Hyderabad as a popular destination for high-tech industries

Hyderabad as a popular destination for high-tech industries
Nov 2019 , by , in Interviews

In conversation with Sreyasi Maity, Madhusudhan G., Chairman & MD, Sumadhura Group speaks about the advent of globalization in India has opened the door for Hyderabad to brand itself as a popular destination for high-tech industries.

  • What are the overall key factors contributing to Hyderabad city’s growth activity?

The advent of globalization in India has opened the door for Hyderabad to brand itself as a popular destination for high-tech industries. Since the past few years, the city has been witnessing a high growth in the real estate business, making it stand among the top five concentrated cities for housing in India. Going through a substantial urban transformation, the real estate activity such as rise in the stock of new homes and retail outlets in Hyderabad has doubled over the last few years resulting in an increase in the income and workforce in the city.

Planned infrastructural developments such as Hyderabad Metro Rail Project with an aim of 56-km operational stretch, is certainly driving the city’s real estate development. To ease traffic conditions within and around the city and to curb pollution, the government has allocated Rs 5,500 crores for building a 363-km regional ring road (RRR) in Hyderabad. Planning for the projects to strengthen the highways connectivity, building skywalks, flyovers, underground cabling, storm water drains and development of green spaces across Hyderabad are some of the key factors driving the growth activity of the city. Moreover, due to the availability of developable land and higher rental abridge, the city is becoming preferred destination for real estate investors and developers who are looking to expand their footprints.

 

  • The reasons for the success of commercial real estate as indicated by increasing private equity inflows.

The commercial real estate continues to be the area of investment for the private equity firms in 2019 and the trend is expected to continue in the years coming ahead. The improved transparency in the real estate market over the last few years, high rentals and the success of India’s first REIT (Real Estate Investment Trust), has attracted plenty of investors, financial institutions and global PE firms to invest in this segment. According to a recent industry report, Hyderabad saw the sharpest quarterly increase among all cities with investment inflows increasing by a multiple of 5.6 times on-quarter.  Commercial real estate remains largely unaffected by the dynamics that affect the residential segment, such as interest rate fluctuation, income tax breaks and even election sentiment. The commercial segment saw a total PE inflow of nearly $ 7.4 billion between 2015 and 2018.

 

  • Has Smart Cities Mission given the required push to the city development?

The Smart Cities Mission has played a pivotal role in Country’s infrastructural development. It has made urban areas feature all core elements of infrastructure, including assured water and electricity supplies, efficient sanitation, solid waste management, public transport, adequate healthcare and education facilities, affordable housing (especially for economically weaker sections of society) required for citizens to enhance the quality of living and sustainable environment. The Smart Cities project has been providing the required push to the country’s development and is benefitting the real estate market by increasing the number of housing projects, developing open spaces (such as parks, playgrounds etc), developing transport services, constructing wider roads and lanes. However, the pace of progression is slow, the smart city mission is still trying to cover the areas targeted under the plan.

 

  • In terms of affordable housing, the incentives and support required for homebuyers in semi-urban areas?

The Government has introduced many policies and regulations to stimulate the interest of homebuyers and real estate developers. Apart from Pradhan Mantri Awas Yojana, Real Estate Regulation & development Act, several other policy measures were announced, which further widened the scope of affordable housing in urban and semi-urban areas. However, the incentives and policies of the government are driving the real estate development under affordable housing in the country, many of the requirements still need to be fulfilled. Lower rentals, housing subsidy, low interest loans and special incentives would help in increasing the demand and access to affordable housing in the semi-urban areas. The banking sector should provide more funds to the developers and builders. Also, the reduction in the GST rates and fiscal incentives under the Income Tax Act for housing initiatives can act as one of the key drivers for affordable housing.

 

  • What are the major challenges of the Hyderabad realty market?

Despite the growth in population and the emergence of new home buyers, the real estate market is decelerating in Hyderabad. The abnormal rise in the land prices and the stagnant price of the apartments, are the major reasons causing decline in the realty market. The lack of faith in under-construction properties, slowing down of NBFCs and HFCs, slowdown of the Indian economy post various reformatory changes, buyer’s distrust of incomplete projects, unattractive loan-to-value ratio, high taxes on under-construction homes, enduring backlash of demonetization, and a growing appetite among investors for other asset classes are the major challenges being faced by the realty market. The economic slowdown in the country is adding to the challenges in this field. However, with major tech parks and developing infrastructure in the city, the real estate sector in Hyderabad is likely to witness a huge growth in the upcoming years.

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