Declining home sales in the Greater Hyderabad.
Builders in confusion due to uncertainty about the government’s stance.
One year for the construction sector to recover?
Hyderabad, rapidly developing on an international level, is a gem for real estate. The Telangana government is generating significant revenue from the Hyderabad real estate sector. There is an intrinsic connection between real estate and the development of world-class infrastructure in Hyderabad. With numerous related sectors intertwined with real estate, business and employment opportunities have increased substantially. As a result, the Telangana government is benefitting greatly from the revenue generated through real estate and its allied sectors.
However, despite this progress, the Hyderabad real estate sector has faced challenges in recent times. Since the Congress government took over in December last year, there was some initial enthusiasm, but it has gradually waned. Currently, the Hyderabad real estate market is in a state of stagnation. Major real estate companies within Greater Hyderabad are in a state of uncertainty, while smaller construction firms and builders are increasingly concerned.
Dissatisfaction with government’s approach
Real estate experts are dissatisfied with the Congress government’s approach. Since the arrival of the Revanth government, there has been no announcement of a clear real estate policy. It is unclear what the Telangana government thinks about incentives for the real estate sector. Additionally, with Hydra’s aggressive actions, the construction industry in Hyderabad has fallen into a state of uncertainty. Not only builders but also the general public are confused about what constitutes full tank levels and buffer zones. As a result, builders are left wondering whether to continue construction in Hyderabad or pause all projects for some time.
In this situation, discussions are ongoing within the real estate sector about the increasing despair and hopelessness among construction companies and builders. Experts note that it is natural for some doubts to arise in the real estate market when a new government takes power. It has been over nine months since the Congress government took charge after the BRS government lost power. However, experts argue that it is the government’s primary responsibility to eliminate the prevailing uncertainty among builders.
As part of this, the government should review old policies and focus on implementing real estate-friendly policies. Yet, the Revanth Reddy government has not taken a single step in this direction. Not only has there been no review of the real estate sector so far, but the establishment of systems like Hydra has also caused various doubts and concerns among both realtors and the general public.
Concerns over Revanth government’s decisions
As soon as Chief Minister Revanth Reddy took office in Telangana, he announced the cancellation of the metro rail project proposed from Raidurgam to Shamshabad. This decision abruptly disrupted the booming real estate sector in West Hyderabad. Following this, the announcement to halt the Pharma City project further destabilised the real estate market in that area. However, the declaration of the Future City project has provided some stability to the real estate sector in that region.
While the previous BRS government revoked the 111 GO, it left the policy direction unclear. The current Congress government has yet to express its opinion on the 111 GO. The lack of clarity regarding the government’s stance on constructions within the 111 GO area has left not only builders but also ordinary citizens confused. Experts assert that all these developments are having a severe impact on Hyderabad’s real estate sector.
Moreover, construction companies and builders are lamenting that delays in granting permissions for new construction projects in Hyderabad are leading to significant losses. They express frustration that if projects halt on lands purchased for crores of rupees, they will struggle to pay interest. To date, the Revanth Reddy government has made no decisions regarding approvals for construction projects. Although officials claim that permits are being issued as usual, there are allegations that the process is dragging on, and no measures are being taken to remove the obstacles present.
Impact of HYDRA on the construction sector
Additionally, the impact of HYDRA on real estate is significantly noticeable. There is no doubt that this has led to a substantial decline in real estate transactions within the city. The decrease in registrations in August serves as a clear example of this trend. Officials from the relevant department report that the government’s revenue dropped by Rs 320 crore compared to July. In Hyderabad, Ranga Reddy, Medchal-Malkajgiri, and Sangareddy districts, there were 58,000 registrations in July, which fell to 41,000 in August, according to statistics. The revenue from real estate registrations was Rs 1,100 crore in July but plummeted to Rs 780 crore in August. It appears that registration revenues have also significantly declined in the current month of September.
Given the current situation in Hyderabad, homebuyers are postponing their decisions, resulting in a gradual decrease in house sales across Greater Hyderabad. Real estate experts indicate that this decline in the construction sector is evident from these trends. Construction companies and builders are adopting a wait-and-see approach by temporarily halting projects, leading to rising concerns among those working in the real estate field. Moreover, it is important to note that many sectors related to real estate have also fallen into uncertainty.
When will the construction sector recover?
Real estate experts state that the situation in Hyderabad will remain as it is until the Telangana government focuses on the real estate sector. They urge the government to immediately implement a clear policy for real estate, which is not only a major source of revenue but also provides employment to millions. They suggest organising meetings with construction companies and builders to gather advice and recommendations. Experts believe that discussing systems like HYDRA with construction specialists could help mitigate its impact.
Furthermore, they recommend that the government announce a clear policy for the future development of Hyderabad. They emphasize the need to eliminate the uncertainties surrounding construction permits and establish a streamlined approval process. The ongoing discussion in real estate circles indicates that only if Chief Minister Revanth Reddy and the Telangana government change their stance on the real estate sector will there be a shift in the current situation. Despite these efforts, it is estimated that it will take at least a year for the Hyderabad real estate sector to stabilise.
