Hyderabad is a unique market where the central business district (CBD) has been changing over the past 30-40 years. CBD is primarily an area which is the fulcrum of all commercial, residential and retail activity for any city.

Abids was possibly the CBD for a long time ago. With the changing times the CBD moved to Secunderabad and its vicinity. Offices complexes like Swapnalok Complex and Minerva in Secunderabad would have the been sort after buildings 25-30 years back. The early part of the current century would have seen the evolution of Sardar Patel Road, Somajiguda, Nagarjuna Circle, Punjagutta and Banjara Hills areas becoming the CBD. A lot of IT companies, banks, corporates started operating from this area. With Hyderabad becoming an IT hub and Hitec city gaining prominence the CBD again shifted towards the western side. Today 80-90% of the office deals both leasing and sale are done in Hitec City only.

The erstwhile CBD's look pale in comparison to the modern designs of Hitec City. Slowly most IT companies moved towards Hitec and development of the city skewed only towards its western side. The difference in development has become so stark that Cyberabad, Secunderabad and Hyderabad do not look like tri-cities anymore rather operate like 3 different cities.

The good thing is that all 3 parts of our city are self sufficient in terms of residential, retail, malls, schools, hospitals and other social infrastructure. All 3 parts are also more or less independent of each other in terms of employment opportunities except for the IT sector for which IT professionals have to travel to Hitec City. It is not uncommon nowadays to find people who have lived their entire life in Secunderabad but are not aware of Cyberabad or vice versa. Hopefully our citizens will explore more of our city and see the changes it has undergone during their lifetime.

Does the changing CBD mean that the earlier CBD's have ceased to be a real estate market today? Let us do an introspection to understand this especially for the Begumpet to Banjara Hills area:

• Office market: Most of the IT tenants moved to Hitec and resultantly these areas had a lot of vacancy in the post 2014-15 period. Rentals for fully furnished spaces with old fitouts came down drastically making them quite attractive. Coupled with the metro connection demand for these areas purely from a lower rental perspective picked up. Corporates, banks, financial institutions, media, infrastructure, consulting and SME IT companies preferred these areas. Pre-covid vacancy levels had come down drastically but the current situation would be different.
• The available office buildings especially on S.P. Road are larger in size but older compared to buildings in Banjara Hills. The older buildings may not be able to cater to the modern requirements of ample car parking spaces, 100% power backup, glass facade, power requirements etc. This newer buildings lack the size to integrate all modern facilities in a 15 mt. structure.
• Having said this each of the micro markets of Begumpet, Raj Bhawan Road or Banjara Hills have one or two office buildings which are better maintained with facilities of new and modern office complexes. These buildings have always had healthy demand from occupants and vacancy levels remained negligible. These buildings actually charge a premium rental and occupants are willing to pay. Some of these buildings achieved rental of Rs. 100-105/sft/mth for newly fitted out office space much before Hitec City buildings could hit the 3-figure mark.
• Except Banjara Hills all other areas are likely to see a positive effect due to an excellent metro connectivity. The metro connection from all sides of the city uses the S.P. Road stretch as the main arterial line and has helped reduce traffic congestion to some extent. Metro will help revive the office market in the coming months.
• Post lockdown, possible decongestion of Hitec City will help the revival of demand in these areas. Companies may choose to set up multiple smaller office centres across the city rather than making all employees travel to Hitec daily. Companies might be open to setting up offices of 100-150 employees in Begumpet / S.P. Road areas.
• Co-working: Not many brands have explored this area for setting up co-working centres. Awfis and Workfella are the only brands operating here apart from business centre brands such as Regus and Ikeva. Occupancy levels in the co-working centres was quite high and expected to revive faster in the coming months. The size of deals in this area remain small to medium. The largest deal size for which clients might have looked for space would be 15-20K sft. Compared to Hitec these deal sizes are quite small. Post covid tenants will go into a nil capex mode. Co-working bands which provide space with fitouts and services would be in good demand in areas of Begumpet, Somajiguda, Khairatabad, Ameerpet and Banjara Hills. This demand will help in the revival of the office market in this side of the city.
• Residential: Many families have lived in this side of the city for years or generations. Unlike the modern residential complexes, in this side of town most of the buildings are older with smaller number of units. These areas are mostly secondary sale markets with primary sales remaining negligible or once in a few years.
• Couple of new residential complexes have come up in the past 4-5 years and demand has been decent. Our sense is customers in this area would lap up smaller and newer residential complexes which offer them a choice to improve their housing standards. Residents here would like to continue staying here and are open to an upgrade. Residential prices in these areas have remained by and large affordable. Even in an aggressive market prices did not escalate much hence in a subdued market are not likely to correct much either. The residential market has had a steady run in this side of town.
• Good part of the residential market, in this side, is that the pricing and sizing range is quite large. Apartments prices range from Rs. 3500-8000/sft depending on location, age, amenities, distance from main road etc. Apartment sizes range from 1/2/3/4 bedrooms. Larger apartments are far and few in number. This wide range ensures that all kinds of sizes and budgets get accommodated. This area also has a healthy residential rental demand thanks to close proximity of government offices and other private corporates.
• The only exception to the above pricing is Banjara Hills were apartment prices are much higher and in some cases cross the Rs. 10000/sft mark. Rentals also are much higher in Banjara Hills compared to S.P. Road and adjoining areas.
• We expect co-living to also make an entry in these areas post lockdown. The mix of tenants from students to single working professionals to nuclear families would be an ideal market to explore for co-living companies.
• Developers should evaluate redevelopment opportunities in these areas by demolishing old structures and building better and modern residential complexes. This model is quite prevalent in Mumbai which faces land shortage. The S.P. Road, Begumpet, Somajiguda, Banjara Hills areas is no different and land supply is practically nil.
• Most of the main roads have been expanded quite a lot in this area. This area needs a lot of ancillary development in terms of foot-over-bridges and pedestrian friendly footpaths. Anybody who has tried to cross these main roads in office traffic would know the amount of risk involved due to the high density of road traffic on S.P. Road and areas beyond it.
• Retail: Most of these areas have remained a high-street market. Malls have got developed in Banjara Hills, Punjagutta, Ameerpet and Erramanzil areas. Mall market was already experiencing an oversupply situation in the pre-covid times. High-street demand remained healthy but lack of parking remains the main concern across these areas.
• Investment Sales: Unlike the Hitec City market, this side of town was giving better returns on office space investment in the range of 8-9%p.a. pre-covid. Buildings being older coupled with lower rentals have helped keep returns better.

This side of town definitely demands a relook in terms of the opportunities it offers which could be hard to find but easier to sell yielding better margins. Hopefully all efforts would not remain focused on further developing a burgeoning Hitec city market. The focus on Hitec city is so blinding that a market constituent once remarked to us that all areas ahead of Banjara Hills is part of the old city. The point being ignored is that good / profitable opportunities might be missed out in the misconception that everyone wants to shift to Hitec city. Majority of the population would continue to live in the established areas of the city and will continue to fuel demand in these areas.

This article was printed by Times of India's edition of Realty Rises Ganesh Chaturthi Special.