The COVID-19 pandemic and the resultant lockdown slowed down the revival of the Hyderabad residential market, a report of real estate consultancy Knight Frank has said.
Sales hit the low of the decade in the first half (January-June) of 2020. Launch of new projects was lower by 19% compared to the corresponding period last year.
Key factors
Key contributing factors were halt in construction activity during the lockdown period, low sales on account of market uncertainties, scarcer credit availability for developers, hike in prices of inputs such as steel and cement and the lack of availability of construction workers in the post-lockdown phase, the report said.
Residential unit sales recorded a 43% year-on-year fall with 4,782 units sold in the first half under review.
A release on the report said this had been the lowest recorded sales figure for the city this decade. Demand had been strong until the pre-COVID period of January to March 2020 and was only restricted by the low availability of supply. Things, however, took a sharp turn in the aftermath of the pandemic and the lockdown.
Some features of the residential unit sales in the first half include a rise in demand in the northern and eastern parts of the city, lower share of affordable housing units sold and an increased traction in the ₹50-₹75-lakh category. West Hyderabad continued to dominate the residential market with a significant share in both launch of projects and sales.
North and East Hyderabad picked up momentum on the back of affordable housing sales. Unsold inventory numbers saw a 5% YoY fall to 4,037 units in H1 2020.
Branch Director (Hyderabad) of Knight Frank India Samson Arthur said “while housing activity appears uneven, we expect the recovery in residential markets to be relatively quick. The asking prices have remained stable though launch of projects took a hit and sales went down. However, the market hopes that prevalent demand, and a low ready inventory coupled with lowered interest rates will offer incentive to home-buyers.”
Office space
According to the report, office transactions in Hyderabad saw a 43% decline to 2.2 million sq ft in H1 2020, compared to the same period last year. The city also saw a decline of 32% YoY to 2.7 million sq ft in new office space completion.
The pandemic and the lockdown appear to be the primary reasons for Hyderabad office market being subdued in the first half of the year. An immediate impact of COVID-19 was felt by the co-working industry and its absorption fell by a significant 75% year-on-year in H1 2020. Other services sector transactions were also adversely impacted.
Information Technology (IT) and ITeS companies contributed 75% of the total transactions. In terms of absolute volumes, the IT/ITeS sector transaction volume grew 11% from 1.5 million sq ft in first half of 2019 to 1.6 mn sq ft in H1 of 2020.
