Hyderabad remains favourite among investors post Andhra split

Investments to the tune of Rs 4,000 crore have pumped in with companies looking to expand operations and announce new plans

Hyderabad has emerged as the sole paradise for investors to park their funds in Telangana. With other tier-II and III cities lacking any USP or even an airport, industries are funnelling their investments into the city.

According to reports, since the unveiling of Telangana’s industry policy in June last year, investments of more than Rs 4,000 crore have been pumped into the city, with companies expanding operations and announcing new plans.

Search engine giant Google is investing Rs 1,500 crore on its new campus, while Swedish furniture chain Ikea has chosen the city for its first store in the country. Meanwhile, Celkon and Makeno have announced plans to invest $20 million for setting up an LED TV unit here. 

“We strongly believe Hyderabad offers a business-friendly environment with a progressive government. Its unique socio-cultural diversity with a rapidly emerging women workforce resonates with our core belief in diversity and is an enabler for our goal to recruit 50% women managers and co-workers," says Juvencio Maeztu, chief executive officer, Ikea India.

In the undivided Andhra Pradesh, too, Hyderabad has attracted most investments, but there was a spread with cities such as Visakhapatnam and Vijayawada digging into the pie.

The city scores high on both existing and planned infrastructure — international airport, outer ring road, MMTS, and metro rail. “Moreover, the current residential prices in the city are among the most affordable across the Tier I cities of the country, an important factor influencing the flow of talent in the city," says Anurag Jhanwar, head — consulting and data insights, PropTiger.

However, experts say, that for a balanced urbanisation and development, more cities need to be brought on the development radar. “Hyderabad can support a certain amount of development. But after that, the state will require other cities for sustainable development,” says Trivita Roy, associate director — research and real estate intelligence service, JLL India.

The continuous expansion of the city is also delaying the development of other cities. The Hyderabad municipal corporation has grown from 175 sq km to the 650 sq km to form the Greater Hyderabad Municipal Corporation.

A few private investments announced after the bifurcation were also on the outskirts of the city. “This is because the companies would want to use the infrastructure of Hyderabad, but they will technically be in another district,” says Roy.

The need to develop more investment destinations in Telangana was the primary reason why the government proposed Warangal and Karimnagar for Smart City, instead of Hyderabad, they say.

“The other cities are not yet an investment option. They will look attractive only if the government steps in and upgrades the infrastructure," says Roy.

Though land prices have seen considerable appreciation — by as much as 30% — in cities such as Nizamabad, Karimnagar, Khamman and Medak, this has not translated into investments. The government has, of late, projected Warangal as an emerging destination but it is making a mark more as a tourism spot.

Karimnagar and Medak districts are known for iron ore whereas Khammam has granite in abundance. The big advantage most of these cities have is their proximity to Hyderabad and this can be leveraged.

"Hyderabad needs to drive the growth in these cities and they can become satellite towns. Then, Hyderabad, too, will go to an altogether different level and be compared with international cities," says Roy.