Hyderabad’s real estate sector has been on an upward trajectory for several years, driven by the city’s transformation with the development of its Financial District and Gachibowli into modern hubs adorned with skyscrapers and upgraded infrastructure. This surge has propelled property prices to new heights, prompting investors and homebuyers to consider the sustainability of these increases.
The investor profile in Hyderabad’s real estate market predominantly includes high-earning tech professionals and non-resident Indians (NRIs), who acquire properties for current residence, future habitation, or as investments for family members. The crux of the issue lies in whether these escalating property prices can continue their upward trend or if there is a potential risk of a market correction. Focusing on the Kokapet region, recent data reveals that premium projects such as Gravva and Nishada by My Home are priced at approximately ₹11,600 and ₹12,300 per square foot, respectively. Other notable developments include Apas, also by My Home, at ₹10,300 per square foot, and Rajapushpa Constructions’ Iris and Casa Luxura at ₹13,500 and ₹13,000 per square foot, respectively. The average price for gated community flats in this area hovers around ₹12,000 per square foot.
Market forecasts suggest these prices might escalate to ₹20,000 per square foot over the next five years. However, this projection needs careful scrutiny. Additional costs such as parking fees, floor-specific premiums, and registration charges could push the effective price to around ₹15,000 per square foot. When selling, investors face a 20% tax on profits, which, after accounting for inflation and indexing over the five-year period, could result in minimal net gains or potential losses. Rental income might offset some losses, but it’s crucial to evaluate the total financial impact. NRIs considering property purchases financed through bank loans should approach with caution. The accumulating interest could negate potential profits if property values do not rise as expected. Furthermore, the looming threat of a global recession adds another layer of uncertainty to the market.
Traditional investors often argue that purchasing independent houses in Hyderabad provides better investment returns compared to flats in gated communities, due to the intrinsic value of land ownership. Villas in gated communities, while potentially lucrative, require substantial financial resources. Looking ahead, experts predict a possible stagnation in Hyderabad’s real estate market as current prices may have peaked. A widening gap between demand and supply could usher in a bear market. Investors should weigh these factors carefully, especially NRIs, and consider their objectives. If the intent is personal enjoyment or providing a quality living environment for family, investment in Hyderabad’s real estate remains viable. For those seeking purely financial returns, a more cautious approach is advised.
