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INSITE REPORT

January - March 2018

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Methodology FOREW0RD The Insite Report by 99acres.com captures the quarterly capital trends and the annual rental analysis of residential apartments in key The first quarter of 2018 countersigned a revival in market real estate markets – Delhi sentiment and enquiries, amid a modest impact on overall sales NCR, Mumbai Metropolitan volume across metros. Supply in the ready residential segment Region (MMR), Bangalore, outstripped demand, particularly in case of luxury and ultra- Pune, Chennai, Hyderabad, luxury units. The under-construction market, too, narrated a Kolkata and Ahmedabad. In similar tale putting a downward pressure on average weighted order to assess the prevailing capital ‘asks’. With new launches down by around 40 percent, sentiment, the report delves YoY, any improvement in property prices is now dependent on the deep into demand and absorption of excess housing stock, which ranges between 15 and supply of properties across 48 months for different metros. Additionally, the increasing cost varied budget segments and of compliance resulting from stringent rules and adherences may occupancy stages. While push the real estate prices up, especially for new launches. Resale demand is a function of segment, however, may not witness any substantial change in ‘ask’ queries received, supply is rates due to the inherent competition characteristic to the segment. based on property listings posted on 99acres.com in On a micro-level, Hyderabad, Pune and Bangalore exhibited Jan-Mar 2018. resilience and showed signs of revival more prominently than other metros. Low inventory levels and fast-paced commercial expansion serve as demand and sales catalysts for these markets. Mumbai and Delhi NCR maintained status quo w.r.t. prices and sales velocity despite multiple infrastructural overhauls ranging Impact of Union Budget Demand-Supply Analysis from metro rail project to new airports and redevelopment drives. Contents 06 10 Any noteworthy improvement in the realty ambience of these Impact of Union Budget 2018-19 on the Demand-supply trends of residential now relies on an effective RERA implementation. Plausibly, Indian real estate market apartments in Jan-Mar 2018 RERA-compliant projects might command a premium over others because of the additional costs borne by the developers in the process. Marketers could employ buyers’ trust while Foreword 03 Market Movers 07 Annexures 11 deciding the price and sales strategy for RERA-approved projects. 99acres’ perspective on current market News that impacted Hyderabad’s sentiment realty market in Jan-Mar 2018 The raft of reforms and legislations passed in the last two years – Demonetisation, RERA and GST – have now started coxswaining the market into a consolidation mode. This could mean fewer National Outlook 04 Hyderabad at a Glance 08 new project launches across budget segments. The increasing preference for affordable homes, however, would drive realty Snapshot of real estate ambience across Capital price movement in key dynamics in the long haul. Apart from a healthy end-user demand, top 8 metro cities micro-markets of Hyderabad the Government’s thrust through incentives such as granting infrastructure status in Union Budget 2017-18 and the setting up of Market Indicators Hyderabad an affordable housing fund in this year’s Budget announcement will 05 09 ensure a rising appetite and supply for such projects across country. Changes in capital rates and inventory Key highlights - Hyderabad’s capital and status QoQ; and rental values YoY rental market in Jan-Mar 2018 99acres 99acres 4 INSITE : HYDERABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : HYDERABAD 5

National Outlook Market Indicators

HOME BUYING SENTIMENT Capital Values Rental Values Supply With the industry getting accustomed to RERA and GST, market was seen regaining normalcy in the first quarter of 2018. Enquiries from fence-sitters resurfaced across metros with a reinstated interest in the under-construction category. Growing transparency and improved processes are expected to fuel BANGALORE this trend in the future.

DELHI NCR

PROPERTY PRICES MUMBAI Despite burgeoning enquires, piling inventory restricted price appreciation, particularly in Delhi NCR. Infrastructural overhauls, a few new launches and incremental ‘asks’ in the resale market, fuelled price growth in some micro- markets of Mumbai, Pune and Bangalore. Affordable pockets will monopolise CHENNAI end-user demand, keeping capital growth in check in the forthcoming quarters. PUNE

HYDERABAD RENTAL LANDSCAPE The obtuseness in the buying market has unabatedly benefitted the rental landscape over multiple quarters. Lease values burgeoned across metros, YoY. Affordable pockets and areas in proximity to transport corridors ruled the KOLKATA roost with maximum traction, pushing rental ‘asks’ further. Speculations of an improvement in the rental values in the ensuing quarters are rife. AHMEDABAD

* Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com

SUPPLY Stringent laws under RERA circumscribed new supply; however, progress on project registrations spiked under-construction inventory across cities. The resale market swarmed with properties across budget segments. RERA-approved supply in the affordable segment remained low this quarter. New launches are anticipated to resurface with increased compliance in the months to come. 99acres 99acres 6 INSITE : HYDERABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : HYDERABAD 7

IN F CUS Market Movers

Telangana gets a fund boost for road repair project BUDGET 2018-19 The government earmarked Rs 750 crore for undertaking road repairs in several parts of the including Greater Hyderabad Municipal Corporation (GHMC) area. The real estate sector expected Union Budget 2018-19 to address concerns pertaining to concessional GST The city can expect an infrastructure facelift in the quarters to come. for housing sector, regularisation of stamp duty charges, and changes in income tax slabs. While these were left unanswered, a slew of announcements pertaining to ‘Housing for All’ counterbalanced the lack of attention to real estate expectations. State relaxes TDR policy norms State government has relaxed Transfer of Development Rights (TDR) norms for INFRASTRUCTURE UPGRADES owners reluctant to part with their property for various infrastructure projects. As per the new rules, the government will issue a TDR certificate to the property owners, Focus on infrastructure development is anticipated to create new real estate pockets and boost housing demand with allowing them to construct additional built-up area anywhere in the city. Funding worth Rs 5.97 lakh crore to infrastructure upgradation A capex of Rs 5.35 lakh crore to Bharatmala project Phase I for strengthening road network National highway budgetary allocation of Rs 71,000 crore An infrastructure overhaul worth Rs 10k cr on the cards The city awaits an infrastructure makeover of Rs 10,000 crore, which along with several industry-friendly policies in the direction of ‘ease of doing business’ will AFFORDABLE HOUSING FUND enable Hyderabad to remain an attractive investment destination.

Increased focus on the affordable segment is evident from the establishment of a dedicated affordable housing fund worth Rs 60,000 crore under the National Housing Bank (NHB) A target of 37 lakh homes in urban areas and 51 lakh homes in rural India in 2018-19 State lays foundation stone for major radial roads Access to cheaper and alternative funds to boost low-income housing The 12-km long radial road connecting Nallagandla to Kolluru is being constructed in Reduction of GST to an effective eight percent from earlier 12 percent on homes purchased and constructed under Credit linked subsidy scheme (CLSS) tandem with the Outer Ring Road (ORR). It will ease connectivity and boost emergence of new financial zones. Additionally, plans of extending the existing 1-km growth corridor around ORR to 2-km are also being considered to propel development.

DISINVESTMENT integrated township to boost real estate demand A disinvestment target of Rs 80,000 crore for FY 2018-19 will open new pockets for private developers This will offer aid to private developers for buying landlocked parcels is set to have its first integrated township at Tellapur. Planned over 100 The move is expected to address the housing shortfall that India currently faces acres of land, the project has been approved to be developed jointly by Tellapur Techno-City Limited (TTPL) and Hyderabad Metropolitan Development Authority (HMDA) and is anticipated to spur real estate demand in the future.

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HYDERABAD Hyderabad at a Glance Hyderabad ended the first quarter of 2018 with nosediving ­sales and no change in average capital values. While homebuyers remained wary of parking their funds in real estate, spur in investor activity kept the market upbeat. New launches remained limited due to uncertainties over the formation of a regulatory body under RERA. Absence of a permanent regulator also dampened buyer sentiment, who turned to the rental segment as an alternative.

Price movement in key micro-markets Key Highlights Locality Average ‘Ask’ Rate QoQ YoY (Per sq ft) Change Change While the city’s average weighted capital values did Amidst the slowdown in the capital market, the rental 2,300 - 3,000 2% 4% not observe any movement in Jan-Mar 2018 against landscape remained robust in some parts of the city, the previous quarter, ruled the capital pushing average rental values up by two percent, Beeramguda 1,900 - 2,300 -2% 2% charts recording a growth of three percent, QoQ. YoY. Maximum leasing activity was recorded in the Locational edge, proximity to the IT corridor and most prominent office corridors of the city located 3,500 - 4,600 1% 7% self-sufficient infrastructure attributed to the growth. in the western quadrant. Continuous commercial Manikonda 3,060 - 3,400 3% 3% development, high office space occupancy rate, Key micro-markets including , Kukatpally, growing demand and improved connectivity to prime 4,200 - 5,000 1% 4% and continued to attract end-users areas on the back of the recently launched metro primarily on the back of enhanced connectivity helped the rental market see steady traction. Miyapur 3,200 - 3,900 1% 8% via unveiling of the Miyapur-Nagole stretch of the Hyderabad metro, nearness to employment hubs and Localities such as Kukatpally, Appa Junction and 3,800 - 4,700 -1% 8% availability of affordable properties. These localities Kondapur caught the interest of the tenant community saw capital ‘asks’ surging by 1-2 percent, each, QoQ. and observed increment in rental ‘asks’ to the tune of Pragati Nagar 2,600 - 3,000 2% 9% 7-11 percent, YoY. New launches came to a standstill due to inordinate Chandanagar 3,200 - 3,600 -4% 3% delays in setting up of the RERA portal and persistent The saturated markets of Gachibowli and Appa Junction 3,300 - 5,000 1% 9% ambiguity over GST. Besides, delay on part of the continued to flounder with extreme traffic congestion Greater Hyderabad Municipal Corporation (GHMC) and other civic issues including ground water * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com in the current quarter to grant building approvals further acted as an depletion and clogged drains leading to high vacancy impediment to the city’s real estate growth resulting levels and six and four percent drop in rental values, in subdued buyer sentiment. YoY, respectively.

99ACRES OUTLOOK

Recording the lowest inventory overhang of 25 months in Developments such as Hyderabad Metro Rail, augmentation the year 2017, amongst other metros, Hyderabad’s real of road infrastructure and elevated corridors infused Top Performers - Capital Market Top Performers - Rental Market estate market remained stable in the first quarter of 2018. optimism amongst stakeholders. Additionally, the title of Improved investor activity in Telangana on the back of the ‘best Indian city to live in’ as per Mercer’s Quality of 3% 3 8 healthy return on investment and enhanced sales in the city Living Ranking report also cheered the market. 7% are testimony to the revival in home buying sentiment and 6 2% market dynamics. In order to expedite absorption of IT spaces in existing hubs 2 4% 4 such as and Gachibowli, the government 2 Although the non-formation of a permanent authority took additional initiatives towards boosting amenities 1% 1% 1 0% 0% -6% under RERA remained a deterrent to growth, enquiries and investment potential of these pockets. The city’s 0 % Change % Change for inventory priced within Rs 40 lakh went slightly up. commercial segment posted a gross absorption of 5.8 -1% -2 The capital ‘asks’, however, maintained status quo with million sq ft, accounting for 13 percent of the total office 0 the last quarter. Some popular localities in the West such take up in 2017. Large funding by private equity firms such -4 as Manikonda, and Kukatpally witnessed prices as Blackstone Group in the commercial sector is set to -1 -6 going north by modest margins, QoQ. The rental market positively impact the residential sector as well. Affordable Manikonda Nizampet Kukatpally Gachibowli Kondapur Kondapur Manikonda Hitec City Gachibowli remained upbeat on the back of lease renewals before year rentals and a robust supply pipeline is expected to bolster Locality Locality end and the impending infrastructure facelift. office leasing in Hyderabad. * %change represents quarterly capital movement * %change represents yearly rental movement 99acres 99acres 10 INSITE : HYDERABAD India’s No.1 Property Portal India’s No.1 Property Portal INSITE : HYDERABAD 11

DEMAND-SUPPLY ANALYSIS While new supply remained restricted, demand skewed further towards ready properties in affordable and mid-income housing Annexures segments. Enquiries witnessed some momentum but were not able to lift sales volume by a notable margin. Unsold inventory remained at almost 36,000 units and a reduction is dependent on the setting up of a permanent regulatory authority in the ensuing quarters. CAPITAL VALUES CAPITAL VALUES Locality Jan-Mar 2018 Locality Jan-Mar 2018 Key Trends AS Rao Nagar 2370 Qutbullapur 2190 The overall demand for residential apartments in Hyderabad remained unaltered in Jan-Mar 2018 Alkapuri 2950 Sanath Nagar 4750 against the previous quarter. Supply witnessed 4100 Shaikpet 5100 marginal variations across different property types. Appa Junction 3825 5350 Distribution of Residential Apartments Despite the absence of newly launched projects, 3325 Tellapur 4050 supply of under-construction apartments rose by Bandlaguda 2870 Tolichowki 3090 over 10 percent due to an influx of resale units UC RTM Demand UC RTM Supply in the market. Owner’s intention to dissolve their 6950 investments was highly evident. Beeramguda 2100 50 Begumpet 4480 Like other metros, the affordable housing category 45% 46% 45% 46% RENTAL VALUES (within Rs 25 lakh) continued to drive maximum Boduppal 2300 40 demand in Hyderabad. A reduction in the applicable Chandanagar 3450 Ameerpet 13 GST rates from an effective 12 percent to eight percent for homes purchased under the CLSS-PMAY 30 Dilsukh Nagar 3000 Appa Junction 13 (Credit Linked Subsidy Scheme-Pradhan Mantri Awas Gachibowli 4280 Attapur 10 Yojana) also pushed its preference among the buyer 20 Gajulramaram 2850 Banjara Hills 17 community. The supply of such units, however, fell 4050 Begumpet 13 short of its demand by close to 10 percent. 10 Himayat Nagar 4700 Chandanagar 13 In tune with previous quarters, supply outstripped 0 Hitec City 5050 Gachibowli 15 demand by 17 percent in the luxury segment (Rs 60 Jan-Mar Oct-Dec lakh - Rs 1 crore), depicting a waning appetite for 2018 2017 6450 Himayat Nagar 14 premium homes in the city. Graph depicts the availability of residential apartments wrt 2600 Hitec City 17 other property types, QoQ, along with the distribution of 4000 Jubilee Hills 18 under-construction and ready stock Kondapur 4300 Kondapur 15 Kothapet 2900 Kukatpally 15 Kukatpally 4050 Madhapur 18 Demand Supply LB Nagar 3370 Madinaguda 12 Madhapur 4950 Manikonda 13 40 Madinaguda 3650 10 -12% Manikonda 3200 Miyapur 12 30 -6% -9% Mehdipatnam 3750 Nizampet 10 5% 17% -2% 1% 16% -13% -16% -12% Miyapur 3450 Somajiguda 16 20 14% 7% 5% 6% Nagole 2950 Tolichowki 11

10 Nallagandla 4400 Nanakramguda 4750

0 Narsingi 3750 Jan-Mar Oct-Dec Jan-Mar Jan-Mar Oct-Dec Jan-Mar Jan-Mar Oct-Dec Jan-Mar Jan-Mar Oct-Dec Jan-Mar Jan-Mar Oct-Dec Jan-Mar 2018 2017 2017 2018 2017 2017 2018 2017 2017 2018 2017 2017 2018 2017 2017 Nizampet 2700 Within Rs 25 Lakh Rs 25-40 Lakh Rs 40-60 Lakh Rs 60 Lakh - Rs 1 Crore Rs 1 Crore and Above Pragati Nagar 3050 Graph depicts the fluctuation in supply wrt demand for residential properties in various budget categories *All prices are per sq ft rates *Average ‘ask’ rates have been calculated as per listings posted on 99acres.com in the current quarter FIND BEST OTIONS TO BUY SELL RENT PROPERTY

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