall: 20/07/2024
Hyderabad’s real estate and infrastructure development have hit a significant pause. Builders and agents are referring to this as the worst downturn since the pre-2014 Telangana State formation period. Currently, around 2.8 lakh apartments are ready for sale, but buyers are hesitant to invest in residential properties, whether land or houses.
Historical Context
The first signs of this downturn appeared six months before the Telangana elections, marking the first phase of decline during the BRS Government’s ten-year tenure. Despite predictions favoring a BRS win, rural voters elected Congress for various reasons, leading to a second phase of decline in the real estate market.
Impact of Government Changes
The public had high expectations from the new government for launching new projects and infrastructure plans. However, these expectations were not met. Existing infrastructure plans were altered, and no new projects were initiated. For instance, the relocation of Pharma City has added to the market’s instability. Furthermore, LRS and BRS regulation confusions and the increase in registration prices from August 31st have further impacted the market negatively.
Leadership and Investment Challenges
Despite CM Revanth Reddy’s background in real estate, his administration has struggled to make decisive moves toward new developments or attract foreign investments confidently. The lack of clarity in investment strategies and the influence of the All India Congress on state decisions have exacerbated the downturn. If this trend continues, foreign investors may perceive Hyderabad as an unfavorable investment destination.
Competition from Andhra Pradesh
Hyderabad faces increasing competition from Andhra Pradesh, where the newly elected TDP government, led by Chandrababu Naidu, is aggressively planning to build a
new capital. Naidu’s vision and convincing skills are attracting significant investor interest, and the state’s i
nfrastructure development plans are promising. Consequently, a substantial portion of the real estate market, around 30%, is expected to shift to Andhra Pradesh.
Solutions for Telangana Real Estate
To counter this downturn, the Telangana State Congress must focus on several key areas:
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Foreign Investment Arena: Establishing the best committees and marketing teams to attract new investors.
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Stable Investments: Committing to secure investments in IT and Pharma industries.
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World-Class Marketing: Hiring great consultants to market Telangana on a global scale.
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Urban Development Focus: Ensuring CM Revanth Reddy prioritizes Hyderabad’s urban development.
Real Estate Pricing Trends
Currently, only 10% of the market is compromising on prices, with rates dropping by 15% below market value. While 50% of the market remains stable, especially among A and B-class builders, the remaining 40% of C-class builders are struggling significantly. If this continues for more than six months, prices could drop by 30%. Conversely, aggressive government actions and new project launches could stabilize or even boost prices.
Buyer Recommendations
Despite the downturn, buyers shouldn’t wait for further declines. The market has only dropped by 15% in the past two years, and if it rebounds, prices could increase by over 30% in the next year. Buyers should consider their investment purposes, budget, location, and ROI. Consulting a good property expert is essential as every property has its unique circumstances.
Broader Economic Impact
The real estate downturn is affecting related industries significantly:
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Construction Materials: Demand for sand, cement, steel, paint, hardware, and bricks has decreased.
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Residential and Commercial Development: There has been a 20% drop in construction development.
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Open Land Sales: Sales have decreased by 90%.
Approximately 2.5 lakh apartments are available for sale, with no scope for new inventory. Over 2 lakh potential buyers hesitate to make decisions, further stagnating the market.
In conclusion, while the Hyderabad real estate market is facing a significant downturn, strategic actions, and government interventions could help stabilize and eventually rejuvenate the market.
Despite the current challenges faced by Hyderabad’s real estate market, I firmly believe in its robust potential and bright future. The city’s strategic location, rich heritage, and thriving IT and pharmaceutical sectors make it a prime destination for investors. With the right initiatives and a collaborative approach between the government and private sector, we can turn the tide and restore confidence in the market. Our commitment at PCM GROUP is to leverage advanced technology and innovative solutions to connect buyers and sellers seamlessly, fostering a dynamic and resilient real estate ecosystem. Hyderabad has always been a city of opportunities, and with renewed focus and strategic planning, we will witness a revitalized and flourishing real estate market that benefits everyone involved.
PCM PROPTECH INDIA PVT LTD
PCM PROPERTY GROUP.