There are a few questions that are bothering all the stakeholders of the real estate industry: How will the current COVID-19 second wave impact property prices in Hyderabad? Will they go down? Will they rise? How will property prices in 2021 be like? When will property prices rise again in Hyderabad? To put things in perspective, it should be noted here that the real estate market performed well in Hyderabad last year, i.e, during the first wave of COVID-19.  So how will it impact the Hyderabad property prices this time around? 

Rise in the Demand for Affordable Housing 

The ‘now-more-than-ever’ cliché of COVID-19 times that was all over the place in business and marketing discourses is applicable to real estate in Hyderabad as well. Now more than ever, during these COVID times,  people are looking to buy their own house rather than stay in a rented house. There is a huge demand for new and affordable housing units. Analysts attribute this to the following reasons:

• There is, currently, an attractive incentive for the middle class — namely lower interest rates to the tune of as much as 6.70%, offered by most banks.
• The unchanged repo rate announced by the Reserve Bank of India (RBI) is another incentive.
• Stamp duty cuts have also contributed to higher property sales.
• Additionally, developers have been offering COVID-19 special discounts to homebuyers, such as no EMI till possession, and various other freebies.
• Telangana has better floor-space index rules, because of which property rates are lower than those in other states. 
• Long-term growth ensured by the government’s decision to spend Rs. 50,000 crores for the development of the Hyderabad Urban Agglomeration Area in the next five years.

Highlights of Property Sales In Hyderabad, 2021

Sales have surpassed pre-pandemic levels in several cities, including Hyderabad in Q1 2021. MMR, Hyderabad, Pune, and Bengaluru together account for  79% of new launches. Property sales in Hyderabad were highest in the mid-segment. Here are some stats for Q1, 2021, according to Anarock.

• 12,620 new launches (compared to 12,820 of Q4-2020, and 3,380 of Q1-2020).
• 4,400 units sold.
• 44,980 available inventory.
• 5% of units are in the affordable segment (< Rs. 40 lakhs).
• 61% of units are in mid-segment (Rs. 40 to 80 lakhs, i.e., 2BHK and 3BHK units).
• 28% of units are in the high-end segment (Rs. 80 lakhs to 1.5 crores).
• 3% of units are in the luxury segment ( Rs. 1.5 to 2.5 crores).
• 3% of units are in the ultra-luxury segment (>  Rs. 2.5 crores).
• 23% increase in sales Q to Q. 
• 64% increase in sales, YoY.
• 22% increase in inventory, Q to Q.
• 81% increase in inventory, YoY.

Will Property Prices Rise Again in Hyderabad?

Property prices are up in Hyderabad, pandemic notwithstanding.  With foreign investors creating more and more jobs in the city, there is a corresponding rise in the demand for housing units as well as office spaces. According to experts from CREDAI and TREDA, prices have risen to the tune of Rs. 500 - 1,500 per sq.ft. This is especially the case in and around Hi-Tech City, Kukatpally, and also Kompally. 

The price rise is attributed to increasing demand, as well as an increase in the price of raw materials. Even the changes in the land registration procedures have not impacted the property sales in Hyderabad, though realtors anticipate that title disputes may cause some hindrance. 

Thanks to lower interest rates and higher incomes, affordability is at an all-time high as noted by various experts. There is no better time to buy a house than now. Among the seven metros (Mumbai, Delhi NCR [National Capital Region], Bengaluru, Chennai, Pune, Hyderabad, and Kolkata), Kolkata has the best affordability, followed by Hyderabad.

V. Rajasekhar Reddy, general secretary of CREDA, notes that there were registrations worth Rs. 950 crores in Telangana state, in the month of January 2021 alone! It is predicted that such increasing demand is resulting in increasing property rates, and in five years' time, Hyderabad property prices would be at par with that of Bengaluru.

 Property Prices Across India

According to Knight Frank, Hyderabad is the only Indian city globally to witness residential price appreciation in Q4-2020, positioning at 122nd rank with a marginal 0.2% year-on-year (YoY) rise in home prices. Hyderabad's residential market had performed consistently all through the pandemic, maintaining annual price growth in each quarter, all through 2020.

Coming to Q1-2021, Hyderabad, along with Ahmedabad, is among top two cities in property price rise, registering a 5% rise in average price (for Q1, 2021). This is incredible, especially in comparison with Mumbai that has not seen any price change. (Courtesy: Real Insight).

How Will the Covid-19 Impact Property Prices in Hyderabad?

We have seen that during the first wave in 2020, property sales had increased marginally by 0.2% YoY (i.e., compared to 2019). Things started looking up at the beginning of 2021 with a steady decrease in the daily number of COVID cases pan-India (except Maharashtra and Kerala). At that point,  Hyderabad property prices went up to 5% YoY (compared to 2020). 

Now, we have the second COVID wave on. If this wave continues for a longer period like the first wave, we can expect reduced interest rates, developer incentives, and other government support.  But, if the second wave is of shorter duration, and hopefully, it should be, then the Q1-2021 trend may continue throughout 2021..