Hyderabad Realty gaining momentum among investors

Hyderabad Realty gaining momentum among investors
Jun 2019 , by , in Interviews

Realty+ in conversation withRakesh Reddy, Director, Aparna Constructions, learns whyHyderabad has been gaining momentum among investors.

Is Hyderabad a better option than Bengaluru in office space leasing?   

Over the past decade, Hyderabad has been gaining momentum among investors, multinational companies and developers to challenge Bengaluru as the top commercial real estate destination. Office space in the city has increased two-fold in the past decade, thanks to the presence of global IT companies.

Hyderabad has many advantageous qualities including a favourable business environment, quick project approvals and proactive governance. The government’s initiative in attracting investments, developing the infrastructure including metro connectivity, and ensuring power supply surplus have played a major role in Hyderabad’s growing prominence as a commercial hub. In order to streamline approvals, the Telangana State Industrial Project Approval and Self-Certification System, which was launched in 2015, limited the approval time-frame to a maximum of 30 days. These pro-business initiatives give Hyderabad a clear edge in office space leasing over other cities, including Bengaluru.

 

Are higher occupancy costs in Bengaluru driving businesses away?

Commercial real estate in Bengaluru has doubled in the past decade and at present, the city accounts for approximately 25% of India’s total Grade A commercial real estate inventory.

Although Bengaluru’s commercial real estate landscape is home to several major technology companies, the growth has come at the cost of unplanned urbanization and put massive pressure on existing infrastructure. Bengaluru offices are contending with increasing rent, unavailability of supply and the emergence of flexible office space.

Conversely, the availability of a large talent pool, strong infrastructure and a stable government in Telangana coupled with lower occupancy costs than Bengaluru makes Hyderabad an attractive destination for both developers and investors. Hyderabad’s growth was impeded due to the global financial crisis and the statehood uncertainty. The government’s pro-activeness to streamline business operations has attracted multinational corporations back to Hyderabad and reinvigorated the market.

 

What are the factors attracting commercial investments in Hyderabad?

Since the turn of the millennium, Hyderabad has been a popular commercial real estate destination. Driven by the IT/ITeS surge in India, companies including IBM, Google, Amazon, Microsoft and Apple have set up offices in the city. Low rent, the ample availability of quality real estate and the presence of a massive talent pool make Hyderabad one of the most attractive destinations for the IT/ITeS sector in India.

To keep up with increased migration to Hyderabad, the Telangana government has invested heavily in the city’s infrastructure facilities and connectivity, which improve the overall real estate climate and ease of doing business in the city. One of the most important infrastructure developments is the transportation and connectivity routes across Hyderabad including the Outer Road and Metro Rail.

Hyderabad’s development strategy of creating commercial growth corridors has also had a direct impact on the city’s immense real estate growth. Growth of the IT/ITeS sector has led to the development of the organised retail sector, attracting major players such as Ikea. In addition to IT/ITeS, other sectors including manufacturing, defence and aerospace, financial services, engineering, pharma and hospitality are all flourishing in the city.

 

Do you see Hyderabad surpassing Bengaluru in terms of commercial infrastructure development?

Since Hyderabad has only recently transformed into a global commercial hub, the potential for more growth is immense. While Bengaluru has been the leader in commercial infrastructure development, Hyderabad has been growing fast as a competitor. In fact, Hyderabad overtook Bengaluru to lead total office leasing in the first quarter of 2019. Hyderabad is also expected to add 33 million sq. ft of commercial office space by 2021, increasing its stock by 60%, compared to approximately 23 million sq. ft of new office space supply in Bengaluru.

While Bengaluru’s commercial real estate challenges include unplanned urbanization and stressed infrastructure, a significant challenge to Hyderabad’s growth is consistently attracting comparable talent. Approximately 70% of the talent pool in Hyderabad is migratory.

Fortunately, Hyderabad is also emerging as one of the best residential real estate destinations in India. Hyderabad’s residential real estate market is witnessing considerably higher demand across all segments, as compared to other major cities in India. According to Mercer’s Quality of Living survey, Hyderabad has held the top spot for 4 years in a row among all Indian metros. The city scored well across many aspects including relatively lower crime rate, good schools, good hospitals, low pollution levels and flourishing job market.

 

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