About Hyderabad

Hyderabad, popularly known as Cyberabad is the fifth largest city in India. The city is the state capital of Andhra Pradesh. On one hand the city is well known for its rich cultural heritage and history and on the other it is considered to be the emerging BPO capital of modern India.

Hyderabad boasts of a 400 year old history and was earlier known mainly for its natural beauty, its unique architecture and its wealthy nizams. But phenomenal development took place in Hyderabad in the past few years. Today, the city is rated amongst the cleanest and the most wired cities of India. Good infrastructure and industry friendly environment of the city has helped it in tapping overseas investment. Information technology, biotechnology, genetic engineering, pharmaceutical R&D are the new buzz words in the city. The city has silently absorbed western culture into its traditional Muslim culture. It is a city where history amalgamates with the future.

Hyderabad realestate market

In recent times, India, though still rated as a developing nation, has become an attractive destination for overseas investments. With more and more foreign companies setting up offices in India, the BPO boom, recognition of Indian IT talent, development of expressways, metro rail projects etc. on the cards, Indian economy has seen a surge like never before. Consequently, real estate is also booming. The overall Indian real estate market is said to be growing at a rate of over 7% annually. Experts believe that even though the 2006 financial budget does not contain any direct benefits for the real estate business, yet real estate prices are expected to shoot up by 30% due to the current strong economic state.Initially the advantages of a growing economy and subsequent real estate boom was localized to Class “A” cities like Delhi, Bombay, Bangalore and Chennai. However, the congestion in these cities and the general shortage of infrastructure facilities in them has driven the real estate traffic to Class “B” cities like Hyderabad. The state government’s pro- industry attitude has further encouraged many top companies to regard Hyderabad as their favorite destination for their offices. Real estate prices in the city have doubled and tripled in past few months. Still no one is complaining. According to Kishore Goeti, Director, Investments, ICICI Venture, “Hyderabad is emerging as a key market in India’s growth story and land is worth the price we are paying.” Hyderabad realestate market offers distinct cost advantages to companies. Most IT companies prefer to keep the cost of their office rentals to less than $1/ sq. ft. or Rs.50/sq. ft. In cities like Mumbai, rentals are available approximately at a cost of Rs.115/ sq. ft, while total occupation does not cost less that Rs.153/sq. ft. and this is not necessarily the rate for prime locations like Nariman point. Compared to this, prime rentals in Hyderabad are a mere Rs.34/ sq. ft. with total occupation costing around Rs.64/sq.ft. These rates are nearly 30% less than what Bangalore offers and 10% to 15% less than Chennai.

Apart from the low rental cost, the city also has numerous other advantages such as low labor costs and abundance of skilled and semi skilled labor. Simultaneously, low living costs in the city have attracted labor from all over India to make Hyderabad their second home.

Role of Government

Efforts of the Andhra Pradesh State government in developing the city infrastructure need to be appreciated as these were the main driving force in development of Hyderabad and consequently in the development of real estate market of Hyderabad.

Work on a new International Airport at Shamsabad is already underway and the airport is due to be ready by the end of year 2008. Development of a 12,000 acre Fab city, building of an eight lane expressway, i.e. the outer ring road aimed at connecting satellite townships

and decongesting Hyderabad are all underway. Such infrastructure projects are contributing in making Hyderabad an attractive commercial destination. Added to this are the sops and tax benefits being offered to IT and IT Enabled Services that are proving irresistible to foreign IT companies. All these factors are playing a major role in driving the city’s real estate boom.Land prices in Hyderabad’s famed Jubilee Hills are reported to be between Rs.80,000 to Rs.1,20,000 per sq. yard. Despite the high price that a seller would get, not much land is being put up for sale.The Andhra Pradesh state government also realized the potential in the real estate market. In order to raise Rs.6,000crore to fund some of its prime infrastructural projects, the government has instructed three of its bodies- Hyderabad Urban Development Authority (HUDA), Andhra Pradesh Industrial Infrastructure Corporation (APIIC) and Andhra Pradesh Housing Board (APHB) to auction some of the lands in their possession.

In the first of such auctions by HUDA in February 2006, 5.33acres of land in Jubilee Hills, Hyderabad was sold for a whooping Rs3.36 billion or $75.6 million. This is considered to be the most successful land auction of recent times. APIIC and APHB are also preparing to auction off lands held by them.

Large corporate houses, domestic builders and even international companies like Emmar and Rahejas are participating in these auctions in a bid to grab valuable land. In an attempt to outbid each other, a price war has been triggered off- leading to even higher real estate prices.However, there is also an underside to the current real estate boom in the city. In an effort to buy as much land around Hyderabad as they possibly can, many private companies have been accused of resorting to unfair practices and cheating poor farmers and land owners in the city suburbs. In February 2006, some Dulapally farmers filed a petition in High Court against M/S New Steel City Welfare Association, a private organization. The farmers alleged that the company was forcing them to sell their lands at a rate of Rs.4,00,000 per acre when the current market price for the same land was at least twenty-five times the above price. They argued that the company was doing so because it had the state government’s approval to go ahead with land acquisition.

Other similar cases have also been reported where private companies have resorted to forceful measures to acquire land from poor farmers.

Conclusion

The Hyderabad realestate market has never been so good in Hyderabad for real estate investors. Private companies, foreign investors, domestic investors and even the state government are all realizing the immense potential in Hyderabad’s real estate market. Thanks to the state government, the city has become a favored destination for foreign investors and large corporate houses. Even though the real estate market is at an all time high in Hyderabad, land in Hyderabad is still cheaper than other metros such as Mumbai, Delhi and Chennai. Unfortunately, in an effort to acquire more and more land in and around Hyderabad, many companies are resorting to fraud and unethical means. The state government must step in to check such cases so that the benefits of the real estate market can be shared by all.