REALTY CITYSCAPE. Hyderabad September

Transcription

1 REALTY CITYSCAPE Hyderabad September

2 Executive Summary Foreword Indian real estate is standing at a crossroad today. The euphoria of double digit return on investment overnight has given way to a more rational expectation. The big bulls of real estate market- Delhi NCR and Mumbai have retreated resulting in softening of prices in these market as well as significant investor s money being stuck. Moreover, the RERA and development of REITS are also expected to re-define the landscape of Indian Real Estate. Prashant Kumar Thakur Head of Research & Data Services QuikrHomes prashant.thakur@quikr.com In the backdrop of weak real estate environment one city that is emerging out from the bruises of long drawn Telangana agitation is Hyderabad. The prolonged uncertainty severely impacted the buyer s sentiments and took the sheen away from brand Hyderabad as one of the fastest growing investment destinations. Corporates shelved their plan of expansion and the buyers shied away from buying. However, with the formation of Telangana, the period of uncertainty has given way to optimism and the Hyderabad is slowly but steadily reclaiming the lost ground. It is one of the most affordable market with the good quality of ready to move in inventory. In today s market scenario, buyers are preferring ready to move in property as they do not take the risk of execution delays. As a result, the sales volume in Hyderabad has gradually picked up, clocking a growth of approximately 60% over a period of one year. The prices have appreciated in the range of 4-5% in the year The city fares better in terms of infrastructure when it comes to metro and outer ring road connectivity as compared to Bangalore and other prominent IT destinations. Post Telangana formation, Google has initiated its expansion plans in Hyderabad. The search giant is building its own 7.2 acres campus in the city that is expected to be completed in the year Overall commercial real estate has been on upswing- a precursor to residential market revival. In the first half of the current year commercial real estate market has witnessed a robust absorption growth of 80% to 90%. Whereas, new office space supply has gone up by 120% as compared to the previous year. In this backdrop, Hyderabad is at the cusp of a strong revival, presenting a sweet spot for the buyers where they have an opportunity to enter the market at a much more rational price. Hyderabad provided a buyer with broader choice of ready to move in apartments, new launch, plots as well as villa projects at a very compelling price. This report will take you through the journey of Hyderabad real estate market from its emergence to stagnation and its journey towards gradual recovery.

3 Executive Summary Hyderabad, the joint capital of Telangana and Andhra Pradesh, has been on the roller coaster ride since Once famously known as the cynosure for investors and realty developers, the city lost its charm during the global financial crisis was the worst-hit period in the history of the Hyderabad real estate market. While other major cities started recovering from the global financial crisis, Hyderabad was stuck in the state of political upheaval leading to prolonged stagnation in capital values and reduced absorption. The unsold inventory touched a all-time high during this period. Buoyed by these factors, Hyderabad witnessed stagnation in capital values till Investors and developers also took a cautious approach during this period that resulted in reduced new supply. Post formation of the separate state and new industrial policy initiated by the government, the city gradually started recovering with increase in new launches across the city. The bifurcation of the new state resulted in realty sentiments moving northwards, which in turn reinstated buyers confidence in the sector. Primarily being an end-user market, Hyderabad holds strong future growth potential with the state-of-art infrastructure, better connectivity and affordable property values. Improved infrastructure development, such as Outer Ring Road (ORR), Rajiv Gandhi International Airport, Multi-Model Transport System, Inner Ring Road, under construction Metro Rail and availability of Grade A offices at comparatively lower prices than those in Bangalore and Pune has made Hyderabad one of the most sought after destinations for real estate development. During the first half of 2016, Hyderabad witnessed the abortion in grade A office space by Amazon and IBM in Hi Tech City. The residential market of Hyderabad witnessed significant increase in unit launches in the first half 2016 compared to its preceding period in West Hyderabad remained the prominent zone for new launches. Out of the total unit launched, Gachibowli, Hi Tech City, Narsingi and Madinaguda witnessed approximate 85 percent of new supply. Jubilee Hills and Banjara Hills in Central Hyderabad remained the prime residential markets in the city majorly compromising bungalows and independent houses. Interestingly, Gandhinagar and Begumpet emerged as posh residential markets with several luxury apartment projects. Availability of grade A office space and direct connectivity to major micro-markets of Hyderabad through Outer Ring Road has made Hi Tech City and Gachibowli climb the realty growth ladder. Narsingi, Madinagua, Kukatpally and Madhapur are a few other western markets that have significantly benefited due to their proximity to Hi Tech City and Gachibowli.

4 1. INTRODUCTION

5 Origin of the City The foundation of Telangana as the 29 th State of the country symbolizes a beginning and an end. Telangana gained its identity as the Telugu-speaking region of the princely state of Hyderabad, ruled by the Nizam of Hyderabad. The Nizam s rule became a princely state during the British Raj, and continued so for 150 years, with the city serving as its capital. On July 2013, the Congress Working Committee with one accord passed a resolution to endorse the establishment of a separate Telangana state. After several stages, the bill was placed in the Parliament and was finally passed in February The state of Telangana was officially formed on 2 nd June Hyderabad is the joint capital of Telangana and Andhra Pradesh for the next ten years. Andhra Pradesh has been bifurcated into two successor states - Telangana with ten districts and Andhra Pradesh with thirteen districts. The new state is bordered by the states of Karnataka in the west, Maharashtra in the north and north-west, Chhattisgarh in the north-east and Andhra Pradesh in the south and east. Hyderabad has a population of around 6.7 million and a metropolitan population of around 7.75 million, making it 4 th most populous city in the country. Hyderabad was traditionally a manufacturing, service and tourism based economy. In the early 1990s, the city witnessed a revolution in the Biopharmaceutical industry with establishment of the Genome Valley (Science Park), Indian Institute of Chemical Technology, National Institute of Pharmaceutical Education and Research, along with the state level institutions making Hyderabad the hub of pharmaceutical and biotechnology in the country. Improved infrastructure in bio-technology has attracted regional companies and MNC s to set up offices, warehouses, research and development centers in the city.

6 Origin of the City In the late 1990s, IT revolution started and Hyderabad emerged as the prominent IT destination in the country. The IT revolution transformed the development scenario in the city with key infrastructure developments announcement, favored policies and proactive support by the government. The improved infrastructure plan for the city attracted investors and developers from across the globe to participate in the vertical growth of the city. Major sectors, such as pharmaceuticals, Bio-technology, manufacturing and telecommunications, also started growing in the city, leading to the overall development of the city. This development phase impacted employment opportunities in the city, leading to increase in demand for housing, retail and hospitality. In 2008, like any other city, Hyderabad was also affected badly by the global financial crisis. The realty sentiments took a dip and the development phase halted with sluggish demand and stagnation in capital values and absorption. Investors and developers restricted themselves from the market and took a wait and watch approach. Post financial crisis, the city was trapped in political turmoil. While other major cities started recovering from the financial crisis, Hyderabad realty market witnessed stagnation in capital values and investor interest. During this period, the sum of unsold inventories reached an all-time high. Thus, developers largely focused on clearing existing stock instead of infusing fresh supply in the market. On 2nd June 2014, the state of Telangana was officially formed, which led to political stability in the state. With this, realty sentiments improved and capital values also witnessed a significant rise of about 5-10% year-on-year. There were significant increases in new launches and government also initiated new industry policies to make Telangana the most preferred investment destination.

7 Timeline Beginning of Pharmaceutical & Bio Technology Era Set up of pharmaceutical and electronic industries in the city. Genome Valley announced. (Genome Valley (Science Park) is an Indian high- technology business district) Its strategic location in South-Central India gave Hyderabad the epithet of the Gateway of South- Central India Beginning of IT Era The city witnessed development in diversified industries such as IT/ITEs Services, Biotech, Insurance and Financial institutions. Cyber Tower (1 st Phase of Hi-tech City) was inaugurated in The city started attracting investments in IT driven services. Microsoft India s Development Center operational in 1990.(largest campus of Microsoft in India). Residential development happened in and around micro-markets of Commercial Business District, such as Banjara Hills, Jubilee Hills, Begumpet, Ameerpet, Somajiguda, Himayat Nagar Hyderabad realty on Pinnacle The city emerged as one of the prominent IT/ITEs hub of the country. Outer Ring Road phase 1 construction started, from Gachibowli to Shamshabad. (Dec 2005). Hi Techh City and Gachibowli emerged as the prominent IT hub of the city, which led to residential development in peripheral areas such as Madhapur, Miyapur, Gachibowli, Kukatpally and Kondapur. Developers welcomed unlimited FSI norm, and participated in vertical growth of the city. FDI up to 100% is permitted on the automatic route in hotel and tourism sector/ construction and maintenance of roads, highways, vehicular bridges, toll roads, vehicular tunnels, ports and harbors./ Mass Rapid Transport Systems in all metropolitan cities, including associated commercial development of real estate. Multi- Modal Transport System phase 1 started its operation in August Hyderabad Metro Rail announced Beginning of Global Financial Crisis Global Subprime mortgage crisis crashed the realty market in the city, with decline in launches and absorption. The city witnessed decline in capital values in major markets. Rajiv Gandhi International Airport commenced operation. Outer Ring Road commenced operation, phase 1 from Gachibowli to Shamshabad. Hyderabad's IT exports reached US$ 4.7 billion. Hyderabad's bio-pharmaceuticals exports reached US$3.1 billion Political Turmoil in the State Realty market remained subdued post global crisis. Capital values remained stagnant. Due to political instability and weak market sentiments, development activity slowed down in the city. No new companies started operations in the city Contd. Political Turmoil, Separation of State Announcement of separate state. Political instability remains. Slowdown continued in real estate development Investors remained on back-seat. Marginal price appreciation recorded due to increase in construction cost. Central Government gave the official approval for the ITIR project New State formation/ Development on Track Telangana state formed. Hyderabad, became the second largest city in India for software exports in FY14. The New Industrial Policy 2014 introduced, for making Telangana preferred investment destination. Implementation of Telangana State Industrial Project Approval and Self Certification Systems (TS-iPASS). Development of the Hyderabad-Warangal Industrial Corridor. Improvement in realty sentiments due to political stability led to increase in new launches and marginal price appreciation. Gachibowli and Hi Techh City remained the preferred micro-markets for new launches due to its proximity to commercial hub. Absorption remained sluggish, consumers continued with a wait-and-watch policy. City witnessed a price appreciation of 5.2 per cent (year-on-year) in Realty Sentiments improved Realty sentiments improved and poised for correction. Decrease in unsold inventory. The State GDP has grown at 9.2 % during as against 8.8 % in during Hyderabad Metro Rail to be operational soon. Outer Ring Road to be fully operational. Absorption and New launches increased. West Hyderabad remained the preferred destination for new launches due to its proximity to the commercial hub of the city.

8 Economic Overview Hyderabad is the joint capital of Telangana and Andhra Pradesh, and post 2024 it will be completely transferred to Telangana. Information technology, pharmaceuticals and biotechnology industries are the leading sectors which contribute to its economic growth. The city is the largest contributor to the state's GDP of about $74 billion. It also has the highest number of SEZs (Special Economic Zone) among all cities in India. The main economic sectors of Hyderabad are traditional manufacturing, the knowledge sector and tourism. Since its establishment in 1591, Hyderabad has been a global trade center in various fields and famously known as only diamond market in the world. During Nizam s rule, the city has witnessed foundation of varied industrial zones leading to industrial growth with traditional manufacturing. During 1950s and 1960s, the city became home to several public enterprises such as BEL, NMDC, BHEL, HAL and DRDO. In 1970s, the city witnessed the establishment of pharmaceutical and electronic industries due to its strategic location in south central India. While in 1990s, the city saw development in diversified industries such as IT/ITeS services, Biotech, Insurance and Financial Institutions. Table 1.1: Economic Industry Overview Industry Information Technology Retail and Real Estate Overview The city is among the global centers of IT/ITeS and considered as the second silicon valley after Bangalore. The city s IT sector includes the Information Technology enabled services, Business Process Outsourcing, Entertainment Industries and Financial services. Hi Techh City and Gachibowli are the key commercial hubs and are home to several US based companies. Deloitte, GE Capital, KPMG, Ernst & Young, HSBC, Bank of America, Genpact are some of the financial services companies that have their offices in the city. During , the city s IT exports reached US $4.7 billion, and 22 per cent of the NASSCOM s total membership is from the city. Hyderabad is undoubtedly the most affordable residential markets out of the country's top seven cities including Mumbai, National Capital Region, Bangalore, Pune, Chennai and Kolkata. The current infrastructure development in and around the city has made it one of the most sought-after destination. The World Bank ranked the city as the second best city for doing business in Banjara Hills and Jubilee Hills are the prime residential areas. The Economic Times valued Banjara Hills to be worth of US $20.7 billion. Post the elections and formation of the new state, the city has seen quite positive realty sentiments with increase in new launches and absorption.

9 Industry Bio Pharmaceutical Industry Tourism Overview Hyderabad emerged as a biotechnology and pharmaceutical hub and is known as India's pharmaceutical capital. Due to its strategic location in south- central and the establishment of Indian Drugs and Pharmaceuticals Limited in 1961, it became a major landmark development to establish Hyderabad as hub of pharmaceutical industry. The establishment of Genome Valley (Science Park) here has attracted regional companies and MNC s to set up offices, warehouses, research and development center in the city. In , Hyderabad's bio-pharmaceuticals exports reached US $3.1 billion. In 2012, Hyderabad was declared as the first-ever "Best Heritage City of India by the Union Tourism Ministry. The city is famous for its monuments which includes the famous Charminar Fort and Golkonda Fort. Several traditional bazaars are situated in and around the city. The prominent Laad Bazaar located near Charminar is famous for pearls, jewellery and products such as Kalamkari paintings, silverware and artefacts. The tourism industry forms significant role in the economy of Hyderabad. It was ranked 3rd Best City to Travel in 2013 by Lonely Planet. Price Index : Hyderabad vs Top Cities 400 Figure 1.1: Price Index - Top Cities Index Q Q Q Q Q Q Q Q Q Q Hyderabad Chennai Pune Kolkata Mumbai Bengaluru Delhi Source National Housing Bank Residex The Hyderabad real estate market has been on a roller coaster ride since The city witnessed a decade-long stagnation in realty sentiments. The residential market here is today one of the most affordable markets compares to other top cities like MMR, NCR, Bangalore, Pune, Chennai and Kolkata. Global financial crisis and political instability in the state had restricted growth of the city with a decline in launches and absorption. Investor and developers took a cautious turn on new developments and waited for stability in the state politics. Above price index depicts the clear picture of the Hyderabad realty market, where property prices were heading south till Q This was the time when the state was going through crisis owing to the formation of a new state. Thus, unsold inventories were an all-time high. Post the formation of Telangana, the city witnessed upward trend in prices and absorption. With new policies announced, Hyderabad has become one of the most preferred investment destinations.

10 2. CITY ZONES

11 Overview: Zones CENTRAL ZONE Central zone is certainly the most developed zones of the city. Various Grade A business and IT parks have emerged in areas like Begumpet, Punjagutta, Raj Bhavan Road, Banjara Hills, Jubilee Hills and nearby areas. Over the last few years, this zones prime location coupled with premium office spaces has successfully attracted several IT giants. Central zone has excellent connectivity with other parts of Hyderabad via NH-44 and 65 that run right through the city. This zone is also known for its first-class physical and social infrastructure, hotels, schools, hospitals and retail hubs. All these factors have boosted property demand here and thus this zone has the highest property prices in Hyderabad. Localities in central zone such as Jubilee Hills and Banjara Hills are the most sought-after residential areas in Hyderabad realty market. Majority of the residential development in these localities comprises of bungalows and independent homes. Gandhinagar and Begumpet have emerged as the posh residential hotspots that are home to a number of luxury apartment projects. WEST ZONE West Zone of Hyderabad is one of the most active regions of the city. Scarcity of land parcels in Central zone and lower land prices in western parts encouraged real estate development here. The tremendous growth in the financial district in Gachibowli and IT corridor in Hi Tech City attracted several multinational corporations, such as Microsoft, Google, IBM, Amazon, Oracle, Accenture, Infosys and TCS to set up large facilities here. Ample social infrastructure in terms of organised retail and multiple entertainment options have boosted residential demand in this zone. Majority of residential projects in west zone cater to IT/ITeS employees in and around Hi Techh City and Gachibowli. These projects also receive spillover demand from the central zone due to comparatively lower prices here.

12 Overview: Zones NORTH ZONE The northern zone comprises locations such as Kompally, Alwal, Sainikpuri, A.S. Rao Nagar, Bolarum, Marredpalli, Himayath Nagar. Realty market here is majorly driven by the industrial/ warehouse development and its proximity to the cantonment area. Marredpalli area in this region enjoys strategic location situated near Secunderabad railway station along with ample social infrastructure facilities including schools, hospitals etc. This micro market is a premium locality. A.S. Rao Nagar, in close proximity to Sainikpuri, is witnessing development of affordable housing and primarily has the presence of local developers. EAST ZONE The eastern zone comprises locations such as Tarnaka, Malkajgiri, Uppal, Bod Uppal, Pocharam, Ghatkesar and L. B. Nagar. The recent completion of Hyderabad s ORR has significantly improved connectivity and traffic situation in this region. Uppal remains one of the most preferred destinations in this zone. It majorly comprises of independent residential units. SOUTH ZONE The real estate development along the southern region is in a relatively nascent stage. The region surrounding the Hyderabad International Airport at Shamshabad is witnessing development of numerous plotted development projects. With the development of Rajiv Gandhi International Airport at Shamshabad and other developments such as SEZs, Hardware Park and Fab City, this region has started witnessing traction from developers that have launched new residential projects here. Malakpet, Upparpally, Saidabad, Santosh Nagar, Rajendra Nagar and Shamshabad fall in the southern zone.

13 Major Localities: Zone-wise NAGPUR & NIZAMABAD SIDDIPET & KARIMNAGAR NH-7 BONTHAPALLE KALLAKAL TURKAPALLY BOINPALLY PEDDAKANJERLA DUNDIGAL ALWAL BOMMALRAMARAM BACHUPALLY KOMPALLY BITS PILANI BHANUR CHIKUR PATANCHERU OSMAN SAGAR BOLARUM KUKATPALLY MARREDPALLY KONDAPUR MAOULA ALI Hi Tech CITY AMEERPET GACHIBOWLI PANJAGUTTA KAVADIGUDA MANIKONDA HIMAYATH NAGAR MEHDIPATNAM UPPAL GOLKUNDA KOTHAPET FORT NAGOLE DILSUKHNAGAR LB NAGAR HIMAYAT SAGAR LAKE KISMATPUR RAJENDRA NAGAR KAPRA VANASTHALIPURAM POCHARAM PRATAP SINGARAM BOGARAM GHATKESAR ANAJPUR SOLIPET SHAMSHABAD NADERGUL PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT KOTHUR MEKAGUDA MAHESHWARAM PULIMAMINDI POCHARAM LEGEND Major North Zone Localities Major South Zone Localities Major West Zone Localities Major East Zone Localities BANGALORE SRISAILAM NAGARJUNSAGAR

14 3. INFRASTRUCTURE OVERVIEW

15 Major Infrastructure Projects: Existing Table 3.1: Hyderabad Metro Details Name Development Connectivity Details Rajiv Gandhi International Airport MMTS International Airport Suburban rail system Flights to 60+ international and national airports Bhongir, Bolaram, Falaknuma, Jangaon, Kacheguda/Falaknuma, Malkajgiri, Manoharabad, Medchal, Mola ali, Secunderabad, Umdanagar It is located in Shamshabad, south Hyderabad and was opened in March 2008 It connects various areas of the city MGBS Jubilee bus station Miyapur bus depot Bus Terminals Major cities Bangalore, Chennai, Mumbai, Pune, Vijayawada etc. Provides intra and inter state transportation Hyderabad ORR Hyderabad Elevated Expressway Hyderabad Inner Ring Road (IRR) Mumbai Highway (NH-9) NH-7 Warangal Highway (NH-163) Access Controlled Expressway Elevated Expressway Arterial Road Highway Highway Highway This is a radial road that provides multiple access and exit points around the city Hyderabad International Airport to Mehdipatnam Mehdipatnam, Banjara Hills, Punjagutta, Mettuguda, Begumpet, Tarnaka, Habsiguda, Uppal, NH-202 via Ghatkesar road, Nagole, L. B. Nagar, Santosh Nagar crossroads, ChandrayanGutta, Kurnool highway, Rajendra Nagar Bypass Road, Attapur and Rethibowli Kukatpally, Patancheru, Chanda Nagar, Punjagutta, Dilsukhnagar, L. B. Nagar and Hayathnagar Medchal, Quthbullapur, Kompally, Secunderabad, Shivarampally and Gandiguda Uppal, Pocharam, Ghatkesar and Ramananthapur The Nehru Outer Ring Road encircles the city of Hyderabad and is a 158- km, 8-lane road This is a 11.6-km long expressway connecting the city centre to the airport It is a 50-km long arterial ring road encircling the inner perimeter of the city It is an arterial road that connects the northwest and southeast locations to the centre of Hyderabad It is an arterial road that connects the north and south locations to the centre of Hyderabad It connects the eastern locations to the centre of Hyderabad Old Mumbai Highway Highway Mehdipatnam, Raidurgam, Shaikpet, It connects the western Gachibowli, Serilingampally and Chanda locations to the centre of Nagar Hyderabad

16 Major Infrastructure Projects: Existing SIDDIPET & KARIMNAGAR NH-7 BONTHAPALLE KALLAKAL TURKAPALLY BOINPALLY PEDDAKANJERLA DUNDIGAL ALWAL BOMMALRAMARAM PATANCHERU BACHUPALLY MIYAPUR BUS TERMINAL KOMPALLY BOLARUM BITS PILANI BHANUR KUKATPALLY Hi Tech CITY AMEERPET MARREDPALLY JUBILEE BUS TERMINAL KAPRA POCHARAM BOGARAM GACHIBOWLI SECUNDERABAD RAILWAY STATION GHATKESAR OSMAN SAGAR ELEVATED EXPRESSWAY MGBS NAMPALLY RAILWAY STATION UPPAL NAGOLE PRATAP SINGARAM CHIKUR KISMATPUR LB NAGAR ANAJPUR HIMAYAT SAGAR LAKE RAJENDRA NAGAR VANASTHALIPURAM SOLIPET PEDDA SHAPUR SHAMSHABAD RAJIV GANDHI INTERNATIONAL AIRPORT NADERGUL POCHARAM MAHESHWARAM KOTHUR LEGEND Major Highways & Roads BANGALORE MEKAGUDA PULIMAMINDI SRISAILAM International Airport Major Railway Stations Bus Terminals NAGARJUNSAGAR

17 Hyderabad Metro Rail Hyderabad Metro Rail (HMR) is a rapid transit system, currently under construction. It is being implemented entirely on public-private partnership (PPP) basis, with the state government holding a minority equity stake. The construction work is being undertaken in two phases. Further, there are six stages of completion in Phase I. Metro Line Connectivity Total Length Line I Miyapur - LB Nagar 29.9 kms Line II JBS Falaknuma 14.8 kms Line III Table 3.2: Hyderabad Metro Details Shilparamam - Nagole 26.5 kms Table 3.3: Hyderabad Metro Rail Construction Stages (Phase-I) Stage Target Section Distance (in km) Line Stage 1 Nagole to Secunderabad 9 Line III Stage 2 Miyapur to S R Nagar 11.9 Line I Stage 3 Secunderabad to Begumpet 10 Line III Stage 4 Begumpet to Shilparamam 9.5 Line III Stage 5 SR Nagar to LB Nagar 17.9 Line I Stage 6 JBS to Falaknuma 14.8 Line II

18 Hyderabad Metro Rail NAGPUR & NIZAMABAD SIDDIPET & KARIMNAGAR NH-7 BONTHAPALLE KALLAKAL TURKAPALLY BOINPALLY PEDDAKANJERLA DUNDIGAL BOMMALRAMARAM KOMPALLY BITS PILANI PATANCHERU MIYAPUR KUKATPALLY BOLARUM MARREDPALLY KAPRA BOGARAM BHANUR GACHIBOWLI SR NAGAR BEGUMPET JBS MAOULA ALI SECUNDERABAD POCHARAM SHILPARAMAM OSMAN SAGAR GOLKUNDA FORT NAGOLE PRATAP SINGARAM CHIKUR HIMAYAT SAGAR LAKE KISMATPUR FALAKNUMA LB NAGAR ANAJPUR SOLIPET NADERGUL PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT POCHARAM MAHESHWARAM KOTHUR MEKAGUDA PULIMAMINDI Legend Corridor I: Miyapur to LB Nagar Corridor II: JBS to Falaknuma Corridor III: Shilparamam to Nagole BANGALORE SRISAILAM NAGARJUNSAGAR

19 4. OFFICE MARKET OVERVIEW

20 Hyderabad Office Market During the first half of 2016, Hyderabad experienced a total office absorption of 3.17 million sq. ft. Prominent tenants such as Amazon leased nearly 350,000 sq. ft. in Raheja Mind Space in Hi Tech City. IBM also took up almost 300,000 sq. ft. in Phoenix Avances in Hi Tech City. Additionally, major IT, digital and e- commerce companies have announced plans for huge investments in Hyderabad. Fig. 4.2 displays top 5, most significant office market transactions in Q Figure 4.1: Office space absorption Q Q Q * Values in million sq. ft. Figure 4.2: Major office deals in , , , , , , ,000 50,000 - Hi Tech City Nanakramguda Madhapur Manikonda Banjara Hills * Values in sq. ft. Other major office dealings in Q included Apple leasing 250,000 sq. ft. in WaveRock in Nanakramguda and Value Labs leasing 220,000 sq. ft. in Lanco Hills in Manikonda. Interestingly, all these major office transactions along with a vast majority of office space absorption are skewed towards West side of Hyderabad. The main reason for this is availability of Grade A office space in Hi Tech City, Nanakramguda, Madhapur and adjacent localities at relatively lower prices than other parts of Hyderabad. This massive office space absorption coupled with accessibility to excellent business parks has had a direct impact on residential demand, since people employed in these areas prefer to live close to their offices and save the daily commute time.

21 Major office transactions: 2016 NAGPUR & NIZAMABAD SIDDIPET & KARIMNAGAR NH-7 BONTHAPALLE KALLAKAL TURKAPALLY BOINPALLY PEDDAKANJERLA DUNDIGAL ALWAL BOMMALRAMARAM BACHUPALLY KOMPALLY BITS PILANI PATANCHERU BOLARUM KAPRA BOGARAM BHANUR Hi Tech CITY MARREDPALLY KAVADIGUDA MAOULA ALI POCHARAM GHATKESAR OSMAN SAGAR GOLKUNDA FORT MEHDIPATNAM HIMAYATH NAGAR UPPAL KOTHAPET NAGOLE DILSUKHNAGAR PRATAP SINGARAM CHIKUR KISMATPUR LB NAGAR ANAJPUR HIMAYAT SAGAR LAKE RAJENDRA NAGAR VANASTHALIPURAM SOLIPET SHAMSHABAD NADERGUL PEDDA SHAPUR RAJIV GANDHI INTERNATIONAL AIRPORT POCHARAM MAHESHWARAM KOTHUR MEKAGUDA PULIMAMINDI BANGALORE SRISAILAM NAGARJUNSAGAR

22 Upcoming Grade-A Office Spaces The new supply of Grade-A office spaces is concentrated mainly in the West side of Hyderabad. With big businesses looking to consolidate all their offices under one roof and new companies willing to enter Hyderabad, one can expect similar or higher office space absorption in West Hyderabad in 2016, 2017 and Figure 4.3: Under Construction Grade-A office spaces Name Area (sq.ft) Location Zone Knowledge City Raidurg West Meenakshi IT Campus Gachibowli West Amsri Brain Storm Gachibowli West avance Bldg # H Madhapur West Salarpuria Sattvaa Madhapur West My Home Divija 3,000,000 Raidurg West Laxmi Cyber Towers 1,000,000 Nanakramguda West This will further increase rental demand and rental yield in these parts of the city. High demand will attract investors and developers leading to increase in project launches in West Hyderabad. Source:

23 5. RESIDENTIAL MARKET TRENDS

24 Weighted Average Prices (Rs per sq.ft) New Launch Supply Volume (units) Residential Supply & Price trends Figure 5.1: Residential Property Supply Trend in Hyderabad 14,000 12,000 10,000 8,000 6,000 There has been a significant rise in the number of residential launches in the first half of the year (H1-2016) as compared to the previous year (H1-2015) indicating an optimistic trend in the residential market of Hyderabad. Majority of the new launches are skewed towards the western markets of the city such as Gachibowli, Hi Tech City, Narsingi and Madinaguda. 4,000 2,000 - H H H H H Growing culture of accommodating apartments and residential communities against bungalows/independent developments have boosted the supply trend in the western region. Figure 5.2: Residential Price Trends of Different Zones 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Central East North South West H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H West Hyderabad marks high in the city in terms of capital prices while Northern markets share the competition in volumes amongst other regions.

25 Apartments Plots Villas Apartments Plots Villas Apartments Plots Villas Apartments Plots Villas Apartments Plots Villas Residential Supply (units) Residential Supply (units) Supply Segmentation & Distribution 8,000 Figure 5.3: Supply Segmentation of Residential Market in Hyderabad 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - A M L UL A M L UL A M L UL A M L UL A M L UL H H H H H Higher income levels available in the IT sector fueled purchasing power of residential property in Hyderabad (esp. West Hyderabad) pushing the focus of the industry towards premium housing. Luxury segment in Hyderabad is seen ranging from Rs 80 lakh to Rs 1.5 crore while the midsegment projects range from Rs 50 lakh to Rs 80 Lakh. Compared to 2015, Hyderabad has seen significant residential activity towards project launches catering to mid, luxury and ultra-luxury segments. 12,000 Figure 5.4: Distribution of Residential Supply in Hyderabad 10,000 8,000 6,000 4,000 2,000 - H H H H H Growing nuclear families preferring residential townships surrounding workplaces has been a clear reason behind the dominating concentration of developers on projects catering huge Apartments and focus on providing unique amenities to the home buyers.

26 Central East Outer North South West Central East North South West Central East Outer North South West North West North West Residential Supply (units) Supply Distribution & Markets 8,000 Figure 5.5: Distribution of Residential Supply in Hyderabad 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - H H H H H Fig. 5.5 indicates a clear controlled launch pattern of residential supply in the western and northern markets of the city from the past three years. Promising returns and fast paced development due to infrastructure and regulatory provisions for enhancing employment centres in the West zone has brought more attention to these markets. Figure 5.6: Since 2014, Residential Developer Interest in Hyderabad (unit supply) Nagole Gajularamaram Yapral Jubilee Hills Sanath Nagar Gachibowli 15,625 3, Madinaguda Narsingi Kondapur Hi Tech City Pocharam Patancheru Bachupally Nanakramguda Beeramguda Madhapur Manikonda Kompally Tellapur Nallagandla *Measured on logarithmic scale Gachibowli clearly marks as the most sought out destination from the past 3-5 years spanning due to a variety of positive reasons such as IT dominance, sound infrastructure and accessibility. Also the neighbouring IT dominant areas and peripheral residential markets have been in the spotlight from the beginning such as Madinaguda, Narsingi, Kondapur and Hi Tech City. Apart from the development of IT sector, active emphasis on city-scale infrastructure projects (such as Metro Project, ORR) have proven to bring good demand to the adjacent localities.

27 6. H Residential Recap

28 H Recap Figure 5.7: Residential Supply Distribution (H1-2016) North 15% West 85% North Hyderabad Others Manikonda 4% 5% Jubilee Hills 7% Nanakramguda 8% West Hyderabad Gachibowli 39% Yapral 21% Other 3% Gajularamara m 33% Sanath Nagar 43% Hi Tech City 15% Narsingi 22% Only West and North Hyderabad are observed to have active residential supply in the first half of 2016 amongst other regions. As seen, residential market in western Hyderabad is predominantly pivoted at Gachibowli and the counterparts while in North, Sanath Nagar is seen driving the residential supply along with Gajularamaram.

29 Segmentation and Typology Distribution West Hyderabad North Hyderabad 18% 1% 1% 29% 28% 53% 70% Affordable Mid Luxury Ultra Luxury Affordable Mid Luxury Ultra Luxury Data indicates that North Hyderabad has seen maximum launches in the affordable segment, followed by mid segment while West Hyderabad saw decent activity in luxury market as well. Hi Tech City, one of the established micro markets in West Hyderabad further had ultra-luxury projects while the remaining markets have projects in upper mid-segment and luxury segments. Jubilee Hills in West and Begumpet in North are the two veteran residential markets filled with luxury supply. West Hyderabad North Hyderabad Gachibowli 94% 6% Sanath Nagar 100% Narsingi 3% 12% 77% 8% Gajularamaram 81% 19% Hi Tech City 100% Yapral 100% Nanakramguda 100% Nizampet 87% 13% Jubilee Hills 99% 1% Begumpet 100% Affordable Mid Luxury Ultra Luxury Affordable Mid Luxury Ultra Luxury North Hyderabad, being a low dense residential region compared to West Hyderabad, witnessed supply of new residential projects comprising villa units. Besides Jubilee Hills, all major residential areas in the West are tuned in to apartment culture. West Hyderabad North Hyderabad Gachibowli 100% Sanath Nagar 100% Narsingi Hi Tech City Nanakramguda Jubilee Hills 100% 100% 100% 99% 1% Gajularamaram Yapral Nizampet 81% 100% 87% 19% 13% Manikonda 100% Begumpet 100% 0% 20% 40% 60% 80% 100% Apartments Plots Villas 0% 20% 40% 60% 80% 100% Apartments Plots Villas

30 7. DEEP DIVE WEST HYDERABAD

31 Residential Capital Price (Rs per sq.ft) West Hyderabad Realty Market Here, major emphasis is being given to West Hyderabad because it is the only zone that observed maximum construction activity in residential real estate over the past five years. Sales volumes have been high in comparison to central business district as this region provides affordable options coupled with aggressive growth factors. Also, markets in Central zone have almost saturated. Prominent residential developers are seen to be concentrating in the western region which is seeing high demand primarily from first-time home buyers that are working in the IT/ITeS sectors. Additionally, all Grade-A office spaces in the city are predominantly available in the western markets such as Gachibowli, Hi Tech City and Madhapur. There has been a remarkable improvement in absorption of the commercial spaces in the region after the bifurcation of Telangana state. Further, the ORR has paved a runway for increased interest from commercial establishments of global brands and ultimately residential growth in the region providing immediate accessibility to important destinations including International Airport along with commercial hubs. 8,000 Figure 7.1: West Zone - Price Appreciation 7,000 6,000 5,000 4,000 3,000 2,000 Gachibowli Hi Tech City Kondapur Madinaguda Manikonda 1,000 - H H H H H H H H H H H H H Property prices in the five key markets of West Hyderabad have been marginally dormant over the last few years. However, Fig. 7.1 suggests that the year 2016 began on a positive note with decent capital value appreciation of residential properties. All the markets are seen to be actively competent in this regard projecting decent returns on investment.

32 Ultra Luxury Luxury Mid A Developer Share & Top Launches Figure 7.2: West Hyderabad Residential Builder's Share for H % 8% 6% 3% 2%2% My Home Constructions Pvt Ltd NCC Urban Infrastructure Limited 4% Sumadhura Infracon Pvt Ltd 17% 52% Salarpuria Group Hallmark Builders Muppa Projects India Pvt Ltd Alekhya Homes Pvt Ltd Jayabheri Group Other Builders Several leading developers have shown interest in this region because of which there has been rapid residential development in recent times. Active and competitive participation of these premium developers indicates future growth potential in average residential prices in the region. My Home Constructions Pvt. Ltd has been the most active developer this year with high residential footprint in this region with two iconic projects - My Home Bhooja and My Home Avatar. This was followed by NCC Urban Infrastructure Ltd with NCC Urban One. Table 7.1: Top Launches in West Hyderabad (H1 2016) Project Builder Locality Available Starting Config. (BHK) Ticket Price Cyber Homes Lake Vision Cyber Homes Narsingi 2, lakh Gangothri Nakshatra Pride Gangothri Builders and Developers Manikonda lakh Hallmark Tranquil Hallmark Builders Manikonda 2, lakh Balaji Grand Balaji Constructions Appa Junction 2, lakh Hallmark Silvanas Hallmark Builders Manikonda 2, 2.5, lakh Prems Sarovar Prem Constructions Kukatpally 2, lakh Muppa Alankrita Muppa Projects India Pvt Ltd Narsingi 2, lakh Sumadhura Acropolis Sumadhura Infracon Pvt Ltd Nanakramguda 2, lakh My Home Avatar My Home Constructions Pvt Ltd Gachibowli 2, lakh Alekhya Palm Woods Alekhya Homes Pvt Ltd Gachibowli lakh NCC Urban One NCC Urban Infrastructure Limited Narsingi 3, lakh Ayyanna Infra Prestige Ayyanna Infra Kondapur lakh Salarpuria Sattva Magnus Salarpuria Group Jubilee Hills 2, 2.5, 3, lakh Incor Divino INCOR Infrastructure Pvt Ltd Nallagandla lakh Radhey Sancia Radhey Constructions Tellapur lakh Star Home R R Star Home Star Homes Film Nagar lakh My Home Bhooja My Home Constructions Pvt Ltd Hi Tech City 3, lakh Jayabheri The Peak Jayabheri Group Narsingi lakh Pooja Forest Light Pooja Crafted Homes Pvt Ltd Madhapur lakh Pavani Manor Pavani Group Jubilee Hills lakh An elementary analysis of the supply that entered the western markets this year indicates that maximum supply was seen in the 3BHK configurations with major orientation towards premium segment.

33 East Marredpally Moosapet Mallapur Nizampet Road Moti Nagar Koti Ameerpet Gandhi Nagar Himayath Nagar Masab Tank Kondapur Pragathi Nagar Gachibowli Manikonda Hi Tech City Padma Rao Nagar Ghatkesar Habsiguda Uppal Ramanthapur Shamshabad Saroor Nagar Dilsukhnagar Saidabad Chandrayanagutta Average Rental Yield Figure 7.3: Average Rental Yield available in Residential Market of Hyderabad 4.2% 4.2% 4.0% 4.0% 4.0% 4.0% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.8% 3.8% 3.8% 3.4% 3.4% 3.2% 3.1% 3.1% 3.0% 3.0% 3.0% 2.8% North Hyderabad Central Hyderabad West Hyderabad East Hyderabad South Hyderabad While Hyderabad residential market essentially saw significant number of options in the premium segment, data indicates that the Western markets amongst other counterparts will also offer reasonable returns (gross rental yield ranging from 3.8 per cent to 4 per cent). Add to this, there are myriad property options by premium developers here and the growing importance of IT industry will provide a good opportunity for residential investment and home-buying experience.

34 Outlook Post the state bifurcation, realty sentiments in Hyderabad residential market seem to have improved. Further, with investment favored industrial policies and improved social infrastructure facilities, Hyderabad is again on the investor s radar. Telangana is among the fastest growing states in India by registering 9.2 per cent growth in The state economy is now fundamentally strong backed by a stable government while the IT/ITeS, manufacturing, Bio Technology and Tourism industries are also on a roll. The investor-favored policies initiated by the Government are likely to boost economic growth in the state and the capital city will also benefit from this. IT/ITeS will remain the primary growth driver which in turn will boost employment opportunities here leading to a rise in demand for residential, retail and hospitality sectors. First Half of 2016 has witnessed quite a healthy residential supply, particularly in West and North Hyderabad. Moreover, consumer sentiments are gradually picking up pace here resulting in increase in new launches and marginal rise in capital values. West Hyderabad remained the preferred destination for most realty players in their real estate portfolio expansion. Availability of Grade A office spaces in Hi Tech City and Gachibowli have made West Hyderabad one of the prominent and most sought-after zone. The current residential supply trend connotes future capital appreciation in and around micro markets of Hi Tech City and Gachibowli. With current pace of infrastructure development, government policy, relatively affordable property prices and improving buyer sentiments, the realty market of Hyderabad is likely to gain more momentum in the second half of 2016.

35 ABOUT QuikrHomes QuikrHomes is the leading Real Estate Marketing Solutions company in the Indian market. We have the largest and most comprehensive list of detailed real estate sales and rental options covering all cities and budget categories. In the highly volatile and scattered Indian real estate market it is quite challenging to understand the dynamics and make profitable investments. We help investors to take informed decision backed by real time data. We capture real estate data across India and also update historical data of supply & absorption in top cities. To ensure the most up-to-date and detailed data availability, our dedicated team/analysts monitor property activity from a number of sources, including developers and property brokers, real estate forums and property listings, as well as our own intensive research. Our research services give clients the tools to review & analyze markets and realty insights that support successful investment strategies. The solutions we provide always cater to our clients needs as we ensure that all captured data and all customized reports undergo thorough due diligence by our in-house audit team. Our Services :- Land Potential Assessment Customized Reports Competitive Benchmarking Study Market Assessment Reports Feasibility Reports Quarterly demand Supply Analysis Report Projects Monitoring Services Tier 1 Cities Residential Projects Details with historical price & Absorption Trends. Authors Rahul Panwar Yadunandan Batchu Priyanka Kapoor Asst. Manager Research Sr. Research Associate Research Senior Manager Research & Content rahul.panwar@quikr.com Yadunandan.batchu@quikr.com Priyanka.Kapoor@quikr.com Abhai Mani Chaturvedi Senior Manager Research & Data Services abhai.m@quikr.com For Residential Data Services: Please contact - Prashant Kumar Thakur Head of Research & Data Services prashant.thakur@quikr.com Quikr India Pvt Ltd Next to Manyata Tech Park, Back Gate No 5. Krishnarajapuram Hobli, Bangalore Copyright QuikrHomes CommonFloor. All rights reserved. The information provided herein is based on QuikrHomes & CommonFloor data which is collected from various publicly known sources viz, websites, documents and maps including QuikrHomes & CommonFloor's proprietary data model. Projects mentioned in the report are selected solely on basis of various parameters including number of units, price range and unique selling point, among others. The selection, omission, or content of items does not imply any endorsement or other position taken by QuikrHomes & CommonFloor. The information is provided on an "as is" and "as available" basis. QuikrHomes & CommonFloor expressly disclaim warranties of any kind, whether express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose and non-infringement.