Infra push: IT hubs lead surge in price of residential real estate

Hyderabad's Gachibowli logs highest rise in avg prices between Oct 2020 and now

Fuelled by a strong housing demand from the information technology (IT) services sector, the average residential prices in key micro markets across the top seven cities saw a significant rise in the last three years, a survey conducted by Anarock Research shows.

Hyderabad’s Gachibowli recorded the highest increase in average residential prices between October 2020 and October 2023, at 33 per cent, followed by Kondapur with a 31 per cent rise, according to the survey, which took into account the micro markets of Bengaluru, Chennai, Hyderabad, Mumbai, Delhi-NCR, Pune, and Kolkata.

“Among the top seven cities, key areas in the IT-led cities of Hyderabad, Bengaluru, and Pune saw the highest surge in average prices,” said Prashant Thakur, regional director and head of research at Anarock Group. “Hyderabad also has a higher scope for price appreciation because before the Covid-19 pandemic, the average residential prices in the city were lower than those in Bengaluru’s IT/ITeS hubs. As of 10 months of 2023, the average prices in Hyderabad’s key micro markets were almost on a par with Bengaluru’s IT-led housing hotspots.”

In Gachibowli, an emerging IT hub in Hyderabad, the average residential price at the end of October stood at Rs 6,355 per square foot (sq ft). In the corresponding period of 2020, the average price in this locality was Rs 4,790 per sq ft. Similarly, in Hyderabad’s Kondapur, the average price rose from Rs 4,650 per sq ft in October 2020 to Rs 6,090 per sq ft last month.

“In recent years, Hyderabad has made remarkable strides in infrastructure development, aligning it with other major metropolitan cities in India. This transformation has attracted both domestic and multinational companies, particularly in the IT sector, leading to a surge in economic activities,” said Prashant Rao, managing director, Poulomi Estates, a Hyderabad-based real estate firm.

Whitefield in Bengaluru stood third, recording a 29 per cent jump during the three-year period – from Rs 4,900 per sq ft as of October 2020 to Rs 6,325 in October 2023. In addition, Thanisandra Main Road and Sarjapur Road saw average prices appreciate by 27 per cent and 26 per cent, respectively, in the period.

Angad Bedi, managing director of real estate firm BCD Group, said that for the last three years, areas like Sarjapur, Whitefield, and Thanisandra had been witnessing accelerated real estate developments that resulted in the price surge. “On average, these prominent micro markets have recorded around 27 per cent rise in prices. The main reason behind this is the overall improvement of infrastructure and connectivity. These are major selling points for a lot of ready and under-construction projects. These areas have emerged as a prominent IT corridor and as a result the portfolio of development has expanded across formats such as luxury apartments, row houses, and villas,” he said.

Professionals are seeking homes closer to work to avoid traffic congestion, said Reeza Sebastian, executive president (residential), Embassy Group. “Sarjapur and Whitefield have witnessed a significant surge in residential prices, driven by multiple factors such as their proximity to IT hubs, corporate offices, educational institutions, upcoming metro lines, and highways. These micro markets, which are home to many IT companies as well as expansive, world-class, and spacious housing options from villas, apartments, and villaments…have proven to be an ideal investment option for working millennials and NRIs in particular,” he said.  

Ravi Aggarwal, co-founder and MD of Signature Global, said there was a noticeable shift in homebuyer preferences towards larger homes with enhanced amenities, contributing to the upward trajectory of prices. “Despite these increases, the industry has successfully absorbed the higher costs, and demand remains substantial,” he said.

Key areas in MMR (Mumbai Metropolitan Region) and NCR (National Capital Region) also saw average residential prices rise between 13 and 27 per cent in this three-year period. In NCR’s Greater Noida West, average prices have increased by 27 per cent in the period. In MMR, Lower Parel saw average prices appreciate by 21 per cent.

Andheri and Worli, in MMR, witnessed an increase in average residential prices by 19 per cent and 13 per cent, respectively. NCR’s Noida Sector 150 and Raj Nagar Extension also saw a jump of 25 per cent and 21 per cent in average residential property prices in this period.

Chennai’s prominent localities for price rises were Perumbakkam at 19 per cent, Guduvanchery at 17 per cent, and Perambur at 15 per cent. Kolkata’s top three prominent micro markets that recorded high price increases were Joka, Rajarhat and EM Bypass, with a surge of 24 per cent, 19 per cent, and 13 per cent, respectively.