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Hyderabad land owners ride realty tide, quote exorbitant rates
The Times of India  |  January 19, 2019

Sudipta Sengupta Hyderabad

The hectic real estate activity unfolding along Hyderabad’s IT corridor has resulted in a concerning trend &ndash steep rise in land prices. With the growing demand for A-grade office spaces, courtesy bigticket corporates flooding the local market, land owners in and around ‘hi tech’ Hyderabad are seen quoting rates ranging between Rs 25-35 crore per acre. The same land parcels, industry insiders say, were available for Rs 18-22 crore per acre until recently. Topping this rate-chart are places such as Financial District, Gachibowli and Puppalguda.

 

“There has been a significant jump in these rates (being quoted) especially after the TRS government came to power for the second-time last month. Owners are hoping to cash in on the fact that the state has a stable government and, therefore, investments/development will continue to grow without any disruption,” said Sandip Patnaik, managing director (Hyderabad) and head of capital markets (South India) with Jones Lang LaSalle. While upbeat about the improving health of Hyderabad’s property market &ndash especially the commercial sector that crossed the 7 million square feet (sft) mark in annual leasing in 2018 &ndash Patnaik said that an excessive rise in prices might become a cause for concern.

 

“At present, Hyderabad is the most attractive market for clients because of its affordable rents. If land becomes excessively pricey, the end product will not be economically viable and the city will lose its competitive edge over other markets such as Pune, Bengaluru (parts of it) and Noida,” Patnaik added.

 

While admitting to a rise in land prices, developers say that the ‘quality of construction’ and industry-friendly norms will always keep Hyderabad ahead in the game. “The quality in some cases is even better than Bengaluru. Also, the relaxation on floor area ratio here allows a developer to build even 3 lakh sft on a oneacre land. In the other city we can build half of that. So, the cost of land notwithstanding, companies will continue to show confidence in the local market,” said Mahesh Khaitan, director, Salarpuria Sattva Group that’s signed roughly 10 million sft of space in Hyderabad over the last three years. “Also, given the huge supply that’s set to hit the western corridor, developers will have to offer competitive prices to stay in the business,” said Khaitan.

 

Another advantage for Hyderabad, according to analysts, is its huge talent pool. “Human resource is in abundance here. Companies can hire young professionals even for a salary of Rs 3.5 lakh per annum. That’s not the case with Bengaluru. It is, therefore, a favourable location for firms scouting for office space,” said a senior official from Phoenix Group which is expected to add over 3 million sft of office space in Hyderabad soon.