Demand for residential properties in Hyderabad continued to outstrip supply in the first half of 2015, with launches at their lowest level since 2010 but sales holding steady. This reduced unsold inventory to its lowest point. In the office market, demand remained robust as supply declined for the second straight year, lowering vacancy levels and driving up rental growth rates. The second half of 2015 saw a reversal in the residential launch trend with an 11% year-over-year increase, though launches were still less than half of 2012 levels. West and North Hyderabad dominated new launches while East launches remained low due to lack of jobs and connectivity. Office space absorption in the second half set a new record of 3.1 million square feet.

1. HYDERABAD
July – December 2015

2. Demand outstrips supply for
the second straight year
RESIDENTIAL

3. While demand holds steady,
residential supply is at its 5 year low
ANNUAL LAUNCHES AND ABSORPTION TREND
8,000
12,000
16,000
20,000
24,000
2010 2011 2012 2013 2014 2015
Launches Absorption

4. HENCE, UNSOLD INVENTORY AT
ITS LOWEST LEVEL SINCE 2010

5. Sharp fall in new launches AND
STEADY SALES reduces inventory
pressure
MICRO-MARKET SPLIT OF SALES
25,000
30,000
35,000
40,000
H2 2011 H2 2012 H2 2013 H2 2014 H2 2015
No.ofunsoldunits
32,700
31,500

6. However, H2 2015 sees a trend
reversal in terms of
launches; 11% growth Y-o-Y

7. H2 TREND OF LAUNCHES AND ABSORPTION
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
H2 2011 H2 2012 H2 2013 H2 2014 H2 2015
Launches Absorption
But launches still less than
half of their 2012 heydays

8. West & North dominate in
new launches; East
neglected

9. While new launches jump 3.5x in North
Hyderabad, it still accounts for just 15%
of the city’s launches
-
1,000
2,000
3,000
4,000
Central East North South West
H2 2014 H2 2015
85%
250%
33%
MICRO-MARKET SPLIT OF LAUNCHED UNITS

10. East suffers due to lack of
employment opportunity and poor
connectivity
-
200
400
600
800
1,000
1,200
1,400
H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015
No.ofunits
LAUNCHES IN EAST HYDERABAD

11. HYDERABAD OFFICE MARKET
CONTINUES ITS UPWARD
CONSOLIDATION
OFFICE

12. Demand stays robust as supply tapers
down for the second straight year
ANNUAL TREND OF NEW COMPLETION AND ABSORPTION
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2011 2012 2013 2014 2015
mnsqft
New Completions Absorption

13. Reducing vacancy levels cause surge
in rental growth
30
32
34
36
38
40
42
44
6%
8%
10%
12%
14%
16%
18%
20%
2011 2012 2013 2014 2015
Rents(INR.psf)
Vacancy%
Vacancy Rents
ANNUAL RENT & VACANCY TREND

14. H2 2015 WITNESSES HIGHEST
HALF-YEARLY DEMAND FOR
OFFICE SPACE IN HISTORY

15. 3.1 mn sq ft of space was absorbed
in H2 2015
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
H2 2012 H2 2013 H2 2014 H2 2015
mnsqft
New completions Absorption
NEW COMPLETION AND ABSORPTION TREND DURING H2

16. KEY Takeaways
RESIDENTIAL
STEADY DEMAND AND REDUCING UNSOLD
INVENTORY COUPLED WITH SALES PRESSURE
WILL SOON ENCOURAGE DEVELOPERS TO
INCREASE SUPPLY
OFFICE
REDUCING VACANCY LEVELS WILL CONTINUE TO
PUSH UP RENTAL GROWTH RATES

17. HYDERABAD
July – December 2015