REALTY CITYSCAPE September-2016

http://www.quikr.com/homes Executive SummaryForeword

Indian real estate is standing at a crossroad today. The euphoria of double digit return on investment overnight has given way to a more rational expectation. The big bulls of real estate market- Delhi NCR and Mumbai have retreated resulting in softening of prices in these market as well as significant investor’s money being stuck. Moreover, the RERA and development of REITS are also expected to re-define the landscape of Indian Real Estate.

In the backdrop of weak real estate environment one city that is emerging out from the bruises of long drawn agitation is Hyderabad. The prolonged uncertainty severely impacted the buyer’s sentiments and took the sheen away from brand Hyderabad as one of Prashant Kumar Thakur the fastest growing investment destinations. Corporates shelved their Head of Research & Data Services| plan of expansion and the buyers shied away from buying. QuikrHomes [email protected]

However, with the formation of Telangana, the period of uncertainty has given way to optimism and the Hyderabad is slowly but steadily reclaiming the lost ground. It is one of the most affordable market with the good quality of ready to move in inventory. In today’s market scenario, buyers are preferring ready to move in property as they do not take the risk of execution delays. As a result, the sales volume in Hyderabad has gradually picked up, clocking a growth of approximately 60% over a period of one year. The prices have appreciated in the range of 4-5% in the year 2016.

The city fares better in terms of infrastructure when it comes to metro and outer ring road connectivity as compared to Bangalore and other prominent IT destinations. Post Telangana formation, Google has initiated its expansion plans in Hyderabad. The search giant is building its own 7.2 acres’ campus in the city that is expected to be completed in the year 2019. Overall commercial real estate has been on upswing- a precursor to residential market revival. In the first half of the current year commercial real estate market has witnessed a robust absorption growth of 80% to 90%. Whereas, new office space supply has gone up by 120% as compared to the previous year.

In this backdrop, Hyderabad is at the cusp of a strong revival, presenting a sweet spot for the buyers where they have an opportunity to enter the market at a much more rational price. Hyderabad provided a buyer with broader choice of ready to move in apartments, new launch, plots as well as villa projects at a very compelling price. This report will take you through the journey of Hyderabad real estate market from its emergence to stagnation and its journey towards gradual recovery. Executive Summary

 Hyderabad, the joint capital of Telangana and , has been on the roller coaster ride since 2008. Once famously known as the cynosure for investors and realty developers, the city lost its charm during the global financial crisis. 2008-2013 was the worst-hit period in the history of the Hyderabad real estate market. While other major cities started recovering from the global financial crisis, Hyderabad was stuck in the state of political upheaval leading to prolonged stagnation in capital values and reduced absorption. The unsold inventory touched a all-time high during this period. Buoyed by these factors, Hyderabad witnessed stagnation in capital values till 2014. Investors and developers also took a cautious approach during this period that resulted in reduced new supply.

 Post formation of the separate state and new industrial policy initiated by the government, the city gradually started recovering with increase in new launches across the city. The bifurcation of the new state resulted in realty sentiments moving northwards, which in turn reinstated buyers’ confidence in the sector. Primarily being an end-user market, Hyderabad holds strong future growth potential with the state-of-art infrastructure, better connectivity and affordable property values.

 Improved infrastructure development, such as Outer Ring Road (ORR), Rajiv Gandhi International Airport, Multi-Model Transport System, Inner Ring Road, under construction Metro Rail and availability of Grade A offices at comparatively lower prices than those in Bangalore and Pune has made Hyderabad one of the most sought after destinations for real estate development. During the first half of 2016, Hyderabad witnessed the abortion in grade A office space by Amazon and IBM in Hi Tech City.

 The residential market of Hyderabad witnessed significant increase in unit launches in the first half 2016 compared to its preceding period in 2015. West Hyderabad remained the prominent zone for new launches. Out of the total unit launched, , Hi Tech City, Narsingi and Madinaguda witnessed approximate 85 percent of new supply. and in Central Hyderabad remained the prime residential markets in the city majorly compromising bungalows and independent houses. Interestingly, Gandhinagar and emerged as posh residential markets with several luxury apartment projects.

 Availability of grade A office space and direct connectivity to major micro-markets of Hyderabad through Outer Ring Road has made Hi Tech City and Gachibowli climb the realty growth ladder. Narsingi, Madinagua , and are a few other western markets that have significantly benefited due to their proximity to Hi Tech City and Gachibowli. 1. INTRODUCTION Origin of the City

The foundation of Telangana as the 29th State of the country symbolizes a beginning and an end. Telangana gained its identity as the Telugu-speaking region of the princely state of Hyderabad, ruled by the . The Nizam’s rule became a princely state during the British Raj, and continued so for 150 years, with the city serving as its capital. On July 2013, the Congress Working Committee with one accord passed a resolution to endorse the establishment of a separate Telangana state. After several stages, the bill was placed in the Parliament and was finally passed in February 2014. The state of Telangana was officially formed on 2nd June 2014.

Hyderabad is the joint capital of Telangana and Andhra Pradesh for the next ten years. Andhra Pradesh has been bifurcated into two successor states - Telangana with ten districts and Andhra Pradesh with thirteen districts. The new state is bordered by the states of Karnataka in the west , Maharashtra in the north and north-west, Chhattisgarh in the north-east and Andhra Pradesh in the south and east. Hyderabad has a population of around 6.7 million and a metropolitan population of around 7.75 million, making it 4th most populous city in the country.

Hyderabad was traditionally a manufacturing, service and tourism based economy. In the early 1990s, the city witnessed a revolution in the Biopharmaceutical industry with establishment of the Genome Valley (), Indian Institute of Chemical Technology, National Institute of Pharmaceutical Education and Research, along with the state level institutions making Hyderabad the hub of pharmaceutical and in the country. Improved infrastructure in bio-technology has attracted regional companies and MNC’s to set up offices, warehouses, research and development centers in the city. …Origin of the City

In the late 1990s, IT revolution started and Hyderabad emerged as the prominent IT destination in the country. The IT revolution transformed the development scenario in the city with key infrastructure developments announcement, favored policies and proactive support by the government. The improved infrastructure plan for the city attracted investors and developers from across the globe to participate in the vertical growth of the city. Major sectors, such as pharmaceuticals, Bio-technology, manufacturing and telecommunications, also started growing in the city, leading to the overall development of the city. This development phase impacted employment opportunities in the city, leading to increase in demand for housing, retail and hospitality.

In 2008, like any other city, Hyderabad was also affected badly by the global financial crisis. The realty sentiments took a dip and the development phase halted with sluggish demand and stagnation in capital values and absorption. Investors and developers restricted themselves from the market and took a wait and watch approach.

Post financial crisis, the city was trapped in political turmoil. While other major cities started recovering from the financial crisis, Hyderabad realty market witnessed stagnation in capital values and investor interest. During this period, the sum of unsold inventories reached an all-time high. Thus, developers largely focused on clearing existing stock instead of infusing fresh supply in the market.

On 2nd June 2014, the state of Telangana was officially formed, which led to political stability in the state. With this, realty sentiments improved and capital values also witnessed a significant rise of about 5-10% year-on-year. There were significant increases in new launches and government also initiated new industry policies to make Telangana the most preferred investment destination. Timeline

• Set up of pharmaceutical and electronic industries in the city. 1970 -1990 • Genome Valley announced. (Genome Valley (Science Park) is an Indian high- technology business Beginning of district) Pharmaceutical & Bio • Its strategic location in South-Central India gave Hyderabad the epithet of the “Gateway of South- Technology Era Central India.”

• The city witnessed development in diversified industries such as IT/ITEs Services, Biotech, Insurance and Financial institutions . • Cyber Tower (1st Phase of Hi-tech City) was inaugurated in 1998. 1990 – 2000 • The city started attracting investments in IT driven services. Beginning of IT Era • Microsoft India’s Development Center operational in 1990.(largest campus of Microsoft in India). • Residential development happened in and around micro-markets of Commercial Business District, such as Banjara Hills, Jubilee Hills, Begumpet, , , Himayat Nagar.

• The city emerged as one of the prominent IT/ITEs hub of the country. • Outer Ring Road phase 1 construction started, from Gachibowli to . (Dec 2005). • Hi Techh City and Gachibowli emerged as the prominent IT hub of the city , which led to residential development in peripheral areas such as Madhapur, , Gachibowli, Kukatpally and . • Developers welcomed unlimited FSI norm, and participated in vertical growth of the city. 2000 – 2007 Hyderabad • FDI up to 100% is permitted on the automatic route in hotel and tourism sector/ construction and realty on Pinnacle maintenance of roads, highways, vehicular bridges, toll roads, vehicular tunnels, ports and harbors./ Mass Rapid Transport Systems in all metropolitan cities, including associated commercial development of real estate. • Multi- Modal Transport System phase 1 started its operation in August 2003. • Rail announced.

• Global Subprime mortgage crisis crashed the realty market in the city, with decline in launches and absorption. 2008- 2009 • The city witnessed decline in capital values in major markets. Beginning of Global • Rajiv Gandhi International Airport commenced operation. Financial Crisis • Outer Ring Road commenced operation, phase 1 from Gachibowli to Shamshabad. • Hyderabad's IT exports reached US$ 4.7 billion. • Hyderabad's bio-pharmaceuticals exports reached US$3.1 billion.

2010- 2012 • Realty market remained subdued post global crisis. Capital values remained stagnant. Political Turmoil in the • Due to political instability and weak market sentiments, development activity slowed down in the city. State • No new companies started operations in the city.

• Announcement of separate state. 2013 • Political instability remains. Slowdown continued in real estate development Contd. Political Turmoil, • Investors remained on back-seat. Separation of State • Marginal price appreciation recorded due to increase in construction cost. • Central Government gave the official approval for the ITIR project.

• Telangana state formed. • Hyderabad, became the second largest city in India for software exports in FY14. • The New Industrial Policy 2014 introduced, for making Telangana preferred investment destination. • Implementation of Telangana State Industrial Project Approval and Self Certification Systems (TS-iPASS). 2014 -2015 • Development of the Hyderabad-Warangal Industrial Corridor. New State formation/ • Improvement in realty sentiments due to political stability led to increase in new launches and marginal Development on Track price appreciation. Gachibowli and Hi Techh City remained the preferred micro-markets for new launches due to its proximity to commercial hub. • Absorption remained sluggish, consumers continued with a wait-and-watch policy. • City witnessed a price appreciation of 5.2 per cent (year-on-year) in 2015.

• Realty sentiments improved and poised for correction. Decrease in unsold inventory. • The State GDP has grown at 9.2 % during 2015-2016 as against 8.8 % in during 2014-2015. 2016 • Hyderabad Metro Rail to be operational soon. Realty Sentiments • Outer Ring Road to be fully operational. improved • Absorption and New launches increased. • West Hyderabad remained the preferred destination for new launches due to its proximity to the commercial hub of the city. Economic Overview

Hyderabad is the joint capital of Telangana and Andhra Pradesh, and post 2024 it will be completely transferred to Telangana. Information technology, pharmaceuticals and biotechnology industries are the leading sectors which contribute to its economic growth. The city is the largest contributor to the state's GDP of about $74 billion. It also has the highest number of SEZs (Special Economic Zone) among all cities in India. The main economic sectors of Hyderabad are traditional manufacturing, the knowledge sector and tourism. Since its establishment in 1591, Hyderabad has been a global trade center in various fields and famously known as only diamond market in the world. During Nizam’s rule, the city has witnessed foundation of varied industrial zones leading to industrial growth with traditional manufacturing. During 1950s and 1960s, the city became home to several public enterprises such as BEL, NMDC, BHEL, HAL and DRDO. In 1970s, the city witnessed the establishment of pharmaceutical and electronic industries due to its strategic location in south central India. While in 1990s, the city saw development in diversified industries such as IT/ITeS services, Biotech, Insurance and Financial Institutions.

Table 1.1: Economic Industry Overview

Industry Overview

The city is among the global centers of IT/ITeS and considered as the second silicon valley after Bangalore. The city’s IT sector includes the Information Technology – enabled services, Business Process Outsourcing, Entertainment Industries and Financial services. Hi Techh City and Gachibowli are the key Information commercial hubs and are home to several US based companies. Technology Deloitte, GE Capital, KPMG, Ernst & Young, HSBC, Bank of America, Genpact are some of the financial services companies that have their offices in the city. During 2008-09, the city’s IT exports reached US $4.7 billion, and 22 per cent of the NASSCOM’s total membership is from the city. Hyderabad is undoubtedly the most affordable residential markets out of the country's top seven cities including Mumbai, National Capital Region, Bangalore, Pune, Chennai and Kolkata. The current infrastructure development in and around the city has made it one of the most sought-after destination. The World Retail and Real Bank ranked the city as the second best city for doing business in 2009. Banjara Estate Hills and Jubilee Hills are the prime residential areas. The Economic Times valued Banjara Hills to be worth of US $20.7 billion. Post the elections and formation of the new state, the city has seen quite positive realty sentiments with increase in new launches and absorption. Industry Overview

Hyderabad emerged as a biotechnology and pharmaceutical hub and is known as India's pharmaceutical capital. Due to its strategic location in south- central and the establishment of Indian Drugs and Pharmaceuticals Limited in 1961, it Bio became a major landmark development to establish Hyderabad as hub of Pharmaceutical pharmaceutical industry. Industry The establishment of Genome Valley (Science Park) here has attracted regional companies and MNC’s to set up offices, warehouses, research and development center in the city. In 2008–2009, Hyderabad's bio-pharmaceuticals exports reached US $3.1 billion. In 2012, Hyderabad was declared as the first-ever "Best Heritage City of India“ by the Union Tourism Ministry. The city is famous for its monuments which includes the famous Fort and Golkonda Fort. Several traditional bazaars are situated in and around the city. Tourism The prominent located near Charminar is famous for pearls, jewellery and products such as Kalamkari paintings, silverware and artefacts. The tourism industry forms significant role in the economy of Hyderabad. It was ranked 3rd Best City to Travel in 2013 by Lonely Planet.

Price Index : Hyderabad vs Top Cities

Figure 1.1: Price Index - Top Cities 400

350

300

250

200

150

100

50

0 2007 Q4 -2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Index

Hyderabad Chennai Pune Kolkata Mumbai Bengaluru Delhi

Source – National Housing Bank Residex

The Hyderabad real estate market has been on a roller coaster ride since 2008. The city witnessed a decade-long stagnation in realty sentiments. The residential market here is today one of the most affordable markets compares to other top cities like MMR, NCR, Bangalore, Pune, Chennai and Kolkata. Global financial crisis and political instability in the state had restricted growth of the city with a decline in launches and absorption. Investor and developers took a cautious turn on new developments and waited for stability in the state politics.

Above price index depicts the clear picture of the Hyderabad realty market, where property prices were heading south till Q2 2013. This was the time when the state was going through crisis owing to the formation of a new state. Thus, unsold inventories were an all-time high. Post the formation of Telangana, the city witnessed upward trend in prices and absorption. With new policies announced, Hyderabad has become one of the most preferred investment destinations. CITY 2. ZONES Overview: Zones

CENTRAL ZONE Central zone is certainly the most developed zones of the city. Various Grade A business and IT parks have emerged in areas like Begumpet, , , Banjara Hills, Jubilee Hills and nearby areas. Over the last few years, this zones’ prime location coupled with premium office spaces has successfully attracted several IT giants.

Central zone has excellent connectivity with other parts of Hyderabad via NH-44 and 65 that run right through the city. This zone is also known for its first-class physical and social infrastructure, hotels, schools, hospitals and retail hubs. All these factors have boosted property demand here and thus this zone has the highest property prices in Hyderabad.

Localities in central zone such as Jubilee Hills and Banjara Hills are the most sought-after residential areas in Hyderabad realty market. Majority of the residential development in these localities comprises of bungalows and independent homes. Gandhinagar and Begumpet have emerged as the posh residential hotspots that are home to a number of luxury apartment projects.

WEST ZONE West Zone of Hyderabad is one of the most active regions of the city. Scarcity of land parcels in Central zone and lower land prices in western parts encouraged real estate development here.

The tremendous growth in the financial district in Gachibowli and IT corridor in Hi Tech City attracted several multinational corporations, such as Microsoft, Google, IBM, Amazon, Oracle, Accenture, Infosys and TCS to set up large facilities here. Ample social infrastructure in terms of organised retail and multiple entertainment options have boosted residential demand in this zone.

Majority of residential projects in west zone cater to IT/ITeS employees in and around Hi Techh City and Gachibowli. These projects also receive spillover demand from the central zone due to comparatively lower prices here. Overview: Zones

NORTH ZONE The northern zone comprises locations such as , , , A.S. Rao Nagar, , Marredpalli, Himayath Nagar. Realty market here is majorly driven by the industrial/ warehouse development and its proximity to the cantonment area.

Marredpalli area in this region enjoys strategic location situated near railway station along with ample social infrastructure facilities including schools, hospitals etc. This micro market is a premium locality. A.S. Rao Nagar, in close proximity to Sainikpuri, is witnessing development of affordable housing and primarily has the presence of local developers.

EAST ZONE The eastern zone comprises locations such as , , Uppal, Bod Uppal, Pocharam, and L. B. Nagar. The recent completion of Hyderabad’s ORR has significantly improved connectivity and traffic situation in this region.

Uppal remains one of the most preferred destinations in this zone. It majorly comprises of independent residential units.

SOUTH ZONE The real estate development along the southern region is in a relatively nascent stage. The region surrounding the Hyderabad International Airport at Shamshabad is witnessing development of numerous plotted development projects.

With the development of Rajiv Gandhi International Airport at Shamshabad and other developments such as SEZs, Hardware Park and Fab City, this region has started witnessing traction from developers that have launched new residential projects here. , Upparpally, , Santosh Nagar, Rajendra Nagar and Shamshabad fall in the southern zone. TOWARDS TOWARDS NAGPUR & SIDDIPET & NIZAMABAD KARIMNAGAR Major Localities: Zone-wise

NH-7

KALLAKAL BONTHAPALLE TURKAPALLY BOINPALLY

DUNDIGAL PEDDAKANJERLA ALWAL

BOMMALRAMARAM

KOMPALLY BITS PILANI

PATANCHERU BOLARUM BOGARAM KUKATPALLY BHANUR KONDAPUR MAOULA ALI POCHARAM Hi Tech CITY AMEERPET GACHIBOWLI GHATKESAR PANJAGUTTA HIMAYATH NAGAR UPPAL PRATAP SINGARAM GOLKUNDA KOTHAPET FORT LB NAGAR CHIKUR ANAJPUR

HIMAYAT SAGAR LAKE RAJENDRA NAGAR

NADERGUL SOLIPET SHAMSHABAD

PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT

POCHARAM MAHESHWARAM KOTHUR LEGEND Major North Zone Localities Major South Zone Localities

MEKAGUDA Major West Zone Localities PULIMAMINDI Major East Zone Localities

TOWARDS BANGALORE TOWARDS TOWARDS SRISAILAM NAGARJUNSAGAR INFRASTRUCTURE 3. OVERVIEW Major Infrastructure Projects: Existing

Table 3.1: Hyderabad Metro Details

Name Development Connectivity Details It is located in Rajiv Gandhi International Flights to 60+ international and Shamshabad, south International Airport Airport national airports Hyderabad and was opened in March 2008 Bhongir, Bolaram, Falaknuma, Jangaon, Suburban rail Kacheguda/Falaknuma, Malkajgiri, It connects various areas MMTS system Manoharabad, , Mola ali, of the city Secunderabad, Umdanagar MGBS Major cities Bangalore, Chennai, Provides intra and inter Jubilee bus station Bus Terminals Mumbai, Pune, Vijayawada etc. state transportation Miyapur bus depot The Nehru Outer Ring Access This is a radial road that provides Road encircles the city of Hyderabad ORR Controlled multiple access and exit points around Hyderabad and is a 158- Expressway the city km, 8-lane road This is a 11.6-km long Hyderabad Elevated Elevated Hyderabad International Airport to expressway connecting Expressway Expressway Mehdipatnam the city centre to the airport Mehdipatnam, Banjara Hills, Punjagutta, Mettuguda, Begumpet, Tarnaka, , Uppal, NH-202 via It is a 50-km long arterial Hyderabad Inner Ghatkesar road, Nagole, L. B. Nagar, Arterial Road ring road encircling the Ring Road (IRR) Santosh Nagar crossroads, inner perimeter of the city ChandrayanGutta, Kurnool highway, Rajendra Nagar Bypass Road, and Rethibowli It is an arterial road that Kukatpally, , Chanda Nagar, Mumbai Highway connects the northwest Highway Punjagutta, Dilsukhnagar, L. B. Nagar (NH-9) and southeast locations to and the centre of Hyderabad It is an arterial road that Medchal, Quthbullapur, Kompally, connects the north and NH-7 Highway Secunderabad, Shivarampally and south locations to the Gandiguda centre of Hyderabad It connects the eastern Warangal Highway Uppal, Pocharam, Ghatkesar and locations to the centre of Highway (NH-163) Ramananthapur Hyderabad

Mehdipatnam, Raidurgam, Shaikpet, It connects the western Old Mumbai Highway Gachibowli, and Chanda locations to the centre of Highway Nagar Hyderabad TOWARDS SIDDIPET & KARIMNAGAR Major Infrastructure Projects: Existing

NH-7

KALLAKAL BONTHAPALLE TURKAPALLY BOINPALLY

DUNDIGAL

PEDDAKANJERLA ALWAL

BOMMALRAMARAM

KOMPALLY BACHUPALLY BITS PILANI MIYAPUR BUS PATANCHERU TERMINAL BOLARUM BOGARAM KUKATPALLY KAPRA MARREDPALLY BHANUR JUBILEE BUS TERMINAL Hi Tech CITY AMEERPET POCHARAM

GACHIBOWLI GHATKESAR SECUNDERABAD RAILWAY STATION PRATAP MGBS UPPAL SINGARAM ELEVATED NAMPALLY OSMAN SAGAR EXPRESSWAY RAILWAY STATION NAGOLE

ANAJPUR KISMATPUR LB NAGAR CHIKUR

VANASTHALIPURAM LAKE RAJENDRA NAGAR

SHAMSHABAD SOLIPET RAJIV GANDHI PEDDA SHAPUR INTERNATIONAL AIRPORT

POCHARAM

MAHESHWARAM

KOTHUR LEGEND Major Highways & Roads International Airport MEKAGUDA PULIMAMINDI Major Railway Stations Bus Terminals TOWARDS BANGALORE TOWARDS TOWARDS SRISAILAM NAGARJUNSAGAR Hyderabad Metro Rail

Hyderabad Metro Rail (HMR) is a rapid Table 3.2: Hyderabad Metro Details transit system, currently under construction. It is Metro Line Connectivity Total Length being implemented entirely on public-private partnership (PPP) basis, with the state Line I Miyapur - LB Nagar 29.9 kms government holding a minority equity stake. The construction work is being undertaken in two Line II JBS – Falaknuma 14.8 kms phases. Further, there are six stages of Shilparamam - Line III 26.5 kms completion in Phase I. Nagole

Table 3.3: Hyderabad Metro Rail Construction Stages (Phase-I) Stage Target Section Distance (in km) Line Stage 1 Nagole to Secunderabad 9 Line III Stage 2 Miyapur to S R Nagar 11.9 Line I Stage 3 Secunderabad to Begumpet 10 Line III Stage 4 Begumpet to Shilparamam 9.5 Line III Stage 5 SR Nagar to LB Nagar 17.9 Line I Stage 6 JBS to Falaknuma 14.8 Line II TOWARDS TOWARDS NAGPUR & SIDDIPET & NIZAMABAD KARIMNAGAR Hyderabad Metro Rail

NH-7

KALLAKAL BONTHAPALLE TURKAPALLY BOINPALLY

DUNDIGAL PEDDAKANJERLA

BOMMALRAMARAM

KOMPALLY BITS PILANI

PATANCHERU BOLARUM MIYAPUR BOGARAM KAPRA KUKATPALLY MARREDPALLY BHANUR BEGUMPET SR NAGAR MAOULA ALI JBS POCHARAM GACHIBOWLI SECUNDERABAD SHILPARAMAM

PRATAP SINGARAM OSMAN SAGAR GOLKUNDA FORT NAGOLE

KISMATPUR CHIKUR ANAJPUR LB NAGAR HIMAYAT SAGAR FALAKNUMA LAKE

NADERGUL SOLIPET

PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT

POCHARAM MAHESHWARAM KOTHUR Legend Corridor I: Miyapur to LB Nagar Corridor II: JBS to Falaknuma MEKAGUDA Corridor III: Shilparamam to Nagole PULIMAMINDI

TOWARDS BANGALORE TOWARDS TOWARDS SRISAILAM NAGARJUNSAGAR OFFICE MARKET 4. OVERVIEW Hyderabad Office Market

. During the first half of 2016, Hyderabad Figure 4.1: Office space absorption experienced a total office absorption of 3.17 million sq. ft. Prominent tenants such as Amazon leased nearly 350,000 2 sq. ft. in Raheja Mind Space in Hi Tech City. IBM also took up almost 300,000 sq. 1.5 ft. in Phoenix Avances in Hi Tech City. 1 . Additionally, major IT, digital and e- commerce companies have announced 0.5 plans for huge investments in Hyderabad. Fig. 4.2 displays top 5, most significant office market transactions in 0 Q4 2015 Q1 2016 Q2 2016 Q1 2016 * Values in million sq. ft.

Figure 4.2: Major office deals in 2016

400,000 Hi Tech Madhapur Manikonda Banjara Hills City 350,000 300,000 250,000 200,000 150,000 100,000 50,000 -

* Values in sq. ft.

• Other major office dealings in Q1 2016 included Apple leasing 250,000 sq. ft. in WaveRock in Nanakramguda and Value Labs leasing 220,000 sq. ft. in Lanco Hills in Manikonda.

• Interestingly, all these major office transactions along with a vast majority of office space absorption are skewed towards West side of Hyderabad. The main reason for this is availability of Grade A office space in Hi Tech City, Nanakramguda, Madhapur and adjacent localities at relatively lower prices than other parts of Hyderabad.

• This massive office space absorption coupled with accessibility to excellent business parks has had a direct impact on residential demand, since people employed in these areas prefer to live close to their offices and save the daily commute time. TOWARDS TOWARDS NAGPUR & SIDDIPET & NIZAMABAD KARIMNAGAR Major office transactions: 2016

NH-7

KALLAKAL BONTHAPALLE TURKAPALLY BOINPALLY

DUNDIGAL PEDDAKANJERLA ALWAL

BOMMALRAMARAM

KOMPALLY BACHUPALLY BITS PILANI

PATANCHERU BOLARUM

BOGARAM KAPRA MARREDPALLY BHANUR MAOULA ALI POCHARAM Hi Tech CITY GHATKESAR KAVADIGUDA

HIMAYATH NAGAR MEHDIPATNAM UPPAL PRATAP SINGARAM KOTHAPET OSMAN SAGAR GOLKUNDA FORT NAGOLE DILSUKHNAGAR

KISMATPUR LB NAGAR CHIKUR ANAJPUR

VANASTHALIPURAM HIMAYAT SAGAR LAKE RAJENDRA NAGAR

SHAMSHABAD NADERGUL SOLIPET

PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT

POCHARAM

MAHESHWARAM

KOTHUR

MEKAGUDA PULIMAMINDI

TOWARDS BANGALORE TOWARDS TOWARDS SRISAILAM NAGARJUNSAGAR Upcoming Grade-A Office Spaces

• The new supply of Grade-A office spaces is concentrated mainly in the West side of Hyderabad. With big businesses looking to consolidate all their offices under one roof and new companies willing to enter Hyderabad, one can expect similar or higher office space absorption in West Hyderabad in 2016, 2017 and 2018.

Figure 4.3: Under Construction Grade-A office spaces Name Area (sq.ft) Location Zone Knowledge City 1540000 West Meenakshi IT Campus 1300000 Gachibowli West Amsri Brain Storm 900000 Gachibowli West aVance – Bldg # H3 560000 Madhapur West Salarpuria Sattvaa 1500000 Madhapur West My Home Divija 3,000,000 Raidurg West Laxmi Cyber Towers 1,000,000 Nanakramguda West

• This will further increase rental demand and rental yield in these parts of the city. High demand will attract investors and developers leading to increase in project launches in West Hyderabad.

Source: http://www.colliers.com/-/media/files/apac/india/market%20insights/opmo-q1-apr-2016.pdf http://www.colliers.com/-/media/files/apac/india/market%20insights/2016-july-india-opmo.pdf http://www.cushmanwakefield.com/~/media/marketbeat/2016/05/hyderabad_off_1q16.pdf RESIDENTIAL 5. MARKET TRENDS Residential Supply & Price trends

Figure 5.1: Residential Property Supply Trend in Hyderabad • There has been a significant rise in the number of residential launches in the first 14,000 half of the year (H1-2016) as compared to the previous year (H1-2015) indicating an 12,000 optimistic trend in the residential market of Hyderabad. 10,000 • Majority of the new launches are skewed 8,000 towards the western markets of the city such as Gachibowli, Hi Tech City, Narsingi 6,000 and Madinaguda.

4,000 • Growing culture of accommodating 2,000 apartments and residential communities New New LaunchSupply Volume (units) against bungalows/independent - developments have boosted the supply H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 trend in the western region. 2014 2015 2016

Figure 5.2: Residential Price Trends of Different Zones

5,000

4,500

4,000

3,500

3,000

2,500

2,000 Central 1,500 East

1,000 North

Weighted Prices Average (Rs per sq.ft) South 500 West - H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2011 2012 2013 2014 2015 2016

• West Hyderabad marks high in the city in terms of capital prices while Northern markets share the competition in volumes amongst other regions. Supply Segmentation & Distribution

8,000 Figure 5.3: Supply Segmentation of Residential Market in Hyderabad

7,000

6,000

5,000

4,000

3,000

2,000 Residential Residential Supply(units) 1,000

- A M L UL A M L UL A M L UL A M L UL A M L UL H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 2014 2015 2016

• Higher income levels available in the IT sector fueled purchasing power of residential property in Hyderabad (esp. West Hyderabad) pushing the focus of the industry towards premium housing. • Luxury segment in Hyderabad is seen ranging from Rs 80 lakh to Rs 1.5 crore while the mid- segment projects range from Rs 50 lakh to Rs 80 Lakh. • Compared to 2015, Hyderabad has seen significant residential activity towards project launches catering to mid, luxury and ultra-luxury segments.

Figure 5.4: Distribution of Residential Supply in Hyderabad

12,000

10,000

8,000

6,000

4,000

Residential Residential Supply(units) 2,000

-

Plots Plots Plots Plots Plots

Villas Villas Villas Villas Villas

Apartments Apartments Apartments Apartments Apartments H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 2014 2015 2016

• Growing nuclear families preferring residential townships surrounding workplaces has been a clear reason behind the dominating concentration of developers on projects catering huge Apartments and focus on providing unique amenities to the home buyers. Supply Distribution & Markets

Figure 5.5: Distribution of Residential Supply in Hyderabad

8,000 7,000 6,000 5,000 4,000 3,000 2,000

Residential Residential Supply(units) 1,000

-

East East East

West West West West West

Outer Outer

South South South

North North North North North

Central Central Central H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 2014 2015 2016

• Fig. 5.5 indicates a clear controlled launch pattern of residential supply in the western and northern markets of the city from the past three years. • Promising returns and fast paced development due to infrastructure and regulatory provisions for enhancing employment centres in the West zone has brought more attention to these markets.

Figure 5.6: Since 2014, Residential Developer Interest in Hyderabad (unit supply)

Gachibowli Nagole 15,625 Madinaguda

Gajularamaram 3,125 Narsingi

625 Kondapur 125

Jubilee Hills 25 Hi Tech City

5

Sanath Nagar 1 Pocharam

Patancheru Bachupally

Nanakramguda Beeramguda

Madhapur Manikonda Kompally Nallagandla

Tellapur *Measured on logarithmic scale

• Gachibowli clearly marks as the most sought out destination from the past 3-5 years spanning due to a variety of positive reasons such as IT dominance, sound infrastructure and accessibility. • Also the neighbouring IT dominant areas and peripheral residential markets have been in the spotlight from the beginning such as Madinaguda, Narsingi, Kondapur and Hi Tech City. • Apart from the development of IT sector, active emphasis on city-scale infrastructure projects (such as Metro Project, ORR) have proven to bring good demand to the adjacent localities. H1 2016 6. Residential Recap H1-2016 Recap

Figure 5.7: Residential Supply Distribution (H1-2016)

North 15%

West North Hyderabad 85%

Other 3% Yapral West Hyderabad 21% Sanath Nagar Others 43% Manikonda4% 5% Jubilee Hills 7% Gajularamara Nanakramguda Gachibowli m 8% 39% 33%

Hi Tech City 15%

Narsingi 22%

• Only West and North Hyderabad are observed to have active residential supply in the first half of 2016 amongst other regions. • As seen, residential market in western Hyderabad is predominantly pivoted at Gachibowli and the counterparts while in North, Sanath Nagar is seen driving the residential supply along with Gajularamaram. Segmentation and Typology Distribution

West Hyderabad North Hyderabad

1% 1% 18% 29%

53% 28% 70%

Affordable Mid Luxury Ultra Luxury Affordable Mid Luxury Ultra Luxury

• Data indicates that North Hyderabad has seen maximum launches in the affordable segment, followed by mid segment while West Hyderabad saw decent activity in luxury market as well. • Hi Tech City, one of the established micro markets in West Hyderabad further had ultra-luxury projects while the remaining markets have projects in upper mid-segment and luxury segments. • Jubilee Hills in West and Begumpet in North are the two veteran residential markets filled with luxury supply. West Hyderabad North Hyderabad

Gachibowli 94% 6% Sanath Nagar 100%

Narsingi 3%12% 77% 8% Gajularamaram 81% 19%

Hi Tech City 100% Yapral 100%

Nanakramguda 100% 87% 13%

Jubilee Hills 99% 1% Begumpet 100%

Affordable Mid Luxury Ultra Luxury Affordable Mid Luxury Ultra Luxury

• North Hyderabad, being a low dense residential region compared to West Hyderabad, witnessed supply of new residential projects comprising villa units. • Besides Jubilee Hills, all major residential areas in the West are tuned in to apartment culture.

West Hyderabad North Hyderabad

Gachibowli 100% Sanath Nagar 100% Narsingi 100% Gajularamaram 81% 19% Hi Tech City 100% Yapral 100% Nanakramguda 100% Nizampet 87% 13% Jubilee Hills 99% 1%

Manikonda 100% Begumpet 100%

0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%

Apartments Plots Villas Apartments Plots Villas DEEP DIVE 7. WEST HYDERABAD West Hyderabad Realty Market

Here, major emphasis is being given to West Hyderabad because it is the only zone that observed maximum construction activity in residential real estate over the past five years. Sales volumes have been high in comparison to central business district as this region provides affordable options coupled with aggressive growth factors. Also, markets in Central zone have almost saturated.

Prominent residential developers are seen to be concentrating in the western region which is seeing high demand primarily from first-time home buyers that are working in the IT/ITeS sectors.

Additionally, all Grade-A office spaces in the city are predominantly available in the western markets such as Gachibowli, Hi Tech City and Madhapur. There has been a remarkable improvement in absorption of the commercial spaces in the region after the bifurcation of Telangana state.

Further, the ORR has paved a runway for increased interest from commercial establishments of global brands and ultimately residential growth in the region providing immediate accessibility to important destinations including International Airport along with commercial hubs.

Figure 7.1: West Zone - Price Appreciation 8,000

7,000

6,000

5,000 Gachibowli 4,000 Hi Tech City Kondapur 3,000 Madinaguda 2,000 Manikonda

Residential Residential Capital Price (Rs per sq.ft) 1,000

- H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2010 2011 2012 2013 2014 2015 2016

• Property prices in the five key markets of West Hyderabad have been marginally dormant over the last few years. However, Fig. 7.1 suggests that the year 2016 began on a positive note with decent capital value appreciation of residential properties. All the markets are seen to be actively competent in this regard projecting decent returns on investment. Developer Share & Top Launches

Figure 7.2: West Hyderabad Residential Builder's Share for H1 2016

6% 2% My Home Constructions Pvt Ltd 2% 3% NCC Urban Infrastructure Limited 4% Sumadhura Infracon Pvt Ltd 7% Salarpuria Group

52% Hallmark Builders 8% Muppa Projects India Pvt Ltd Alekhya Homes Pvt Ltd Jayabheri Group 17% Other Builders

• Several leading developers have shown interest in this region because of which there has been rapid residential development in recent times. Active and competitive participation of these premium developers indicates future growth potential in average residential prices in the region. • My Home Constructions Pvt. Ltd has been the most active developer this year with high residential footprint in this region with two iconic projects - My Home Bhooja and My Home Avatar. This was followed by NCC Urban Infrastructure Ltd with NCC Urban One.

Table 7.1: Top Launches in West Hyderabad (H1 2016) Available Starting Project Builder Locality Config. (BHK) Ticket Price

A Cyber Homes Lake Vision Cyber Homes Narsingi 2, 3 28.5 lakh Gangothri Nakshatra Pride Gangothri Builders and Developers Manikonda 3 40.9 lakh Hallmark Tranquil Hallmark Builders Manikonda 2, 3 32.3 lakh Balaji Grand Balaji Constructions Appa Junction 2, 3 30.7 lakh Hallmark Silvanas Hallmark Builders Manikonda 2, 2.5, 3 30.8 lakh

Mid Prems Sarovar Prem Constructions Kukatpally 2, 3 38.3 lakh Muppa Alankrita Muppa Projects India Pvt Ltd Narsingi 2, 3 43.8 lakh Sumadhura Acropolis Sumadhura Infracon Pvt Ltd Nanakramguda 2, 3 51.9 lakh My Home Avatar My Home Constructions Pvt Ltd Gachibowli 2, 3 65.0 lakh Alekhya Palm Woods Alekhya Homes Pvt Ltd Gachibowli 3 66.5 lakh NCC Urban One NCC Urban Infrastructure Limited Narsingi 3, 4 64.5 lakh Ayyanna Infra Prestige Ayyanna Infra Kondapur 3 85.1 lakh

Luxury Salarpuria Sattva Magnus Salarpuria Group Jubilee Hills 2, 2.5, 3, 4 61.0 lakh Incor Divino INCOR Infrastructure Pvt Ltd Nallagandla 3 125 lakh Radhey Sancia Radhey Constructions 3 185 lakh Star Home R R Star Home Star Homes 3 201 lakh My Home Bhooja My Home Constructions Pvt Ltd Hi Tech City 3, 4 169 lakh Luxury Jayabheri The Peak Jayabheri Group Narsingi 4 258 lakh

Ultra Pooja Forest Light Pooja Crafted Homes Pvt Ltd Madhapur 4 700 lakh Pavani Manor Pavani Group Jubilee Hills 4 750 lakh

• An elementary analysis of the supply that entered the western markets this year indicates that maximum supply was seen in the 3BHK configurations with major orientation towards premium segment. Average Rental Yield

Figure 7.3: Average Rental Yield available in Residential Market of Hyderabad

4.2% 4.2% 4.0% 4.0% 4.0% 4.0% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.8% 3.8% 3.8%

3.4% 3.4% 3.2% 3.1% 3.1% 3.0% 3.0% 3.0%

2.8%

Koti

Uppal

Mallapur

Saidabad

Kondapur

Ameerpet

Moosapet

Ghatkesar

Habsiguda

Gachibowli

Moti Nagar Moti

Manikonda

HiTech City

MasabTank

Shamshabad

Dilsukhnagar

SaroorNagar

GandhiNagar

PragathiNagar

Nizampet Road Nizampet

Himayath Nagar Himayath

EastMarredpally

Padma Rao Nagar Rao Padma Chandrayanagutta North Hyderabad Central Hyderabad West Hyderabad East Hyderabad South Hyderabad

• While Hyderabad residential market essentially saw significant number of options in the premium segment, data indicates that the Western markets amongst other counterparts will also offer reasonable returns (gross rental yield ranging from 3.8 per cent to 4 per cent). Add to this, there are myriad property options by premium developers here and the growing importance of IT industry will provide a good opportunity for residential investment and home-buying experience. Outlook

 Post the state bifurcation, realty sentiments in Hyderabad residential market seem to have improved. Further, with investment favored industrial policies and improved social infrastructure facilities, Hyderabad is again on the investor’s radar.

 Telangana is among the fastest growing states in India by registering 9.2 per cent growth in 2015-16. The state economy is now fundamentally strong backed by a stable government while the IT/ITeS, manufacturing, Bio Technology and Tourism industries are also on a roll. The investor-favored policies initiated by the Government are likely to boost economic growth in the state and the capital city will also benefit from this. IT/ITeS will remain the primary growth driver which in turn will boost employment opportunities here leading to a rise in demand for residential, retail and hospitality sectors.

 First Half of 2016 has witnessed quite a healthy residential supply, particularly in West and North Hyderabad. Moreover, consumer sentiments are gradually picking up pace here resulting in increase in new launches and marginal rise in capital values.

 West Hyderabad remained the preferred destination for most realty players in their real estate portfolio expansion. Availability of Grade A office spaces in Hi Tech City and Gachibowli have made West Hyderabad one of the prominent and most sought-after zone. The current residential supply trend connotes future capital appreciation in and around micro markets of Hi Tech City and Gachibowli.

 With current pace of infrastructure development, government policy, relatively affordable property prices and improving buyer sentiments, the realty market of Hyderabad is likely to gain more momentum in the second half of 2016. ABOUT QuikrHomes

QuikrHomes is the leading Real Estate Marketing Solutions company in the Indian market. We have the largest and most comprehensive list of detailed real estate sales and rental options covering all cities and budget categories. In the highly volatile and scattered Indian real estate market it is quite challenging to understand the dynamics and make profitable investments. We help investors to take informed decision backed by real time data. We capture real estate data across India and also update historical data of supply & absorption in top cities. To ensure the most up-to-date and detailed data availability, our dedicated team/analysts monitor property activity from a number of sources, including developers and property brokers, real estate forums and property listings, as well as our own intensive research. Our research services give clients the tools to review & analyze markets and realty insights that support successful investment strategies. The solutions we provide always cater to our clients needs as we ensure that all captured data and all customized reports undergo thorough due diligence by our in-house audit team. Our Services :-

 Land Potential Assessment  Customized Reports  Competitive Benchmarking Study  Market Assessment Reports  Feasibility Reports  Quarterly demand Supply Analysis Report  Projects Monitoring Services  Tier 1 Cities Residential Projects Details with historical price & Absorption Trends.

Authors –

Rahul Panwar Yadunandan Batchu Priyanka Kapoor Asst. Manager | Research Sr. Research Associate | Research Senior Manager | Research & Content [email protected] [email protected] [email protected]

Abhai Mani Chaturvedi Senior Manager | Research & Data Services [email protected]

For Residential Data Services: Please contact - Prashant Kumar Thakur Head of Research & Data Services [email protected]

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