Increasing Land Prices in Hyderabad Western Corridor to Decline Investments

Increasing Land Prices in Hyderabad Western Corridor to Decline Investments

The IT corridor of the city is now the most lucrative in South India with regard to the rising prices besides Bengaluru, Chennai and the two other IT destinations.

High Prices to Halt Property Investments in West Hyderabad

In Madhapur, Financial District, Gachibowli stretch the land rates have increased from Rs 45 crore to Rs 50 crore per acre. This has contributed to zero land sales with all big developers stopping their investments.

It isn't easy to purchase land at that price with a reduction in lease rates and with a massive rise in construction costs. Furthermore, Hyderabad's built-up space costs remain lower than most of the metros. The cost of land jumping at a range of 25% to 35%, some property owners in Hitech City claim up to Rs 60 crore per acre. This would result in a decrease in a smooth flow of investments.

Many property developers are certainly not re-entering the city unless the unlimited FSI Floor Space Index) standards are revised. Only then the land rates would stabilise. This helps developers to build on a piece of land as much as they want.

Wealthy Property owners not Desperate to Sell

Property owners are aggressively scouting for land in Hyderabad, but they have not been able to close any deal due to increasing prices. The cash-rich landowners and lack of an alternative IT corridor are also the other reasons for this land price rising.

Prices must be corrected by 20 % to 25%. However, in Hyderabad, landowners are incredibly rich in cash and do not want to sell. So they will stick to the land until they get a reasonable price. No one is looking far beyond the west now. In order to break the monopoly by examining this artificially generated price increase, there would need better infrastructure and lucrative incentives in the West and the North.

Land prices are the main obstacles for global commercial investors in at least the west corridor, with the resulting overstretched valuations. Investors like REITs do not want to look for high-density developments, which go beyond a certain level, from a long-term investment point of view. The new mantra for global corporations nowadays is densification.

By: Shailaja K