Strong economic growth and low interest rates have revived the demand for property across urban India. The real estate segments were on a rise in 2005, this trend is going to continue in 2006. The urban land ceiling law reforms, stamp duty cuts in some states, access to finance, FDI are some of the reasons that have led to an increase in real estate prices. Development authorities all over the country have been retailing land for private development, many a times the value exceeding the reserve value (sometimes it is double of the reserved value).This has boosted the magnitude of investment, however in the long term it is going to have a serious impact on the affordability of products.

According to CII, the southern region of India, primarily represented by Bangalore, Chennai and Hyderabad, comprise approximately 60% of the pan-India office space market; While Bangalore leads the development volumes, Hyderabad has seen increased interest during the last couple of years. With more and more IT companies making a beeline to the Andhra Pradesh capital and further the city bagging Fab City project, a US$3 billion, has lead to an increase in its popularity.

The twin cities of Hyderabad and Secunderabad are recording a major increase in real estate development activities. This has resulted in the demand exceeding the supply and a sudden surge in property prices. According to Cushman & Wakefield, , the year-on-year (y-o-y) growth has been more than 75% vis-a-vis 2004.The healthy growth across sectors like BPO, finance, telecom and retail has generated a genuine demand from office seekers across urban India. Especially, in Hyderabad the demand for property-both residential and commercial-has primarily been fuelled by large IT and ITEs companies, which are occupying close to a million square feet of space. . Apart from the IT & ITES sectors, the Hyderabad market is also beginning to solicit interest from industrial and biotech sectors

Hyderabad real estate rates is increasingly being recognized as the next hub of technology

sector activity, mainly due to its low cost of living and ability to draw quality talent from other locations. The current market may rise to an absorption of about 4 million square feet.

The government is bullish towards building infrastructure like the outer ring road, international airport, hardware park and facilitating the entry of companies both domestic and international to set up businesses in the 2 cities, This along with foreign direct investment of up to 100% in real estate, under the automatic route, has also added to the price escalation.