India

Commentary
Resilience of Hyderabad residential market during COVID-19

COVID-19 has severely impacted the

residential property markets across India.
But, how did Hyderabad perform better than
all major cities in the country, and what new
trends emerged during the pandemic?
August 03, 2021

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Contributors:
Raghudeep Ganugu

With the massive surge of Covid-19 in early 2020, India put into place stringent lockdown measures that dampened
residential market activity. Despite the massive disruption, Hyderabad residential sector has remained resilient. 
Figure 1: Residential Traction in Hyderabad

Source: JLL Research, 2Q21

 In 2020, new launches in the city reached a record high of 23,692 units manifesting a growth of 106% over the previous
year. Driving into 2021, launches have already reached 83% of 2020 volume, owing to developers’ positive outlook on
the city’s residential market. Despite a significant downfall during 2Q20, residential sales remainedIndia
on the recovery
curve in H1 2021, recording a growth of 62% and 21% over H1 and H2 of 2020, respectively. While sales have witnessed a
downfall in Q2 with another round of localised lockdowns, capital values in the city observed 3.7% growth y-o-y in 2Q
2021, withstanding the Covid impact.
Share of affordable and lower-mid segments increase in new launches
The luxury and upper-mid segment projects, ranging above INR 10 million with an average unit size above 2000 square
feet, continued their traction in new launches through the pandemic. As buyers were more inclined towards large
houses, affordable and lower-mid segment projects witnessed a sizeable surge during the same time. Expansion of
residential activity into new markets, along with robust demand for affordable housing, encourage developers to launch
projects in that segment.

Decentralisation policies propel new residential pockets - Northern suburbs

Since the establishment of Hitec City and Financial District, Hyderabad’s realty market flourished only in the western
part of the city, driven by large-scale commercial and residential projects. But since the last few years, residential
development has further extended into the Northern submarket due to policy interventions like Growth in Dispersion
(GRID). Proximity to the existing IT corridor and the ongoing development of physical and social infrastructure in the
northern city has resulted in drawing the attention of mid and affordable segment buyers as the capital values are much
affordable compared to all other micro-markets. Locations like Kompally, Bachupally and Gundlapochampally have
capitalised on this new demand and observed the launch of few large-scale residential projects by Grade A developers
and achieving healthy success. 
Figure 2: Share of Northern Suburbs in New Launches (%)

Source: JLL Research, 2Q21

New launches in this submarket have increased by 4.7 times in 2020 when compared to 2016. Continuing with a similar
trend this year, launches have already recorded 88% of 2020 launches in H1 2021 alone. This has enlarged the product
portfolio for customers and attracted buyers from the affordable and mid-income segment. The reduction in home loan
rates has further propelled the interest from homebuyers in this submarket.

Plotted development garners assertive traction

In the last two years, Hyderabad has witnessed overwhelming demand for plotted development as retail buyers have
shown keen interest in investing in land, which has experienced a multi-fold jump in value. Locations lying in the fringe
abutting Outer Ring Road (ORR) like Adibhatla, Kollur, Medchal, Patancheru and Ghatkesar have received maximum
traction. Besides small and medium developers, few Grade A residential players have ventured into plotted
development to cash in on the current demand. As the state and central government have aggressively pushed forward
the Regional Ring Road (RRR) project that encircles the city, plotted developments have received significant demand
from retail investors in the outskirt locations around Hyderabad, like Shadnagar, Kothur, Sangareddy, Bhongir and
Tupran, which fall along the corridor.
Medium to long-term outlook remains promising
During the first half of 2021, sales picked up and reached 98% of pre-Covid levels (H2 2019), indicating a strong revival.
New launches are likely to slow as the unsold inventory has surged since the last year. However, in the medium to long-
term, newly emerged residential hotspots in the northern and eastern part of the city are expected to witness
heightened residential activity along with already established western suburbs.

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