Hyderabad’s residential market has inched towards to an improved phase today in comparison to a couple of years back. The exuberance of it’s commercial market is finally rubbing off on the residential demand. Sales and prices, in the residential segment, have both improved. Residential prices though are not galloping like in the commercial or land segments but increasing steadily. This improvement over the past year or so, is fickle at best. The last 2-3 months in particular have not been great for sales or prices in general across projects. The overhang of constant elections and the effects of the NBFC crisis seem to be taking a toll. We will have to wait and see how the residential market fares in the coming quarters.
Hyderabad’s residential market has always been affordable in comparison to all other metros. An interesting trend of the Indian residential market is that prices have grown substantially since 2008. This is true for all metros except Hyderabad. A long cherished dream of Hyderabad’s residential market has always been to become as expensive as any other Indian metro. Chances are that Hyderabad may continue to remain with affordable tag for sometime.
In most metros the prime area always hog most of the infrastructure improvements. In Delhi, Luyten’s Delhi is still the most coveted place to stay. The development of this side has been done so methodically that even the Delhi metro is developed here all underground. All other sides of Delhi can continue to see the metro pillars of development, but not Luyten’s Delhi. Similar infrastructure hogging examples can be seen for other prime residential areas of Mumbai, Bengaluru, Chennai etc.
In Hyderabad the Outer Ring Road (ORR) has been the get leveller. Probably the only metro which has an ORR and might be the only one for a long time to come. The ORR has ensured that all property abutting its approx. 160 km radius became prime property. Before the ORR was operational, prime property was restricted only to the main roads of the core city area. The ORR has made innumerable number of landlord’s owners of prime property across the city. Every project today in any side of the city highlights their distance or access to the ORR. Prices along this road range from a few lacs to a few single digit crores to double digit crores, per acre, as we move from east to west. Even if you decide to stay in North or East or South and work in West it is a hassle free commute thanks to the ORR.
Is it possible that such democratization of development along the ORR has held back the growth of prices within the core city? It is a fact that the recession and subsequent political situation were major reasons for holding back prices since 2008. The ORR has been in the making since 2005-06 onwards and probably the first section opened somewhere in 2008. The market has been talking about the ORR for more than a decade now. Land acquisitions & projects have been planned across the length and breath of our city considering the ORR. Some of these projects / plans have been successful while some others have been a failure. Over supply of prime land could be the main reason for prices being held back in the core city. Prices in the suburbs have remained in check over the past few years. Excess available land in the suburbs keeps adding more projects to the overall supply. Resultantly the overall real estate prices in the city remain under check / held back.
Does infrastructure need to be planned in stages / phases / mild doses so that the real estate market is able to absorb the opportunity and plan for the next round. May be from a real estate market prices standpoint a more measured or controlled or monopolized approach to providing infrastructure might be desirable. From an overall city planning perspective this measured or controlled plan may not work. Even though the above reasoning about ORR seems logical but it still does not convince me that markets remain subdued just because the ORR increased availability of prime land manifold. After all just having land does not ensure projects will get automatically developed.