MC Explains: With rentals in Hyderabad hitting the roof, is the city’s real estate sector going the Bengaluru way?

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Aakanksha Tripathi, who recently moved to Hyderabad on work in August, has been hopping apartments. “Every time either the landlord increases the rent (with several excuses like increased electricity charges) or simply asks me to move out so that they can increase the rent for the next tenant,” she added. Since 2022, Hyderabad real estate has been on a tear with rentals being hiked by at least 20-30 percent while the capital values of properties have jumped by 10-15 percent, local brokers say. Several tenants Moneycontrol spoke to said most of them have moved to co-living spaces after the landlords increased their 2BHK rents from Rs 32,000 to Rs 48,000 in 2023.

However, real estate experts say Hyderabad real estate has always been on an uptick, outpacing even the other hot market, Bengaluru, since 2019.

Understanding the city’s real estate

Much of the real estate demand in the city is driven by the IT sector clustered across the western corridor in Hyderabad—around areas like HITECH City, Kundapur and Gachibowli. The south, closer to the airport, too has slowly started seeing developments.

The eastern part of the city with areas like Secunderabad and Ramoji Film City predominantly see office spaces with affordable residential real estate. And with major land banks available in the north, the area has a flourishing data centre and warehousing business, said Samson Arthur, senior branch director, Hyderabad, at property consultancy Knight Frank India.

According to GV Jagdish, senior realtor at Hanu Reddy Realty, the rent for a 2BHK in prime areas towards the western IT corridor is between Rs 20,000 and 25,000 for unfurnished ones and between Rs 30,000 and 35,000 for furnished ones. The capital prices for apartments on average is about Rs 10,000 per sq ft which can go up to Rs 15,000 for premium apartments.
“Last year the rent for a furnished 3BHK was Rs 25,000-30,000 and now it has jumped to more than Rs 40,000,” he added.

The growth in the city’s real estate sector

According to data from property consulting firm ANAROCK, the average rentals in key micro markets have seen up to 20 percent growth in 2023 over 2019.

“HITECH City saw its average rent go up from Rs 23,000 per month in 2019 to nearly Rs 27,500 per month in 2023 till date. Likewise, rents in Gachibowli have increased from Rs 22,000 in 2019 to over Rs 26,500 per month in 2023. This is also a 20 percent jump. Further, in Kondapur we saw rentals go up by 19 percent,” said Ashish Sharma, city head, Bengaluru, ANAROCK Group, who also looks after the Hyderabad market.

Is Hyderabad real estate going the Bengaluru way?

Real estate experts point out that real estate in Hyderabad has been at a premium to Bengaluru since 2019.

ANAROCK data suggests that the average monthly rentals in HITECH City was higher at Rs 23,000 per month in 2019 while in Bengaluru’s Sarjapur Road, it was about Rs 21,000. Likewise, the average monthly rent in Bengaluru’s Whitefield was about Rs 19,000 in the same year while in Hyderabad’s Gachibowli it was Rs 22,000 then.

Post-pandemic, both markets have grown tremendously. However, the jump in Bengaluru is stark compared to Hyderabad, predominantly due to the local demography.

In Hyderabad, geographically, the IT hubs (Gachibowli, HITECH City, etc.) are all concentrated in one zone (towards the west) and, hence, the demand for rentals in these areas remained high.

In Bengaluru, on the other hand, the IT industry is spread across the north, south and east zones in the city, easing pressure on the rental options available. But post-Covid, with offices opening up, the available supply was limited in many areas, causing rentals to go up in Bengaluru while in Hyderabad supply remained fairly good, thus limiting the pace of rise.

However, data shows that Hyderabad is almost catching up with Bengaluru in terms of annual real estate growth. As many as 30,710 units were sold in Bengaluru in H1 2023 which is 23 percent higher than H1 2022. Meanwhile, housing sales in Hyderabad stood at 27,845 units in H1 2023 and around 24,330 units in H1 2022, a yearly growth of 14 percent.

“In areas like the western corridor, the returns on land assets can double within five years today. Alongside, the rental market is still maturing in Hyderabad and is not far behind,” Arthur added.

source : moneycontrol

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