Residential demand up in Hyderabad

Even the rate of return on investments in real estate has risen in the last two years following sharp downfall in interest rates. "It's a kind of steady boom in a buyers' market now,"says C Sekhar Reddy, the president of Builders Forum of Andhra Pradesh.

He believes that in the years to come, the prices "" residential and commercial "" are only slated to rise further without any downside.

Reddy said the residential demand had outpaced demand for commercial space and would continue to do so in the future. Stating that this trend was seen in the suburban areas as well, he explained that it was due to the increasing concentration of employment activity.

He cited the example of Madhapur where there has been a spurt in residential activity. Madhapur is where Hi-Tec City and reputed institutions like Indian School of Business (ISB) and International Institute of Information Technology (IIIT) are located. IT majors like Microsoft, Wipro were also setting up facilities there, boosting residential activity, he said.

Residential property prices are at present hovering between Rs 1,500 and Rs 1,750 per sqft in upmarket localities like Begumpet, Banjara Hills, Punjagutta, Jubilee Hills, Marredpally, Srinagar Colony.

In the other areas of the city like Barkatpura, Ameerpet, Himayatnagar etc, the price range per sqft is Rs 950-1300, he said, adding there had been a 15 per cent increase in residential property prices over the last three years.

On the contrary, one finds stagnant growth in commercial property values and rentals. The city appears to be slowly recovering on this front, with builders taking care to match supply with demand, Reddy said.

According to watchers here, the average base office rentals in the commercial business district (CBD) of Begumpet is Rs 25 per square feet (sqft). The related price in Madhapur, where Hi-Tec City and prominent IT companies' facilities are located, is Rs 35.

The other areas of the city and suburban areas have also witnessed stagnancy in real estate prices at Rs 24 and Rs 18 respectively. This trend is reflected in the values of the property also, stagnating at Rs 2,400 per sqft in Begumpet, Rs 3,250 per sqft in Madhapur and Rs 2,250 per sqft in the non-CBD areas of the city like Himayatnagar.

Cushman & Wakefield (C&W ) has observed that information technology (IT) and IT-enabled services (ITES) continue to be prime drivers of real estate. Reddy added that multiplexes, automobile showrooms, shopping malls etc were also driving the demand.

Among the IT and ITES companies keen on real estate property in the city are Invensys PLC, i-Vantage, Cognizant Technology Solutions, Polaris Software Lab, C3i and Nipuna Services Limited, the business process outsourcing (BPO) arm of Satyam Computer Services.

The exception is Ranbaxy which is reportedly on the look-out for around 50 acres of land for a research and manufacturing facility in Hyderabad.

Among the major transactions in January, CSC leased approximately 80,000 sqft and Bank of America leased one lakh sqft, both at Mindspace, Madhapur.

Accenture leased around 15,000 sqft at Auriga (Vanenburg IT Park) at Madhapur, and Analog Devices leased approximately 60,000 sqft of office space at Cyber Spazio at Banjara Hills.