HYDERABAD: The peaking home prices in Hyderabad are finally expected to hit pause in 2025. And it is thanks to the city reverting to being an end-user market, not driven by investors, say industry pundits.
Their prediction: A stable rate card for apartments, especially those set to be completed in the next 6 to 12 months, with average prices hovering in the Rs 8,000 to Rs 10,000 (semi-luxury segment) per square feet (sft) range. There could be a few added offerings from developers as well: GST waiver, discounts on early bookings, rental guarantees etc.
“Post Covid, the pool of investors in Hyderabad expanded from the usual around 5% to around 20%. They saw opportunity in the city’s pent-up demand and rushed into cash in on it. This led to an escalation in rates – of 30% or more – and worked as a deterrent for genuine homebuyers,” said the proprietor of a major real estate firm with projects across Hyderabad.
Dust to settle soon
Currently, even Hyderabad’s ‘affordable’ segment of homes is priced upwards of Rs 1.5 crore with costs in the IT belt in the western part of the city sitting at Rs 2.5 crore to Rs 3.5 crore. The size of homes too has shot up with several developers going for more than 2,000 sft flats.
“These costs will stabilise now as most retail investors – eyeing quick returns – have exited Hyderabad since the market has saturated. Also, the costs are no longer viable for them,” said the owner of another leading construction firm.
Drawing parallels with Bengaluru he said while land at Rs 5 crore an acre is available within a five-km radius of the Kempegowda Airport, in Hyderabad an investor has to drive at least 30 km from the Shamshabad airport, to Shadnagar, to avail land at that price.
“But their exit is likely to benefit end-users,” the developer reiterated, adding how builders will now make the market more attractive for genuine buyers – the majority of whom are dependent on loans.
Demand-supply yet to equalise
There’s one critical challenge though: the significant gap in demand and supply. Roughly, realtors say, Hyderabad has between 25,000 and 30,000 near-complete homes lying vacant at present with an equally large quantity expected to hit the market soon. And this expands beyond the core city market to places such as Kollur and Bachupally, among others.
“Many builders are now rushing in to launch high rises with 2,000+ units. Where are the takers for so many homes? Also, at the costs are still very steep for the mid-range customer. They do not have the bandwidth to buy these multi-crore homes,” said A Sumanth Reddy, chairman, National Association of Realtors, India, dismissing the confidence of a section of builders who are certain of the inventory clearing up in the next six months.
