Hyderabad has witnessed a surge in infrastructural development and corresponding IT sector expansion, contributing to its rapid urbanization. It also offers a budget friendly alternative in comparison to Mumbai, Delhi and Bengaluru and the current real estate market offers many opportunities for homebuyers, developers and investors. On the other end, Hyderabad’s unrestricted FSI policy that gave rise to many high-rises has led to oversupply leading to lower resale value. Moreover, the tightening of obtaining building permissions process has led to a decline in new project launches.
RESIDENTIAL PREFERENCES
An in-depth analysis of Hyderabad’s real estate market in August 2024 revealed notable trends in apartment launches. The demand for 3BHK units has grown from 56% in August 2023 to 64% in August 2024, while the launch of 2BHK units dropped from 25% to 20% YoY. Demand for larger configurations homes like 4BHK and 5BHK has slightly decreased, while smaller units such as 1BHK and 2.5BHK have remained relatively stable.
According to Shishir Baijal, Chairman and Managing Director, Knight Frank India, Hyderabad’s residential market is flourishing in the luxury segment, as more homebuyers seek spacious layouts and premium amenities. This shift toward higher-value properties underscores the growing preference for upscale living across the city.”
Pavan Vajram, Managing Director & Founder Vajram Group shared his perspective, “In Hyderabad’s dynamic real estate market, current buyer preferences for residential properties have evolved significantly. Buyers today are gravitating towards integrated township projects that offer a blend of modern amenities, green spaces, and security. There is a marked preference for properties in gated communities, with a growing emphasis on sustainability and energy-efficient homes. Additionally, proximity to workplaces and quality educational institutions are increasingly influencing buying decisions. The trend is shifting towards larger homes with home office spaces as remote work remains prevalent.”
Piyush Agarwal, Head Business Development – Hyderabad, Sattva Group was of the view that Hyderabad’s residential market is experiencing strong demand, driven by its growing IT sector and overall economic progress. “Buyers are seeking homes that offer a mix of convenience, connectivity, and sustainable features. Popular areas like Gachibowli, HITEC City, and Kondapur remain highly sought after for their proximity to business hubs, educational institutions, and healthcare facilities.”
HOUSING PRICE TRENDS
Average residential prices in top 7 cities saw double-digit growth of 23% in Q3 2024 against Q3 2023. Hyderabad saw highest 32% annual growth. However, Hyderabad added approx. 13,890 units in Q3 2024 compared to 24,900 units in Q3 2023 – a 44% yearly decline. A whopping 97% of the new supply was added in the premium, luxury, and ultra-luxury segments (priced upward of INR 80 lakh) as per Anarock.
Pavan Vajram speaking about the current housing prices said, the upward trend is likely to continue, though moderated. “Hyderabad has seen substantial growth due to a robust IT sector and infrastructural developments, which drive demand. However, market conditions and economic factors, including interest rates and inflation, will play a crucial role in determining the pace of this growth. While price appreciation is expected, it might stabilize as developers and buyers adjust to changing economic conditions.”
Piyush Agarwal on a positive note added, “The housing market in Hyderabad will continue its upward trajectory, fueled by economic stability, a growing IT sector, and a steady influx of professionals. Housing prices have increased by 64% between 2019 and the first half of 2024, according to recent reports. Despite rising prices, the market remains attractive due to the availability of new developments and emerging residential areas that cater to a range of budgets. The demand for ready-to-move-in properties is particularly high, driven by the desire to avoid construction delays. The market’s strong fundamentals, including ongoing infrastructure development and government support, suggest that prices will continue to rise, although the availability of new supply will help moderate this growth in the near term.”
OFFICE REAL ESTATE DYNAMICS
Cities like Bengaluru and Hyderabad saw increased occupancy by e-commerce and life sciences firms, respectively, reflecting their strong growth trajectories. Furthermore, Hyderabad recorded potential SM RE- IT-ready completed office stock of 30+ mn. sq. ft as of June’24. It is estimated that cumulatively, Delhi-NCR, Bengaluru and Hyderabad could add an additional supply of potential SM REIT-worthy stock of 36 mn. sq. ft. by 2026. as per CBRE.
Pavan Vajram agreed that Hyderabad’s office market is experiencing robust performance. “The city remains a preferred destination for IT and tech companies, contributing to high demand for office spaces. There is new demand created in CBD regions of Begumpet, Secunderabad, Somajiguda for class A buildings. The rise in flexible workspaces and co-working spaces is also noteworthy. Despite some fluctuations, the commercial office segment is generally resilient, with significant absorption rates and steady rental yields.”
Piyush Agarwal stated that Hyderabad’s commercial office market is closely linked to the city’s thriving IT sector and favorable business environment. “Areas like Gachibowli, HITEC City, and the Financial District have become major commercial hubs, attracting a diverse range of businesses, from tech giants to startups. In 2024, the city saw a significant increase in office space transactions, with over 3 million square feet leased in the first quarter alone, reflecting strong demand from the tech sector and beyond.”
Comparing the top cities office markets Arpit Mehrotra, Managing Director, Office services, India, Colliers shared, “Office space demand in Bengaluru, Hyderabad and Mumbai have reached close to or surpassed 2023 demand levels in the first three quarters of 2024. Select micro markets such as SBD 1 in Bengaluru, Golf Course Road in Delhi NCR, CBD in Pune and SBD in Hyderabad accounted for about 54% of the leasing by flex space operators in Q3 2024.”
In addition, Hyderabad recorded the highest average transaction size of 53,210 sq ft in the post-pandemic period, which has increased by 55% compared to the pre-pan- demic period (2015-2019), stated Vestian research.
RETAIL DEVELOPMENT
According to Pavan Vajram, the retail sector in Hyderabad is seeing a substantial transformation with the influx of new retail malls and mixed-use developments. “The outlook for retail development remains positive, driven by a burgeoning middle class and increasing consumer spending. Retail spaces are evolving to offer experiential shopping and integrated leisure facilities, catering to changing consumer preferences. However, retail developers will need to navigate evolving trends in online shopping and changing consumer behaviors to ensure sustained growth.”
Furthermore, JLL India has mentioned a significant shift in the Indian retail landscape, with Indoor Amusement Centers (IACs) emerging as a key driver of footfall and consumer engagement. And in terms of regional concentration, majority of the IACs in India are located in South India, primarily in Bengaluru, Hyderabad and Chennai
Piyush Agarwal concurred, “Retail developers are focusing on creating multi-functional spaces that combine shopping, dining, and entertainment, a trend known as ‘retail-tainment.’ Malls are now incorporating entertainment zones, wellness centers, and curated food experiences to attract consumers, reflecting the evolving preferences of Hyderabad’s diverse population. The city has seen a surge in retail leasing activity, with new malls and high-street outlets emerging in key locations. Areas like Banjara Hills, Jubilee Hills, and the Financial District are popular for luxury retail, catering to affluent buyers seeking unique shopping experiences.”
POTENTIAL GROWTH MICRO-MARKETS
“Hyderabad’s real estate growth extends beyond established locations, with several emerging micro-markets gaining traction. Kokapet, Miyapur, and Narsingi are witnessing rising residential demand due to their strategic locations near major business hubs and enhanced connectivity. On the commercial side, Gachibowli and HITEC City remain dominant, with ongoing investments and expansions from multina- tional companies. New infrastructure projects, such as the Outer Ring Road (ORR) and the upcoming Regional Ring Road (RRR), are opening up previously inaccessible areas, making them attractive for both residential and commercial developments. As these micro-markets mature, they are expected to drive significant growth in Hyderabad’s real estate sector, said Piyush Agarwal.
The Hyderabad residential market encompasses four districts, - Hyderabad, Medchal-Malkajgiri, Rangared- dy, and Sangareddy, covering home sales relevant to both primary and secondary real estate markets. At a district-level, Rangareddy led property registrations with 42% of the market, up from 39% in August 2023. Medchal-Malkajgiri and Hyderabad district accounted for 41% and 17% of the total registrations respectively. The weighted average price of transacted residen- tial properties witnessed a sharp YoY increase of 9% during August 2024. Among the districts, Rangareddy, experienced the sharpest increase of 10% YoY while, Medchal-Malkajgiri and Hyderabad experienced an increase of 8% and 2% YoY respectively.
Pavan Vajram expressing similar sentiments added, “Areas such as Gachibowli, Hitec City, and Kukatpally are demonstrating strong growth potential for both residential and commercial properties, thanks to their proximity to IT hubs, educational institutions, and enhanced infrastructure. We also believe that CBD areas in Hyderabad, like Begumpet, Ameerpet, and SR Nagar, with their excellent metro connectivity, are poised to thrive in the residential sector. Moreover, emerging local- ities like Narsingi and Kompally are gaining momentum due to their connectivity and competitive pricing. The combination of well-established metro infrastructure and proximity to essential amenities makes these areas prime candidates for future development.”
INFRASTRUCTURE BOOM
As per Piyush Agarwal, key projects like the ORR, metro rail expansions, and major road improvements have drastically reduced travel times and enhanced connectivity across the city. These improvements are not only boosting property values but are also making new areas more accessible and livable. As infrastruc- ture continues to evolve, it will remain a key driver of sustained growth in the city’s real estate market.
Pavan Vajram highlighted that city's expanding metro network, the Outer Ring Road (ORR), and the development of elevated corridors are significantly improving connectivity to key business hubs such as Hitec City, Gachibowli, and CBD areas like Begumpet, Ameerpet, and Somajiguda. With a shortage of Class A buildings in the CBD regions and rising demand, these infrastructure advancements are not only enhancing commute options but also elevating the overall quality of life. They are making residential and commercial properties increasingly attractive. Upcoming infrastructure projects, including metro line extensions and additional civic improvements, are expected to propel Hyderabad’s real estate market to new heights.”
Hyderabad saw highest 32% annual growth. However, Hyderabad added approx. 13,890 units in Q3 2024 compared to 24,900 units in Q3 2023 – a 44% yearly decline.
Hyderabad recorded potential SM REIT- ready completed office stock of 30+ mn. sq. ft as of June’24.
The city has seen a surge in retail leasing activity, with new malls & high-street outlets emerging in key areas like Banjara Hills, Jubilee Hills, and the Financial District, popular for luxury retail.
New infrastructure projects, such as the Outer Ring Road (ORR) and the upcoming Regional Ring Road (RRR), are opening up previously inaccessible areas, making them attractive for both residential and commercial developments.
CAUTIOUS OUTLOOK
According to PropEquity, new launches in Hyderabad declined by 54% between July and Sept, while sales witnessed a drop by 42%, which is the highest among major metros in the country. In fact, the report states that while the city saw 25,370 new housing launches between July and Sept 2023, these figures were limited to 11,601 this year. A similar trend was seen in sales. While 20,658 units were sold in the July-Sept quarter last year, this year's figure plummeted to 12,082 units. Industry experts attributed this property slump to several reasons, including oversupply, rising prices and the recent HYDRAA demolitions.
As per Anuj Puri, Chairman Anarock GroupAnuj Puri, Chairman Anarock Group, one of the reasons for tapering down of housing sales in the third quarter is the monsoon season and the ‘shraadh’period that suppresses demand as many Indians defer home buying during this time. “Overall, the housing market is stabilizing after creating a new peak in Q1 2024 and developers have several projects lined up during the festive quarter (Oct.-Dec.) during which the market is expected to see an uptick in demand,” he stated. Despite the demand fluctuations, Hyderabad remains an attractive destination for developers and investors due to fundamentally strong economic prosperity, maturing of purchasing power and customer aspirations as well as prudent fiscal policies and regulatory measures by the state government. During the state's bifurcation, Hyderabad's real estate was widely predicted to collapse.
Yet, proactive measures by the then-ruling government ensured that investments flowed in. The current Chief Minister A Revanth Reddy, comes from a real estate background and that has raised expectations that the sector would flourish under his leadership.
