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New projects, stable leadership set ground for realty’s bull ride
HYDERABAD: Big ticket investments, a flurry of new projects and, most importantly, a stable political climate gave Telangana's real estate sector its best three years, between 2014 and 2017. The last time the real estate market touched such a high was in 2007, said industry insiders.
Though the maiden TSR government started out on a sticky wicket, multi-crore corporate deals soon made way for increased activity in the commercial realty sector. In fact, in 2016, this segment broke all records by clocking an office space absorption of 6.5 million square feet (sft).
While the flow of funds and subsequent development was largely restricted to Hyderabad's IT corridor, it, nonetheless, helped the state (and the city, in particular) consolidate its position as a prime real estate destination among investors, both from neighbouring states and overseas.
"Groups that were previously unsure about coming to Hyderabad, made a foray into the local market while the existing names took up massive expansion. This increased activity among corporate occupiers, and in turn, benefitted land sales and the residential market. Brands such as Prestige, Salarpuria (both from Bengaluru) increased their footprint in the city," said Sandip Patnaik, head of capital markets (South India) of global real estate services firm Jones Lang LaSalle.
His only complaint: the recent land auction where the highest bid was a staggering 42.59 crore per acre. "This is unrealistic and shouldn't be encouraged. Else, Hyderabad will lose its advantage over other competitors for being most economical realty destination," he said. For developers, good news also came in the form of reduced impact fee (charged for construction of high rises) and Non-Agricultural Land Assessment (NALA) charges that were dropped from 9% to 3%.
"Several bureaucratic hurdles were also smoothened out, to the delight of developers. This was first administration that convened a meeting with industry players to listen to their grievances and address them," said Ashwin Rao, director, Manbhum Construction.
Former national president of Credai, C Sekhar Reddy, agreed the "KCR government maintained good working relations with the associations". "Going forward, I just hope that the government makes available suitable incentives to developers to pursue affordable housing projects," Reddy said.