Hyderabad Realty market turns to slow down

Hyderabad : Six years after the global slump, the history of Hyderabad realty market remains to be dreary. In fact, in recent times, shades have dropped on more than a dozen residential projects in the city, leaving customers in a soup even as about 6000 units are sobbing for purchasers.

Although the builders put the blame directly on “hostile circumstances” – first the crisis and then the sharp bifurcation keen observers of the sector tell a different story. As per them, the financial crisis that developers profess is greatly embroidered. A prominent realtor of the city asked that “If it is true, how they can invest in projects outside Hyderabad?” Pointing out the number of realty firms, including Keerthi Estates Pvt Ltd, Janapriya Engineers Syndicate, SMR Holdings and Aditya Infra and many others, have entered the realty markets of Bangalore, Chennai and Pune over the past one year.

Even though, in Hyderabad some of them holding number of unsold properties. “Certainly, there is no demand hence; the developers cannot sell these units. Furthermore, there is very little to do with pricing as it needs to do it with their inability to complete any endeavor over the last three-four years.” Sources said; the waning reputation has kept buyers at cove, with reasonably priced homes (anywhere between Rs 2,800 and Rs 3,500 per sq ft) waiting for purchasers.

Incidentally, most of the fading projects are those who jumped on the Bandwagon of private equity (associating with private investors) that snorting in the city amid 2006 and 2008. The perception is new to Hyderabad however; it was lapped primarily since the developers need not to bear the initial capital alone. Over time, however, the economic turbulence coupled with almost 50% depreciation in land value spelt doom for these alliances.

Sandip Patnaik, managing director, JLL (Hyderabad) says “It’s vital that people understand the fundamentals of a proposed private equity before entering into one because moreover, exiting such a project is very complex and mainly in the prevailing market condition. According to him, most developers are now staying put in these ventures (despite they not selling) as they would have to suffer a 50% 'haircut' (loss) in case they decide to walk out.

P Dasharath Reddy, president of Telangana Real Estate Developers' Association contended “beyond any doubt a few developers stretched out themselves excessively because they didn’t predict such a long period of dry season however, despite the chances, they cannot slice costs now to clear their stocks as the selling price is as of now at the depths. In fact; due to the rising cost of construction over the years, some are even selling at a loss”. He demanded that the number of developers confronting a crisis line comprise only “a little percentage of the total 3,500 builders operating in Hyderabad”.

At the same time, the claim may be controversial since developers generally agree that the property rates in the city remain sluggish for at least another four quarters and “There is no scope for rise in property rates any time soon” said by Ashwin Rao of Manbhum Constructions. He again added that; its repeating how the “ambitious projects that are in limbo” at present whereas the “smaller enterprises are doing great”.

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