The Indian real estate landscape is witnessing a notable shift as Hyderabad’s property market shows remarkable growth, challenging the long-standing dominance of Bengaluru. Since the bifurcation of Telangana and Andhra Pradesh, Hyderabad has steadily positioned itself as a leading real estate hub, with residential prices surging amid rising demand and new supply.
Over the past year, Hyderabad’s real estate sector has experienced a significant boom, with rental prices climbing by at least 30%, according to local brokers. The city’s Kokapet region, for instance, has seen a staggering 89% increase in property values over the last five years. A recent analysis by real estate consultancy ANAROCK reveals that housing prices in Hyderabad surged by 64% from 2019 to the first half of 2024, outpacing Bengaluru, which recorded a 57% rise. Despite this impressive growth, Bengaluru remains a formidable player in the real estate market. The city has enjoyed a bull run in property prices over the past three years, although recent data indicates a stabilization in the market. Housing sales in Bengaluru dipped to 13,133 units in Q1 2024, a 2% decline from the previous year, attributed partly to a downturn in the affordable housing segment. Rental growth in Bengaluru has also slowed by 5-10% following a sharp increase earlier in the year.
Hyderabad’s real estate demand is largely driven by the IT sector, particularly in areas such as HITECH City, Kundapur, and Gachibowli. The city’s affordable housing sector, especially in the eastern parts like Secunderabad and Ramoji Film City, continues to attract interest due to its value proposition. In contrast, Bengaluru’s market is facing a saturation point with higher inventory levels and stable rental yields. Recent political developments have also bolstered Hyderabad’s real estate market. The declaration of Amaravati as the sole capital of Andhra Pradesh has clarified the city’s political landscape, enhancing investor confidence. More than 60% of the city’s budget is allocated to infrastructure and public amenities, further driving property prices.
In terms of commercial real estate, Hyderabad has seen a resurgence in office space activity, contributing about 30% to India’s commercial supply and 24-25% to the demand, according to data from JLL. This contrasts with Bengaluru, where office space absorption has only marginally increased, reflecting a potential slowdown in commercial activity. While Hyderabad’s real estate sector is on a growth trajectory, experts believe Bengaluru will continue to lead in overall supply and absorption. “Hyderabad is catching up in terms of growth, but it is unlikely to surpass Bengaluru in the near future,” notes the Senior Vice President of Research at ANAROCK Group.
