The New Realty Powerhouse Torbit City Report-Hyderabad

With its stellar performance in residential and commercial real estate, Hyderabad has emerged as a rising star of realty

Since the formation of the state of Telangana, Hyderabad has been on the top in terms of office leasing activity. Residential real estate has also been strong, with the city registering the highest housing sales in 2022 in the last 8 years. In the retail segment too, annual supply addition increased for the first time since 2018, as 2022 witnessed around 1 mn sq. ft. of supply infusion. As of December 2022, Hyderabad had around 8% share in the operational mall stock of India. Data centres, the sunrise sub-sector within real estate, have emerged as a favourite asset class for investors. Of the 500 acres of data centre related land transactions in 2022 in the country, around 26% came from Hyderabad.

According to Savills ,There have been a number of  key drivers for the success story of Hyderabad as a star real estate destination .

Policy Push:

Proactive government policies such as Information Communication Technology (ICT) Policy 2.0, Telangana Electric Vehicle (EV) and Energy Storage Solution (ESS) Policy, Space-Tech Framework, State-wide Optical Fibre Network and Growth in Dispersion (GRID) Policy, and TS-ipass, have powered the growth story of Hyderabad.

Infrastructure:

Steady infrastructure creation and upgrades, including the Nehru Outer Ring Road (ORR), expansion of metro rail and the implementation of a Strategic Road Development Plan (SRDP), have ensured excellent connectivity in and around the city, thereby enhancing core real estate potential. Other planned infrastructure developments include the Regional Ring Road (RRR) and Elevated Bus Rapid Transport System (EBRTS).

Affordability:

Relatively affordable price points have defined ‘The Hyderabad Opportunity’ to a large extent particularly in the commercial office market, wherein the entire city enjoys a cost advantage. Hyderabad stands to benefit most from sub-dollar office rentals over a long period of time. Therefore, it is a major market for flexible spaces. The city witnessed 2.3 mn sq. ft. of leasing activity from flexible spaces in the period 2020-22, which is around 15% of the shared space demand in the country. Similarly, residential capital values and rentals for the secondary business districts or sub-urban areas of Hyderabad are 10-20% lower, compared to similar localities in other major cities in Southern India.

Human Capital:

In FY22, almost 1.5 lakhs employment opportunities were realised in the IT/ITeS sector which in turn translated to a phenomenal one-third of the IT related jobs in the country. By the end of FY22, IT/ ITeS employed around 7.8 lakh people in the state (primarily Hyderabad); this is a 24% YoY increase compared to FY21. People are   particularly drawn in by the quality of life the city offers to working professionals and students alike.

 Sectoral Focus:

Transit Oriented Development (TOD) Approach

This approach is adopted to address the challenges of urban sprawl by concentrating the activities at a node or along a public transit corridor, thereby increasing the efficiency of land utilisation. Areas in proximity to the airport in South Hyderabad can benefit the most from such a model.

Sharp focus sectors such as Life Sciences, Data Centres, EV Ecosystem, AVGC and Aerospace:

• Developing a world class life science city in the peripheral areas of Hyderabad will provide a significant boost to existing clusters. It is anticipated that revenues from the life sciences sector in the state will be 3-4 times the current levels and reach USD 40-50 billion by 2030.

• By 2025, Hyderabad will have a 7-10% share (~2.5 mn sq. ft.) in India’s data centre stock

• iii. Hyderabad’s EV ecosystem is likely to witness USD 3- 4 billion of investments, employing more than 1 lakh people by 2030. Creation of a world class Telangana Mobility Valley (TMV) is also a big step in this direction.

• Currently, around 150 Animation, Visual Effects, Gaming and Comics (AVGC) companies provide direct employment to approximately 30,000 people. With significant impetus from the state government, the sector can support 0.5-1.0 lakh people in the next 5 years

• The Maintenance, Repair & Overhaul (MRO) industry within the aerospace segment in the country is likely to reach USD 2-3 billion in the next five years, and Hyderabad is likely to play a prominent role in it. According to Mark Ridley, Group & Global Chief Executive Officer, Savills, Hyderabad has an enormous focus on innovation, IT, life sciences, and infrastructure, driven by a talented workforce and a strong entrepreneurial spirit. It has all the characteristics of a Megapolis in the making and the momentum is simply unstoppable.

• Hyderabad ticks all the right boxes of real estate. It is now the most sought-after gateway city for global corporations cutting across sectors. It provides incomparable value-proposition whether by way of infrastructure, policy support, quality real estate or ease of living. Most companies wish to expand their footprint by increasing their presence in Hyderabad, a shining example of a powerful economic hub.

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