Regarding real estate in Hyderabad owned by nonresident Indians it may be correct to say that rental income from such properties has appreciated substantially for the owners. Market efficiencies across the country have had a positive impact on rental incomes from homes, many of which are owned by NRI’s. Rental income earned by placing a property in Hyderabad on rent through a property aggregator gives returns which are nearly 20 to 25 percent greater than properties placed on rent using a traditional broker. Nearly seventy percent of properties in the country which are rented through an aggregator are owned by non-resident Indians.
property aggregators are rapidly replacing tradition brokers due to several reasons, the first and foremost of which is the trust deficit which property owners face when dealing with brokers. As many brokers work in a poorly regulated industry which at times may even be shady, homeowners prefer to deal with larger branded organizations which are professionally managed and more effective at renting out property in Hyderabad. The surplus rental income of nearly 25% earned by using an aggregator rather than a broker is an additional reason that many real estate projects in Hyderabad which have a significant number of flats owned by NRI’s are placed on rent by aggregators.
Such a trend points to a far greater efficiency visible across the real estate and hospitality market where travelers who may have spent a few thousand rupees extra in a hotel room are able to save money by staying in luxury apartments in Hyderabad which are just as comfortable as a three-star hotel. The losers in this proposition are certainly the brokers who will find it more difficult to find suitable residential apartments in Hyderabad on which they may be allowed to earn a brokerage on. The vast sums of capital which many home aggregators have provides them with incredible leverage which they used to gobble up homes, fix them to make them suitable as comfortable residences for business travelers, and conduct marketing activities to gain a larger share of the aggregator market.
Three-star hotels may be another loser in this new business paradigm as they now have to compete with more streamlined businesses which have deeper pockets than any individual three-star hotel or service apartment in Hyderabad does. Of course, the real beneficiary is the guest who stays in homes many of which have been built by the top builders in Hyderabad and have essential amenities such as Wi-Fi, flat screen TV’s, comfortable beds, and a cook and cleaner available at all times.
As this business model evolves it may be that many smaller hotels capitulate or sell their entire business to property aggregators themselves. Aside offer lower rental charges, small hotels, and service apartments have little else ammunition to fend off the attack they are facing. Selling to aggregators may be the most sanguine decision as most aggregators have ample funds to buy out any small hotel or guest house at a generous premium. In addition, many such small hotels and guest houses are at prime locations near railway stations and airports which increase the attractiveness of such hotels for business travelers.