Introduction:

Hyderabad, a city known for its vibrant culture and booming real estate market, has recently experienced a noteworthy transformation in its housing sector. According to a comprehensive report by Knight Frank India titled "India Real Estate – Office and Residential Market – Jul-Sep – 2023," the city's real estate dynamics have undergone a significant shift. In particular, the affordable housing market, once the cornerstone of Hyderabad's real estate, has witnessed a sharp decline in sales during the third quarter of 2023 (Q3 2023), giving rise to a surge in premium real estate transactions.

Affordable Housing Downturn:

The report reveals a troubling trend for affordable housing in Hyderabad, as the sales of homes priced below 5 million witnessed a staggering year-on-year decline of 44%. Among the major cities surveyed, Hyderabad recorded the lowest sales in the sub-5 million segment. This decline can be attributed to various factors, including price hikes, increased interest rates, and a notable 14% rise in effective Equated Monthly Installments (EMI).

Premium Real Estate on the Rise:

Contrastingly, Hyderabad's overall real estate market has grown by 5%, with a remarkable shift towards premium properties. A significant 52% of the residential sales now fall into the premium category, leading to an 11% year-on-year increase in price levels. The average price per square foot has reached Rs 5,518, reflecting the city's growing affinity for high-end real estate.

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Impact on Middle-Class Homebuyers:

The surge in prices and interest rates has made homeownership increasingly challenging for the middle-class population. The report highlights a 7% increase in down payment requirements, further exacerbating the financial burden on aspiring homebuyers. With only 9% of residential sales below the 5 million mark, the affordable segment is facing a severe setback, prompting concerns about its long-term impact on the real estate sector.

Shishir Baijal, commenting on this transformation, acknowledges the overall growth in residential sales but expresses concerns about the decline in the affordable segment. He emphasizes the need for interventions to stimulate demand and enhance development viability in this crucial market segment. Baijal notes that prolonged stagnation in the affordable housing sector could have detrimental effects on the long-term health of the real estate industry.

Commercial Real Estate Strides:

Amidst these residential real estate changes, Hyderabad has made headlines for its commendable strides in the commercial sector. The city recorded the highest new office completions in the country during Q3 2023, with 2.9 million square feet of office space transactions. The average transacted rent remained stable at Rs 65.3 per square foot per month, demonstrating the resilience of the commercial real estate market.

Hyderabad Real Estate Market Breakdown for Q3 2023:

In the third quarter of 2023, Hyderabad's real estate market witnessed a nuanced distribution of sales across different ticket-size segments. The breakdown is as follows:

Homes priced below 5 million: 749 units

Homes in the 5-10 million range: 3,247 units

Homes priced 10 million and above: 4,329 units

Total residential units sold: 8,325 units

Year-on-Year Percentage Changes:

Comparing the sales figures with the same period in the previous year, the following variations were observed:

Homes below 5 million: Experienced a notable decline of 44%

Homes in the 5-10 million range: A marginal decrease of 2%

Homes priced 10 million and above: Showed a substantial increase of 34%

Overall Total Sales Growth: Demonstrated a modest growth of 5%

Conclusion:

Hyderabad's real estate landscape is undergoing a paradigm shift, marked by a decline in affordable housing sales and a surge in premium real estate transactions. While the commercial sector continues to thrive, stakeholders must carefully reconsider strategies to revive the affordable housing segment and maintain the overall momentum of the real estate industry. The challenges faced by the middle-class in achieving homeownership dreams underscore the need for targeted interventions and collaborative efforts to ensure a balanced and sustainable real estate market in Hyderabad.

Source: Telanganatoday.com

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