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Telangana strengthens its global brand appearance

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Hyderabad: Telangana Real Estate Developers Association (TREDA) and JLL brought out a research report on Telangana Real Estate –Telangana- The new face of India’s growth Story. The report highlights the initiative that Telangana Government has undertaken to ensure long term economic sustainability in the State and steer the growth of infrastructure that will help redefine its identity as a vibrant and prosperous State.

Ease of doing business

Telangana topped the 2016 World Bank “ease of doing business” ranking. It also saw a 10.1% growth in Gross State Domestic Product (GSDP) in 2016-2017, which is almost double the growth of India’s GDP. Per Capita Income (PCI) grew by 12.6% in the last year. These achievements can be attributed to the Telangana government that focused on strategic development initiatives to accelerate economic growth, the report said. About 13% of Telangana’s GSDP is contributed by the real estate and construction sector together.

Hyderabad is agile city

Hyderabad emerged as an agile, high-value city globally as it stood fifth among 150 cities in JLL’s City Momentum Index, which tracks a city’s short-term socio-economic and real estate momentum in combination with measures of whether a city has the longer-term foundations for success. Increased infrastructure investment, creation of high-skilled jobs and high levels of FDI are all characteristics that define Hyderabad, the report said. The development approach provided impetus to Hyderabad’s development that already had an established business environment. Google, Apple, Uber, Amazon and Ikea are a few of the large companies that invested in the city in the last few years.

Investors

Investors such as Blackstone, Acendas and Brookfield have already invested in the city and many others are planning to invest. Hyderabad scores high on construction, absorption, price, office, retail, hotel, investment transactions and transparency. Prices appreciated due to positive market dynamics. Hyderabad scores moderately higher in education, innovation capability, international patent applications, technology firms and environmental quality.

Real estate back on investment radar

Hyderabad witnessed robust real estate growth in the last three years. As large corporates entered the city due to seamless policy support, investors also started scouting for opportunities to invest. Land costs in Hyderabad revived in prime locations. Commercial office space rents edged up by 23% in three years. Office space absorption set new records and was at 6.5 million sq ft in 2016. The vacancy rate dipped to as low as 5-7% in key IT hubs. There was 15.06 million sq ft of office space built and 23 million sq ft launched from 2014 to 2017. Capital values of residential properties increased by 8-10% y-o-y in the last three years with revived demand and residential launches increased by 30% y-o-y since 2014. Demonetisation, implementation of GST and the introduction of RERA acted as a brake on the sale of residential units across the country but Hyderabad saw a 6-10% increase in residential sales.

Eating out and fashion

Restaurants and cinemas are the key drivers for footfall in malls. As such, restaurant space in malls is likely to double to about 25% of the total available space. About six million sq ft of mall space is expected in next three years. International brand penetration is also on the rise. New fashion entrants such as H&M and Forever 21 have been embraced well by local shoppers, resulting in a healthy rise in sales.

New push

The city has a Grade A office stock of about 60 million sq ft (including IT campuses) and another 23 million sq ft of office space is expected to come up in the next five years. The development of the office sector attracted large national and international developers such as K Raheja Corp, Salarpuria, Phoenix Group, RMZ and Embassy to invest in the city. Real Estate funds such as Blackstone, Ascendas, Brookfield, Altico, Piramal, Goldman Sachs already have their investments in Hyderabad. Telangana is keen on development of new IT parks on PPP basis and focus on SMEs and start-ups. A new 350 acre IT park at Budwel near Hyderabad is on cards. Hyderabad is one of the leading information technology hubs and houses over 1,400 companies including a few global leaders.

State’s Innovation Policy aims to build on positive response to T-Hub and put Hyderabad & Telangana on the global innovation map. Government plans to develop 1 million sq ft of workspace. There has been a resurgence of interest in the IT and allied sectors in the State (EMCs) at eCity and Maheshwaram. The State is also focused on gaming, animation, data analytics, data centres, Internet of Things and cybersecurity.

Policy support

Telangana has implemented key policies like TS iPass, Shelter Fee, Impact Fee, e-STAMPS, Telangana 2BHK scheme, Affordable Housing to bridge the gap. Telangana Data Centre Policy is set to open new door for real estate development. Development of Pharma City will create opportunities for mid to affordable segment housing development.

Outlook

The city is likely to witness a large flow of foreign capital into office developments in the mid to long term. Residential and retail demand is likely to improve due to the increase in employment.

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