Hyderabad's realty sector continues to be grim

HYDERABAD: Underlining significant progress and push backs which the real estate sector faced in 2014, an analytical report of the performance of the sector in commercial, residential and retail across India and in Hyderabad by property consulting firm Jones Lang Laselle, revealed that while commercial and office uptake has significantly improved last year, the residential sector continues to remain a cause for worry.

'In Hyderabad, even after bifurcation there hasn't been much progress in the residential sector. This is mainly because of the lack of clarity between the state governments of Andhra Pradesh and Telangana,' pointed out Sandeep Patnaik, managing director, JLL Hyderabad.

According to the report, which was released here, office market trends in India showed that demand rational and absorption has significantly improved in 2014, with an absorption of 29.9 msf. Office space absorption in Hitech City and Gachibowli has fallen by 3 to 4 per cent due to a huge pick up of office space by companies like Delloitte and Novartis.

The net absorption in Hitech City and Gachibowli is 2.9 msf, almost 10 per cent of Pan-India net absorption, the report revealed. 'Unfortunately in the past few years, we have lost out to cities like Pune and Bengaluru despite having superior infrastructure, better prices, etc.

We had been ahead of Pune in the office market until 2008-09 but have fallen behind due to the political instability in the region,' Patnaik observed.

As far as rental values are concerned, the report revealed that Hyderabad will cross its respective peaks in 2016 and 2017, adding that Hitech City and Gachibowli have already crossed their peak rents.

'Commercial absorption in 2014 has been the best we have seen in the last three years. While IT and ITES continue to be the largest office space consumer, other industries such as Telecom, health care and BSF are improving their share in leasing activity,' explained Patnaik.

'Establishment of the Forum Sujana Mall in Kukatpally was a game-changer in Hyderabad and completely changed the entire scenario of the retail sector in the city,' explained Patnaik.

However, all realtors unanimously agreed that the residential sector continues to be a major cause for concern as the sector witnessed a huge drop in 2014 across the country. According to the report, there has been a huge oversupply in the residential sector in India, the highest being NCR and Chennai.

'To be honest, I don't see the residential sector improving in the next couple of years. There is a lot of optimism and positivity among the sector but significant improvement in the next few months seems a bit far-fetched,' expressed Anuj Puri, chairman and country head, JLL.