Demand On City Outskirts For Affordable Real Estate in Hyderabad

On the outskirts, in the suburbs, demand for real estate in Hyderabad is growing. The demand on the outskirts consists of demand for homes which are priced below 25 lakhs. While affordable housing in Hyderabad within the city is in short supply, on the outskirts and among the suburbs of the city such homes are aplenty. To cater to demand from households, builders and developers in Hyderabad are eagerly building and promoting homes in Hyderabad outskirts.

Hyderabad Is Driven by End Users
From the beginning, real estate in Hyderabad has been driven by end users. The city has a vibrant IT and ITeS sector which promotes absorption of residential real estate in Hyderabad. In the recent

past there has a been a fall in the number of new launches while the demand for residential property in Hyderabad has mushroomed. These factors have led to a fewer number of properties in Hyderabad which are ready to be occupied as in other large metros.

Immigrants vs Natives of Hyderabad

Recent reports prove that there has been an increase in demand for homes that are priced at or below twenty five lakhs in Hyderabad. At the same time that an increase in demand for such properties has been recorded, there has been a shortage of supply of such homes as well. According to sources while the demand for mid to upper segment housing is largely driven by natives of Hyderabad, migrants to the city opt to purchase affordable housing in Hyderabad which is often the first property they buy in the city.

An Opportunity For Small, Capable Builders

The largest, well known and top builders in Hyderabad have not opted to enter the market segment which caters to affordable homes in Hyderabad to migrants to the city. Such homes have with them lower margins than do larger homes which has led the top builders in Hyderabad to avoid building such properties. While the top builders have avoided this segment, other smaller yet respected builders have actively chosen to enter this market and build such homes.

Such smaller yet respected builders see the development of such homes as an opportunity. There is however a shortage of such homes in regions which are the most prominent in the city of Hyderabad while the suburbs and less well known localities such as Saket, Upparpalli, and Alkapuri Kukatpally-Miyapur regions are robust regions for such homes. The regions mentioned have gated communities where there is active demand for homes priced at or below twenty five lakhs in the primary and secondary markets. The mentioned regions of Hyderabad have all of the basic physical and social infrastructure in place such as good roads and connectivity, access for residents to hospitals and schools, access for residents to shop for the daily needs of homes, and adequate water and power supply.

Markets for Affordable Housing in Hyderabad

A few micro markets which fall in this range are listed below and characteristics are stated which make such markets suitable regions at which to own a home.

Bundlaguda is often the preferred choice for first time homebuyers as it has no shortage of homes in the affordable segment when compared to the availability of such homes in other regions of Hyderabad. This region is also attractive as it has low levels of pollution and good connectivity to employment hubs

Ligampally is another region where affordable homes are found as it is well connected and due to lack of affordable housing in surrounding regions.

Patancheru was once an industrial town yet today is an attractive destination for homes as it is located near IT hubs and due to the presence of industry. This region of Hyderabad has its own bus depot and an unlimited supply of water for its residents.

Conclusion

The demand in many of the thus far neglected regions of Hyderabad is being driven by affordable properties. Apartments in Hyderabad at such regions are being built by smaller yet respected builders often for migrants to Hyderabad. Most such regions tend to lie on the outskirts of Hyderabad yet have the necessary infrastructure to make them good places to own a home. Such apartments in Hyderabad tend to be priced close to 25 lakhs.

Will Cash Crunch Influence the Property in Hyderabad?

The recently implemented demonetization scheme has affected property market in Hyderabad. Buying and selling of real estate in Hyderabad have come to a virtual standstill. Hitherto, cash constituted a significant portion of real estate transactions in the city.

Close to 30 percent of the price component is in cash. It means that the homebuyers are investing more cash in properties than online payment while buying homes. Hyderabad’s real estate market is growing fast and with the changes in the transaction mode, there will be a substantial impact on the overall growth of the market.

The reason that cash plays such a dominant role in the sale of a property in Hyderabad is that the difference between the government’s rate card for a property and the market price of a property is wider.

Which segment is the most affected?

Luxury apartments in Hyderabad and the segment in the city have been hit very hard by the central government’s announcement. The upmarket regions such as Banjara Hills, Somajiguda, and Abids are few regions where real estate in Hyderabad are facing a crisis. The business class dominates these regions and the price of homes is in crores. The other regions with more affordable flats in Hyderabad are Madhapur and Gachibowli have not been impacted excessively as such homes are bought with the help of a home loan.

What Builders in Hyderabad Fear

Today the top builders in Hyderabad fear with changes happening in the market. There is a cash crunch in the Hyderabad market. While today demonetization has had an impact on the buying and selling of property in Hyderabad so if liquidity is not pumped into the market, the construction of upcoming projects in Hyderabad will likely come to a halt. Currently, real estate developers in Hyderabad and contractors in the city are still paying workers with old currency notes. After November 24, 2016, this may also become very difficult. As many workers employed in real estate in Hyderabad work on a daily wages basis, they may opt not to work if not paid in the legal tender by their contractors.

The property market in Hyderabad is driven by the end users and not by the investors. There will be almost no impact on the price of real estate in Hyderabad due to the absence of the cash component. The demand for properties is there in the market as there is the presence of IT hub in the market. It seems that the Hyderabad’s real estate market will be unaffected as the homes buyers are keeping a cautious approach.

Advancing Infrastructure– The infrastructure of the Bangalore city is fast developing and connectivity via all the modes like- road and metro rail is connecting all the corners of the city.The growing infrastructure and development taking place in the city are attracting the homebuyers and making the city livable. There is a need to boost the growth of residential spaces so that the homebuyers and investors invest more in the area. It is a great time to invest in Sarjapur as it will provide a high return on the investment.

The Cloud Will Become Essential to Owners of Property in Hyderabad

Eventually, everyone who owns property in Hyderabad will store everything on the cloud. All things such as pictures, files, videos will shift to the cloud seamlessly as the speed by which we access the cloud becomes so fast that it makes the difference between accessing a hard disk and data on the cloud indistinguishable. When such a day comes technology companies may well sell larger storage on the cloud bundled with electronic devices such as smartphones, laptops, tablets, and cameras.

While hard disks may still be around those who use them will be regarded as dinosaurs and as being unhip. Such a change is crucial as much of the data we have today is too crucial to first save on a hard disk before transferring it to the cloud, certainly many of those with important roles work exclusively on the cloud, however even simple files may prove to be crucial to the completion of a task and may first need to be created and saved on the phones or laptops built in memory before being transferred safely to the cloud. The need for instant storage on the cloud will prove crucial to many in the next few years if it has not already become so for many today.

Real estate developers in Hyderabad will find the cloud suitable for storing data regarding their layout of upcoming projects in Hyderabad and the plans for new developments as well.  Many already don’t feel secure keeping sensitive data on their hard disks or memory sticks and immediately shift data to the cloud when presented with the opportunity. With the emergence of 4G connectivity and also the technologies which follow it, there may be little difference between accessing a hard disk and data or applications on the cloud. Thus as individual electronic gadgets such as phones and laptops grow to become even more powerful they may also be devoid of a hard disk all within the span of a decade. All applications may rest on a cloud and the phone in our pocket or the laptop on our back may simply provide the means for accessing our data on the cloud.

As data security improves and 5D storage (which prevents digital information from being degraded) is commonplace, the data stored in the cloud will also become far less susceptible to being compromised due to the deliberate actions of hackers or competitors. Many of those who live in luxury apartments in Hyderabad will have several devices to access data on the same cloud and such individuals will ensure that the probability of such data being compromised is minuscule as access to the cloud shall require a combination of biometric and password clearances. Even those with less money who live in affordable housing in Hyderabad shall have data such as pictures or the deeds to their property online.

One such government initiative is already in place and will trickle down to the masses within a decade. Many feel ill at ease when they store important data on a hard disk as physical damage to such a disk can lead to the information being lost or corrupted. Additionally, a cloud will have more space than the hard disks of many devices do today which will allow greater storage online. Speedy cloud access through 4G and subsequent technologies means that online access will be dramatically faster than it is today and phones and tables need only have one of the three Android, OS, or Windows operating systems with all other applications being used exclusively online rather than being downloaded before being used as is the case today.

Real estate in Hyderabad enjoys a vibrant realty market

Real estate in Hyderabad enjoys a vibrant realty market and demonstrates excellent investment prospects due to number of reasons

Good social and physical infrastructure

The city enjoys a robust social and physical infrastructure with the presence of a good number of big hospitals, awe inspiring shopping  malls to spend a fun filled day and plethora of restaurants to tickle your taste buds and much more. The city is known for its delicious cuisines and historical monuments that bestows a magnetic charm to the city.

Presence of giant companies

Quite a good number of multinational corporations are shifting their focus to Real estate projects in hyderabad with an intention of setting up their base here. This has translated into several white collar jobs. This has tremendously increased the footfall as these companies are pulling huge number of people from different parts of the country and globe.  With this, residential market is definitely set to boom. Demand of residential properties is expected to go high in future.

Property Rates Are Still Affordable

Affordability is the best bet of the real estate market in Hyderabad. Affordable housing scheme in the city has inculcated waves of positivity amongst the buyers. More investors and end users are showcasing their interest to invest in this city.

Tranquil City

The city offers a peaceful living unlike some horn blaring metro cities like Delhi, Mumbai. This attracts a great number of end users as well as investors.

Gachibowli, a major IT suburb has witnessed tremendous infrastructure development and has emerged as a lucrative investment destination in the city. The area demonstrates an excellent potential for growth and showcases promising prospects.

There are few reasons for investing in Gachibowli

Location Advantage

Gachibowli is located in the north-west part of Hyderabad, that is just 5 Km away from HiTec City, another renowned IT hub. Both the suburbs are likely to see steep growth in future on the back of excellent transportation, social infrastructure & good job prospects. It is well connected by road and railways with nearest railway station being MMTS Railway Station (6 Km). The close proximity to outer ring road provides superb connectivity to other parts of Hyderabad.

IT Hub

Gachibowli is a prominent IT hub that houses some of the big IT companies such as Microsoft, TCS, Polaris, Accenture, Wipro & Infosys etc. Moreover, the location has the presence of international banking institutions such as Bank of America, Union Bank of Switzerland & Franklin Templeton Investments etc. that have added necessary flux to the realty sector of Gachibowli.

Social Infrastructure

The city has thriving social infrastructure with number of renowned schools, hospitals, hotels & shopping malls etc.

Hyderabad Metro Rail

Luxury homes in hyderabad Metro Rail, also called Mana Metro, is currently under construction. After its completion, due in December 2017, Gachibowli will get metro connectivity through Ameerpet Metro station and other stations that are likely to further escalate the connectivity.

Airport

The city is conveniently connected to Rajiv Gandhi International Airport through Jawaharlal Nehru Outer Ring Road that has reduced the commuting time from more than 1 hour to less than 25 min. Gachibowli is in close proximity to Old Airport of Hyderabad that now has been used for military aviation training and for flights carrying VIPs.

Sports City

Gachibowli is home to some of the best stadiums in city including Swarna Telangana State Sports Complex, Gachibowli Indoor Stadium, Hockey Stadium & GMC Balayogi Stadium etc and a golf course with natural rock formations. It has hosted various world championships such as Military World Games & World Badminton Championships etc.

Real estate in Hyderabad enjoys a vibrant realty market

Real estate in Hyderabad enjoys a vibrant realty market and demonstrates excellent investment prospects due to number of reasons

Good social and physical infrastructure

The city enjoys a robust social and physical infrastructure with the presence of a good number of big hospitals, awe inspiring shopping  malls to spend a fun filled day and plethora of restaurants to tickle your taste buds and much more. The city is known for its delicious cuisines and historical monuments that bestow a magnetic charm to the city.

Presence of giant companies

Quite a good number of multinational corporations are shifting their focus to Real estate projects in hyderabad with an intention of setting up their bases here. This has translated into several white collar jobs. This has tremendously increased the footfall as these companies are pulling huge number of people from different parts of the country and globe.  With this, residential market is definitely set to boom. Demand of residential properties is expected to go high in future.

Property Rates Are Still Affordable

Affordability is the best bet of the Affordable flats in Hyderabad market in Hyderabad. Affordable housing scheme in the city has inculcated waves of positivity amongst the buyers. More investors and end users are showcasing their interest to invest in this city.

Tranquil City

The city offers a peaceful living unlike some horn blaring metro cities like Delhi, Mumbai. This attracts a great number of end users specifically and also investors.

Gachibowli, a major IT suburb has witnessed tremendous infrastructure development and has emerged as a lucrative investment destination in the city. The area demonstrates an excellent potential for growth and showcases promising prospects.

There are few reasons for investing in Gachibowli

Location Advantage

Gachibowli is located in the north-west part of Luxurious flats in hyderabad, that is just 5 Km away from HiTec City, another renowned IT hub. Both the suburbs are likely to see steep growth in future on the back of excellent transportation, social infrastructure & good job prospects. It is well connected by roads and railways with nearest railway station being MMTS Railway Station (6 Km). The close proximity to outer ring road provides superb connectivity to other parts of Hyderabad.

IT Hub

Gachibowli is a prominent IT hub that houses some of the big IT companies such as Microsoft, TCS, Polaris, Accenture, Wipro & Infosys etc. Moreover, the location has the presence of international banking institutions such as Bank of America, Union Bank of Switzerland & Franklin Templeton Investments etc. that have added necessary flux to the realty sector of Gachibowli.

Social Infrastructure

The city has thriving social infrastructure with number of renowned schools, hospitals, hotels & shopping malls etc.

Hyderabad Metro Rail

Hyderabad Metro Rail, also called Mana Metro, is currently under construction. After its completion, due in December 2017, Gachibowli will get metro connectivity through Ameerpet Metro station and other stations that are likely to further escalate the connectivity.

Airport

The city is conveniently connected to Rajiv Gandhi International Airport through Jawaharlal Nehru Outer Ring Road that has reduced the commuting time from more than 1 hour to less than 25 min. Gachibowli is in close proximity to Old Airport of Hyderabad that now has been used for military aviation training and for flights carrying VIPs.

 

Sports City

Gachibowli is home to some of the best stadiums in city including Swarna Telangana State Sports Complex, Gachibowli Indoor Stadium, Hockey Stadium & GMC Balayogi Stadium etc and a golf course with natural rock formations. It has hosted various world championships such as Military World Games & World Badminton Championships etc.

Using Surge Pricing to Sell Affordable Housing in Hyderabad

Local authorities may use surge pricing when selling affordable housing in Hyderabad. The central government’s plan to provide housing to one million households within the next few years is likely to elicit great demand from buyers keen to own their first home. Already the government has seen the benefits of surge pricing when selling railway tickets, just because the railways are a government undertaking does not forfeit them from making a profit. Surge pricing allows industries to which they are introduced to become profitable and more efficiently allows the market to decide the price of the product or service being sold.

While many may be aghast at using such a mechanism to sell homes, doing to shall not only create greater demand for property in Hyderabad but will also allow local authorities to earn greater revenue than they would earn if apartments in Hyderabad are sold at a fixed price. Such a proposal, however, shall work best for affordable homes, luxury apartments in Hyderabad are not likely to lead to higher revenues for developers if such homes are sold using surge pricing.

Surge pricing allows the market to decide the price of a product or service by steadily increasing the price of the product or service as demand for the same increases. The price increases for real estate in Hyderabad should surge pricing be employed will allow homes to be valued higher than they would be if sold conventionally. As a rough example consider new projects in Hyderabad aimed at lower-middle-class households. Of 200 units in such a development all of which would be conventionally priced at 16 lakhs, the first 50 flats may be sold at 15 lakhs each, the 50 after that may be sold for 16 lakhs per unit, the 50 afterwards may be sold for 17 lakhs each and the remaining 50 flats may be sold for 18 lakhs each.

While through conventional methods a local government or one of the top builders in Hyderabad may have been able to earn revenue of 32 crores or 16 lakhs each for 200 flats, using surge pricing such a development would generate 33 crores revenue for a builder or the local government. Market forces would decide how valuable such upcoming projects in Hyderabad are since buyers who purchase at the highest price point will set the market rate for all those units which were sold at a lower price point. The first batch of such projects would be sold easily as the market mechanism shall allow buyers to discern that the units being sold are priced below the market value.

Once the first tier of such apartments in Hyderabad has been bought, the second tier is more likely to be bought as the new residential apartments in Hyderabad are assured of being occupied by residents and families. As demand for unit’s increases due to the lower initial price, surge pricing comes to the play and drives prices higher.  Depending upon earlier demand of nearby properties developers or local authorities can set price points as they wish and extensively advertise the same.

As conventional price mechanisms face challenges, surge pricing is likely to be more widely applied to various products and services. While certain top builders in Hyderabad already employ pricing strategies similar to surge pricing, an overt marketing campaign advertising surge pricing has not captured the imagination of builders and developers in Hyderabad.

Room Aggregators Assault Brokers for Real Estate in Hyderabad

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.

Low Global Interest Rates Bode Well for Property in Hyderabad

The entire world’s economy is on a sugar high which is great for property in Hyderabad as well as other parts of the country. For the first time in history, interest rates are near zero across the globe and capital is cheap due to quantitative easing by many large central banks. As a matter of fact, many important economies such as Japan, Switzerland, and the EU today have negative rates. What this essentially means is that there are very few instruments through which banks and other investors can gain yield except the stock market. In many instances, the inflow of money into Indian capital markets is the result of easy lending practices by major central banks across the globe. Global investors with capital invest in India to take advantage of higher interest rates in the country as they have few available options to earn yields within their own economies.

Most likely there has never been a better time to acquire funding for large infrastructure projects within India than today. There is so much capital across the globe that the most opportune time to undertake large development projects in India is right now. Plans by the government to build smart cities across India likely reflect this new paradigm. Those who wish to purchase residential apartments in Hyderabad may never find a time as opportune as today and for a few more years ahead, interest rates are likely to remain low across the globe leading to a free for all for those willing to take on debt to purchase the property. This is, however, a brave new world for monetary policy, never has such a scenario been visible across the globe and how it will end and what is likely to happen if and when interest rates across the globe normalize is an open question.

Even highly respected and informed oracles of capital markets such as Warren Buffet tend to stutter and run for cover when asked if they believe interest rates will ever normalize. The Federal Reserve has today supplanted other central banks to become the central bank for the entire world. Interest rates in India shall likely head south as the new RBI Governor takes charge, perhaps one of the reasons the change at the Reserve Bank of India was to have a governor who was willing to be more accommodative and push interest rates lower to spur economic growth. In the future, it may become even more affordable to take a home loan to purchase affordable or luxury apartments in Hyderabad as a result of lower interest rates. Lower interest rates, however, are not a panacea to spur economic growth, lower interest rates result in inflation as banks readily lend capital to borrowers since they receive a lower rate of return if they park their money with the RBI.

The government’s plan built nearly one million affordable homes across the country over the next few years shall receive an impetus if the RBI lowers interest rates making it easier to purchase affordable housing in Hyderabad and in other regions of the country. For real estate developers in Hyderabad, lower interest rates are a blessing in the short run as they may borrow more easily due to lower cost of capital. So why don’t banks continuously keep interest rates low? The biggest reason is that doing so causes inflation to rise which eats up the savings of citizens, another important reason is that perpetually low-interest rates lead to bubbles which cause distortions in prices and a sharp drop in sectors of the economy when the bubble bursts. Interest rates, if they are kept too low for a prolonged time, may also deter foreign investors to invest in India as they may seek higher returns elsewhere.

Tips to find the right kind of property Real estate Hyderabad

Hyderabad has emerged as one of the most sought after destination in realty investment due to the presence of several big IT companies and other blue chip.More people are showing their interest to invest in real estate of Hyderabad. This article aims to highlight the basic features that will be very helpful in getting you the right kind of property. If you are looking forward to approach a good real estate company in Hyderabad for commercial property or residential property investments, you must follow these 5 tips that can guarantee you to the get the best property company that perfectly suits your requirements.  Because not every company is efficient  to meet your expectations which can  be slightly perplexing so it is important to choose a company that is determined to meet the requirements of their clients. Deciding which company to choose can be tactical but these tips can be very helpful in getting you the best available option.

Tip  1

It is better to opt for a company that has a global presence. A real estate projects in Hyderabad that has a multinational presence is always a better choice because it is quite clear that the company would be big enough to accommodate sufficient resources to have a global presence. A local company that has grown large enough to have presence in other countries will surely have excellent prospects. It also reveals the fact that the company is a trusted one and  largely accepted and acknowledged in other countries as well.

Tip 2

One should check that how committed the company is towards the region. Commitment to the region is one crucial point that needs to considered while making a choice for any real estate company. A company with great level of dedication and high integrity is the best choice as it reflects the endeavours of the company and proves that it is potent enough to make a global presence.It also indicates the company enjoys a good rapport.

Tip  3

Look for longevity. An experienced company is always the better choice. A real estate company that has been in business for a while is a much more reliable source than one that is new to the industry. Longevity in the industry also  boasts of an excellent client satisfaction level. Because  you cannot survive in a business market for a long time unless you are offering valuable services to the clients/ customers and satiating their core requirements.

Tip 4

Look for diversity. Any Luxury apartments in Hyderabad  that offers  diversified services and options like investment in both residential and commercial properties is a better choice to opt for.  These companies are working hard to initiate new opportunities on a continuous basis  in order to impart quality services to the customers.

Tip 5

Research is the most important part  of property buying in Hyderabad city. One of the best ways to choose a real estate company is to do your homework well and opt of a detailed analysis and research. As you compare properties, there is no harm in comparing  companies and utilize the extracted in a resourceful manner. Word of mouth is also a vital tool that can  be used here.  It is always good to ask friends and family for recommendations and if they are willing to discuss their experiences. Using other people’s recommendations is a good way to find the right real estate company.