The Indian real estate sector is undergoing a transformative phase, with Hyderabad’s property market emerging as a formidable challenger to Bengaluru’s long-standing dominance. Since the bifurcation of Telangana and Andhra Pradesh, Hyderabad has consistently positioned itself as a burgeoning real estate hub, witnessing significant growth in residential prices fueled by rising demand and new supply.
Over the past year, Hyderabad’s real estate landscape has experienced remarkable momentum, with rental prices soaring by at least 30%, according to local brokers. The Kokapet region, in particular, has recorded an astounding 89% increase in property values over the last five years. A recent analysis by ANAROCK highlights that housing prices in Hyderabad surged by 64% from 2019 to the first half of 2024, outpacing Bengaluru’s impressive 57% rise during the same period. Despite Hyderabad’s rapid ascent, Bengaluru remains a key player in the real estate arena. The city has enjoyed a robust bull run in property prices over the past three years. However, recent data suggests a stabilisation in the market, with housing sales in Bengaluru dipping to 13,133 units in Q1 2024, reflecting a 2% decline from the previous year. This downturn has been partly attributed to a slump in the affordable housing segment, while rental growth has slowed by 5-10% after a surge earlier in the year. Hyderabad’s real estate demand is primarily driven by its thriving IT sector, particularly in key areas like HITECH City, Kundapur, and Gachibowli. The city’s affordable housing sector, notably in eastern regions such as Secunderabad and Ramoji Film City, continues to draw significant interest due to its attractive value proposition. In contrast, Bengaluru’s market faces saturation challenges, with increasing inventory levels and stable rental yields.
Political developments have also provided a boost to Hyderabad’s real estate market. The designation of Amaravati as the sole capital of Andhra Pradesh has clarified the political landscape, enhancing investor confidence. Notably, over 60% of the city’s budget is now dedicated to infrastructure and public amenities, further propelling property prices upward. On the commercial front, Hyderabad has seen a resurgence in office space activity, contributing approximately 30% to India’s commercial supply and 24-25% to the overall demand, as reported by JLL. This contrasts with Bengaluru, where office space absorption has only marginally increased, indicating a potential slowdown in commercial activity. While Hyderabad’s real estate sector is firmly on a growth trajectory, experts believe Bengaluru will maintain its leadership in overall supply and absorption. As noted by the Senior Vice President of Research at ANAROCK Group, “Hyderabad is catching up in terms of growth, but it is unlikely to surpass Bengaluru in the near future.” This dynamic interplay between the two cities will shape the future of India’s real estate landscape, with each market offering unique opportunities and challenges for investors and buyers alike.
