The residential property buyer sentiment in Hyderabad has improved considerably over the last three quarters, according to consultancy company Jones Lang Lasalle.
The consultancy, in its update, states there has been a gradual increase in residential demand and absorption. The market is still a long way from touching the 2007- 2008 levels, according to Mr Sandip Patnaik, Managing Director—Hyderabad of Jones Lang Lasalle.
“We definitely expect an increase in PE (private equity) investments into residential real estate projects in Hyderabad in 2012. Until now, institutional capital flows had been slow in Hyderabad when compared to some of the other cities,” he stated.This was mainly due to high valuations in 2007-2008, the global financial crisis in 2008-2009 and the State-level political scenario leading to expressed institutional investment sentiment in 2010-11.
The real estate valuations are once again making sense now and developers as well as end-users are back in action. The political scenario will take a turn for the favourable for PE investment in 2012-2013.
The residential supply is likely to outstrip demand in the foreseeable future possibly impacting the pricing.
The commercial real estate sector in Hyderabad has reacted very differently from the residential sector over the past few years. Hyderabad saw absorption of 4.4 to 5.0 million square feet year-on-year. This clearly indicates that corporate clients did not let the political scenario upset their expansion plans in Hyderabad.
Cognizant and Accenture have expanded their office bases over last two to three years. However, very few new companies have set up their base in Hyderabad over last couple of years. Notable exceptions would be JP Morgan and Facebook, along with a few others.
In 2012, the lack of SEZ supply will result in city absorption being lower than in 2010 and 2011.
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