This is a perennial question posed by all acquaintances. It becomes difficult to answer this question, especially if you are not sure which side of the new states the questioner belongs to. The questioner's response to your views could make you feel like 'heads you loose and tails they win'.

This is an important question, since our city has been regularly making news for all good and / or bad reasons since 2009 onwards. Since opinions are normally biased on what one feels about the recent past and prospective future of our city hence the answers could be taken positively or construed to be vague and confusing. One of the best ways of answering this question is by stating some facts and let the questioner make up his / her mind about how the market has been. Some of our thoughts are as follows:

HITEC CITY (OFFICE SPACE):

• Hitec city currently seems to be the cheapest office rental market compared to Bangalore, Chennai and Pune. The difference in lease rentals is almost 30-50% in some cases.
• In Hitec city over the past few months companies have been taking up space and resultantly today good buildings have negligible vacancy rate. These companies include both current expansions and new additions.
• We understand that Thoughtworks a Bangalore based IT Company recently signed up their first Hyderabad office in Hitec city.
• We understand a Pune based IT Company who had closed its Hyderabad office last year has recently came back and signed up some SEZ space in Hitec.
• We understand a large US based enterprise IT Company, which is entering the Indian markets for the first time, has signed up an office in Hitec.
• We are aware of couple of more new companies who are in the process of finalising their entry into Hyderabad.
• All of the above are new companies coming into Hyderabad.
• In addition to the above, quite a few existing IT companies in Hitec city are also looking for space or have taken up additional space.
• We can also presume that some more new companies would have taken space in Hitec. The momentum now, in terms of new companies, is definitely much more than the previous trickle coming into Hyderabad.
• On the supply all major IT parks in Hitec city are close to 100% occupancy levels. All the good & well maintained IT buildings currently have negligible vacancy levels.
• Some of the older IT buildings in Hitec city which are not maintained well are the only ones being avoided by prospective / existing tenants.
• As we work on options for new client requirements in Hitec city, we are finding the availability list is getting shorter over the past few months.
• If we analyse the period of 2007-14, for SEZ transactions, then we find that rentals hit a high of Rs. 43-44/psf/mth in 2007-08. These came down to Rs.
30-32/psf/mth in 2009-10. These rents are now in the range of Rs. 39-41/psf/mth. Slowly the lack of additional supply and more demand has pushed the rentals to almost the highest point it had ever touched.
• All SEZ's in Hitec city irrespective of their location be it Madhapur, Raidurg, Gachibowli etc. quote rents in the range of Rs. 40-43/psf/mth.
• Rents in non-SEZ properties have also followed a similar chart over the period of the past 6-7 years. An interesting fact about non-SEZ properties is that quotes differ with areas. In Madhapur such properties could quote Rs. 37-40/psf/mth but in the Financial District this quote ranges from Rs. 33-36/psf/mth. An exception seems to be a recent quote of Rs. 48/psf/mth for a good non-SEZ IT campus.
• The lower quotes are the result of a lot of supply which had been built in the financial district area over the past few years. We now find that companies looking for more economical options prefer to set up shop in the financial district. Some larger rental deals have reportedly been closed at Rs. 25/psf/mth in this area. With supply gradually coming down in this area we can expect rentals to inch up closer to Madhapur rates.
• For the above analysis we are considering only IT buildings / parks. We have not considered commercial buildings with retail spaces / shops on lower floors for this analysis. Further we have looked at only warm shell rates while comparing rents.
• Obviously the rental market in Hi-tech city remains attractive and has resulted in good leasing activity in the past few months.

RESIDENTIAL MARKET

• Analysis of this segment is always tricky since closure numbers are not easily available. Actually quoted numbers alongwith some limited info on closing numbers should give us some idea of where this market has been.
• In 2009-10 the quoted capital values for new apartments in Banjara Hills used to Rs. 8000-10000/psf. In some of the better apartment complexes, deals had reportedly been closed at Rs. 9750/psf.
• In 2012-14 period quotes for new luxury apartments in this area is between Rs. 12000-15000/psf. Some deals in premium apartment complexes in resale have been closed at a little above Rs. 14000/psf. Demand in this area remains soft and builders are selling lower volumes in the above range.
• Recently a builder was sharing with us that for an apartment project in Banjara Hills they started booking at Rs. 5500/psf, 3 years back. The last sale, a few months, back was at Rs. 7500/psf. The quote now is Rs. 9000/psf.
• Lot of new projects have been launched in the Banjara Hills area over the past few years. Today a buyer in Banjara Hills has a lot of options in first and second sales.
• If we evaluate the 2009-14 period, basis the quoted and some closing nos., one can hardly say the market suffered. What actually has happened is that increase in prices has been limited and prices did not sky rocket as in other metros in the same period.
• A similar trend one can find in Hitec city, wherein the quoted & closing numbers for almost all projects have moved up in the 2009-14 period.
• In one of the prominent residential projects, in Hitec city, we did our first sale for Rs. 4250/psf and then at Rs. 4500/psf and then at Rs. 4750/psf. Now the builder, for the final few units, quotes Rs. 5250/psf.
• Even with smaller builders we have seen closing prices move from Rs. 3300/psf to Rs. 4000/psf+ over the past 12 months.
• If a project has a significant construction risk then this trend may not have been followed. Buyers have lost faith with a lot of builders in Hitec city with some prominent flagship projects failing to deliver. Today a buyer prefers buying from a reputed brand known for delivery or else closer to completion units. The latter is the case with most buyers today.
• Suburbs like Kukatpally, Miyapur, APPA Junction, A. S. Rao Nagar, Sainikpuri etc. have followed a similar trend.
• In Kukatpally, for some new apartment projects the landed cost of buying a 3 bedroom apartment is touching the Rs. one cr. mark.
• In 2008-09, period if a customer had a budget of Rs. 1cr then he could buy a 3 bedroom unit in Hitec city. Incase the budget was Rs. 50-70L then Kukatpally / Miyapur was the next best choice. Today in the same markets a customer needs a budget of Rs. 1.3cr to Rs. 1.75cr and Rs. 80L-Rs.1cr respectively.
• Yapral, a suburb in Secunderabad cantonment is an interesting case study. Omsree Developers concentrates in this area and develops only premium apartments.
• Omsree is constructing 2 projects now, first is Rainbow Ville a low density apartment project of 77 units which basically basement + 3 floors. The second one is Green Park which has approx. 270-280 nos. and is a normal Slilt+G+4 floors project.
• Omsree has sold approx. 50% in Rainbow Ville and 50-60% in Green Park in the past 12 months. The basic price for a 2500sft apt. in Rainbow Ville is Rs. 3400/-psf plus a few add ons. The basic price for Green Park is Rs. 3000/-psf plus a few add ons. Sizes in this project range from 1500-2000sft.
• Down South at MAK projects, golf course plots started selling at Rs. 7500 per sq yd a couple of years back and now the quote is Rs. 11000 per sq yds.

So what did Hyderabad loose out in 2009-14 period? The above analysis could seem to give an impression that the period was beneficial to Hyderabad. Let us analyse this a little further. The period of 2005-07 was one of the best periods for the real estate markets in our country. Almost all markets were at their peak including Hyderabad. From 2008 onwards the recession set in and markets prices started dropping. Somewhere towards the end of 2009 the recessionary trends started to slow and from 2010 onwards things started to improve overall for all real estate markets except Hyderabad. From late 2009 alongwith recession Hyderabad had another challenge i.e. the rekindling of the agitation for bifurcation.

Resultantly all other markets except Hyderabad had another excellent period between 2010-12 and this time the peaks achieved by these markets were higher than the 2005-06 peak in prices. So what Hyderabad lost in the 2009-14 period is another bull run which might have taken prices to another level altogether. From a buyers perspective the good thing that happened is that Hyderabad remains to this day the most affordable metro. All other metros are unaffordable to the majority of its population.

Hopefully Hyderabad will regain its position as the costliest city in the erstwhile state of AP in the short to medium term. In the long term Hyderabad will start competing with other metros like Bangalore, Chennai and Pune in terms of prices and quality.