Presentation on the India Real Estate Outlook Report highlighting the residential and office real estate scenario in Hyderabad.

1. Hyderabad
July – Dec 2014

2. Residential
July – Dec 2014

3. Residential market continues to lose steam despite
political scenario easing out
RESIDENTIAL
Hyderabad residential market launches, absorption and price trend
30% fall in H2 2014 vs. H2 2013
H2 2013 – 7,376 units
H2 2014 – 5,151 units
7% fall in H2 2014 vs. H2 2013
H2 2013 – 8,419 units
H2 2014 – 7,829 units
5.6% rise in price
Y-O-Y in 2014

4. RESIDENTIAL
Residential Market in Hyderabad in Year 2014
Sales
volume
fell
by
18%
15,111 units sold vs.
18,428 units in 2013
New
launches
dropped
by
30%
13,050 units launched vs.
18,643 units in 2013

5. West Hyderabad accounts for the largest share of
under-construction inventory
RESIDENTIAL
1,248units
535units
907units
605units
347units
399units
359units
609units
246units
827units
600units
609units
4,336units
5,808units
2,990units
Micro-market-wise residential launches – Share in %

6. Share of West Hyderabad falls over the past 18 months
RESIDENTIAL
Micro-market-wise residential sales – Share in %
848units
820units
945units
945units
904units
1,056units
956units
877units
909units
334units
384units
383units
5,355units
4,279units
4,536units

7. Current QTS at nearly 2.5 years indicates a fairly better
residential market – Age of inventory as high as 3.5 years
RESIDENTIAL

8. Central Hyderabad remains healthiest in the city
with West following close behind
RESIDENTIAL
4
6
8
10
12
14
16
18
20
0 5 10 15 20 25 30 35
Ageofunsoldinventoryinquarters
QTS
HMR - Central
HMR - East
HMR - North
HMR - South
HMR - West
Size of the bubble indicates the quantum of unsold inventory
Total Unsold Units
35,183
as on December 2014

9. RESIDENTIAL
Prices have grown by 5.6%; Cost pressures rule out
possible corrections

10. Concluding Remarks
 Change of guard at the state government does little to improve the
residential market
 Cash strapped developers put the brakes on launches while looking
to offload existing inventory
 West continues to see bulk of the market activity
RESIDENTIAL

11. Going forward
 De-growth in launches and absorption likely to be stemmed to just
5% and 2% Y-O-Y respectively in H1 2015
 Though we expect a fall Y-O-Y in H1 2015, the numbers will still be
better than H2 2014
 Prices expected to grow at the same rate Y-O-Y in H1 2015 as in H2
2014
RESIDENTIAL

12. July – Dec 2014
Office

13. Vacancy levels drop to 17% - first time since 2012
OFFICE
Hyderabad office space stock and vacancy levels

14. Deloitte leasing deal leads the office market rebound
- Absorption levels have shot up by 140% Y-O-Y
OFFICE

15. IT/ITeS share drops; other services sectors
compensate the fall
y
OFFICE

16. SBD accounts for practically all the space absorbed
during Jul – Dec 2014
y
OFFICE
56,700sq.ft.
8,500sq.ft.
645,523sq.ft.
2,637,816sq.ft.
449,532sq.ft.
113,000sq.ft.
5,800sq.ft.
13,500sq.ft.

17. Post a 2 year stagnation, rentals have grown by
5% Y-O-Y - expected a similar pace in the next 6 months
OFFICE
y

18. Concluding Remarks
• Deloitte gives a new lease of life to Hyderabad office market
• The SBD business district accounts for practically all the
space absorbed during H2 2014.
• Receding share of the IT/ITeS sector has not affected overall
absorption volumes, as consulting, designing and media
companies from the other services sector have been
gaining a share in tandem

19. Going Forward
 Change in political regime to get businesses back in the city
 Increase in average deal sizes bodes well for the market and this
phenomenon should sustain going forward as well
 Absorption likely to be 3.3 mn.sq.ft. during Jan – Jun 2015; similar
to that of H1 2014
 Weighted average rental to rise by a nominal 5%

20. Contact
KnightFrank.India@in.knightfrank.com
research@in.knightfrank.com