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www.99acres.com HYDERABAD RESIDENTIAL MARKET UPDATE JANUARY - MARCH 2020 Market Sentiment INSITE 99acres India’s No.1 Property Portal FROM CBO’S DESK The calendar year 2020 began with some Real Estate (Regulation and Development) hopes of a revival for the residential realty Act 2016, Goods and Services Tax (GST), market in India with an increase in property and more lately the liquidity crisis amongst enquiries in January and February. Sales NBFCs and developers. The industry expects volume, too, reported growth over the home buyers to returning to the market only previous months in most metro cities, gradually as social distancing restrictions get barring Delhi NCR and Mumbai, where lifted, even though prices are likely to come supply overweighed demand. New housing down. Pro-realty measures announced by the launches remained low as the liquidity crisis Government, including loan moratorium and continued troubling developers; however, repo rate cut by 75 basis points have helped the silver lining was the upcoming festive soothe the sentiment of uncertainty among season in March. Fast-forward less than a homebuyers, but the industry is looking to month and the outbreak of novel COVID-19 in more support from the government. India turned tables as construction activities Currently sitting with an unsold inventory came to a sudden halt, and restrictions on of around 6.24 lakh residential units and site visits shrunk property sales significantly. 15 lakh under-construction homes in top The announcement of the 21-day lockdown eight metros, the real estate industry would further marred hopes of a quick revival in need more definite growth stimulators business activities. The event is most likely such as further cuts in borrowing costs for to delay project deliveries by at least 2-3 homebuyers, staggered/deferred payments quarters, defer any new launches planned of various levies, support to NBFCs to and drive real estate prices downwards in improve their liquidity which in turn would most markets. mean better access to capital for developers, The real estate sector in India has and penalty exemptions for the delay in project completions for developers. It will Maneesh Upadhyaya effectively survived several past challenges starting with demonetisation, be interesting to see how the market Chief Business Officer followed by the implementation of behaves post-COVID-19. 99acres.com COVID-19 AND REAL ESTATE: A SNAPSHOT The outburst of novel Coronavirus in India has undoubtedly been detrimental to the economic health of the country, and both real estate and construction sectors have been at the receiving end, like many others. The initial impact was noted with reducing number of site visits, which gradually converted into fewer sale conversions. The subsequent 21-days nationwide lockdown put a temporary break on the construction work of over 15 lakh housing units across the top eight cities alone, further delaying project deliveries by a minimum of 2-3 quarters. IMPACT ON HOMEBUYERS IMPACT ON DEVELOPERS • Stalled work on under-construction units to further • Construction work comes to a halt due to curtailed delay completion timelines imports from China, soon followed by the lockdown in India • Reduced payment capacity amid economic slowdown and job cuts • Lack of sales to impede cash flows, further straining the financial health of developers • Festive offers postponed to the subsequent quarters • New launches and festive offers deferred for at least • Deal closers become challenging in absence of physical 2-3 quarters movement • Possible identification of COVID-19 outbreak as a • Reduced payment capacity amongst homebuyers amid Force Majeure event under Real Estate (Regulation and economic slowdown and job cuts Development) Act, 2016, to bring some relief • Extension of project completion deadlines amongst the IMPACT ON SELLERS biggest requests by the developer community • Reduced demand for under-construction units, and restrictions on site visits IMPACT ON REAL ESTATE AGENTS • A possible hike in negotiations in the favour of buyers • Direct hit on business during COVID-19-induced lockdown • Governmental initiatives resulting in reduced home loan interest rates, extended timelines to pay property • Increased dependence on digital platforms for taxes and deferment of EMIs via loan moratorium for networking three months to benefit homeowners 99acres India’s No.1 Property Portal INSITE : Hyderabad 5 NATIONAL MARKET OUTLOOK INDICATORS Capital Values Rental Values Supply HOME BUYING SENTIMENT While and January and February saw moderate recovery in sales across metro cities, barring Delhi NCR, the month of March saw site visits and transactions coming to a halt due to the outbreak of COVID-19 in India. Enquiries in the affordable segment stayed afloat; however, sale conversions are expected to remain bleak until the next quarter. DELHI NCR PROPERTY PRICES Barring Hyderabad, Bangalore and Ahmedabad, which posted a one percent uptick in capital ‘asks’, each, all metros saw prices remaining stable, QoQ. Unlike KOLKATA expectations, property prices may dwindle in the short- AHMEDABAD to-mid term due to dented home buying sentiment. Eventually, the COVID-19-infused slowdown might also mar the pace of realty growth across metros. MUMBAI PUNE RENTAL LANDSCAPE HYDERABAD Mumbai, Pune, Bangalore and Hyderabad posted a 3-4 percent growth in rental ‘asks’, YoY. Surplus housing stock in Delhi NCR kept rental rates under check. A slowdown in sales in the upcoming quarters may drive the rentals across cities. Bangalore and Kolkata were the most lucrative for rental income with the yield ranging between 3.65 and 3.75 percent. BANGALORE CHENNAI SUPPLY With sales limiting to the first two months of the quarter and developers missing on the opportunity to boost absorption around the festive season, unsold inventory remained largely unchanged at 6.24 lakh units in the top eight metro cities. There are about 15 lakh delayed under-construction units, which have been stalled 99acres temporarily due to COVID-19 crisis. India’s No.1 Property Portal * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com MARKET MOVERS State infuses Rs 10,000 crore for infra projects The Telangana government has allocated Rs 10,000 crore for FY 2020-21 to complete various infrastructure projects including Musi River purification and development works in Hyderabad Urban Agglomeration (HUA) area. Hyderabad Metro Phase 1 becomes operational With the opening of the 11 km-long section on Green Line, Hyderabad Metro Phase 1 project has marked its completion. This makes Hyderabad metro the second largest metro network in India. The Green Line connects Secunderabad and Hyderabad. Approvals mandatory for registration of plots In a move to crack down unauthorised plots in the city, the State government has stopped the registration of properties constructed without attaining necessary approvals from the concerned authorities. COMMERCIAL Approvals of building layouts within 21 days REAL ESTATE To expedite the building plan approval system in Hyderabad, the government will roll out an online building layout approval portal, TS-bPASS. The new digital system will provide building permissions within 21 days of receiving OUTLOOK the applications. Additionally, Hyderabad has started the issuance of TDR certificated online. • With the growing technological expansion in the western nodes of Hyderabad, Grade A office space in the city is expected to surpass 11 million sq ft mark by the end of 2024. • By the end of the year 2021, the number of shopping malls in Hyderabad is likely to increase by 12 percent from the current eight percent. • Among the top metro cities, Hyderabad and Bangalore garnered about half of the total flexible space take-up. The absorption of flexible space in the country touched 10.8 million sq ft in 2019. • Rentals for co-working spaces in Hyderabad are 10 percent lower than the traditional offices. Co-working rentals in areas, such as Gachibowli, Madhapur, Manikonda and Kondapur, range between Rs 5,000 and Rs 8,000 per desk as against Rs 6,000-9,000 per desk in traditional office spaces. 99acres India’s No.1 Property Portal INSITE : Hyderabad 9 * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com HYDERABAD’S REALTY AT A GLANCE Property Rental Prices ‘Asks’ Price movement in key micro-markets Localities Jan-Mar 2020 QoQ YoY Rental % Change % Change Yield Nizampet 3,180 - 3,740 -1% 5% 4% Demand Supply Manikonda 4,030 - 4,840 1% 5% 4% Miyapur 3,590 - 4,780 -2% 2% 3% Kondapur 5,220 - 6,200 3% 9% 3% Begumpet 4,420 - 5,700 1% 0% 3% Chandanagar 3,800 - 4,730 -2% -1% 3% * Property prices represent quarterly change * Rental ‘asks’ represent yearly change * Supply is basis properties listed on 99acres.com * Demand is basis queries received on 99acres.com Gachibowli 5,610 - 6,500 2% 8% 3% Kukatpally 4,860 - 5,800 -4% -2% 3% HITEC City 6,070 - 7,600 3% 11% 3% Attapur 3,680 - 4,460 -2% 8% 3% * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com ** Rental Yield has been calculated for a 1,000 sq ft apartment INSITE : Hyderabad 11 99acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS 99ACRES’ 20% OUTLOOK 15% Economic slowdown coupled with the outbreak of the Coronavirus pandemic disturbed the otherwise resilient real estate market of Hyderabad in Jan-Mar 2020. Nevertheless, the first two months of the quarter were testimony to robust commercial activities and 44% resultant benefits to the housing segment. Noticeably, nearly 65 percent of the listed localities reported an 36% 49% uptrend in the average weighted property prices in Jan-Mar 2020 over Oct-Dec 2019. Overall, Hyderabad reported a marginal hike of a percent in ‘ask’ rates, QoQ. Meanwhile, Hyderabad witnessed a decline of 50 percent in housing sales, YoY.