Airport Metro Cancellation
Pharma Corridor Cancellation
Hydra Surge
New permits in exchange of cash
Unlaunched New Projects
NOCs issued only after paying money
Scarcity of confidence among buyers
Missing real estate investors
After Revanth Reddy, who is from the real estate background, took charge as the Chief Minister… those who hoped for a market boost were left disappointed. As soon as the Airport Metro was canceled, investors disappeared. With the cancellation of the Pharma City, those who had bought plots were left in shock. The Hydra project, which started without proper planning and with no clear strategy, led to an unexpected loss in the real estate sector. The construction industry was up in arms, claiming that Hydra was created merely to extort money. After completing its collection phase, the government was rumoured to have issued a statement stating it will stay away from RERA projects. Despite the launch of RRR and Future Cities in November bringing a positive atmosphere to the market, the situation remained uncertain as no one knew how long it would take for the market to recover.
Hyderabad’s real estate sector holds a special place in India. Among the major metro cities in the country, Hyderabad is developing at the fastest pace. With jet-speed growth and international infrastructure, the city’s real estate market faced challenges in 2024. The impact of the 2023 Assembly elections and the 2024 General Elections was clearly visible in the Hyderabad real estate market. Additionally, certain decisions made by the newly elected Congress government in the state had both positive and negative effects on the city’s construction industry.
Impact of elections on real estate
The impact of the Assembly and Lok Sabha elections on Hyderabad’s construction sector was clearly visible. Exactly one year ago, in November, the Telangana Assembly elections took place, and real estate began slowing down three months prior. Due to the reduced money circulation during the election period, housing sales were affected. From July to December 2023, real estate transactions significantly dropped across Telangana, including Hyderabad. The impact of the elections on the construction sector in Hyderabad was particularly evident. Real estate sources confirmed that housing sales in Hyderabad dropped by 30% during the Assembly elections. The impact of the May 2024 Lok Sabha elections on the city’s construction sector was also clear. While it is common for sales to decrease during election periods, the real estate sector further slowed down due to certain decisions made by the Congress government after the elections.
Raidurg-Shamshabad metro project cancellation
Immediately after taking power in Telangana, the Congress government’s decision regarding the metro project had a negative impact on Hyderabad’s construction sector. The previous BRS government had decided to implement a metro rail project from Raidurg to Shamshabad Airport and even laid the foundation stone for it on December 9, 2022. However, the Congress government cancelled the project. On December 13, 2024, they decided to scrap the Raidurg-Shamshabad Metro project. This caused some slowdown in the real estate market, which had been rapidly growing. Real estate experts had anticipated significant residential and commercial development opportunities between Gachibowli and Shamshabad with this metro project. But with the cancellation, the momentum disappeared overnight. Nevertheless, experts suggest that the real estate market in the West Zone would have continued to thrive without any major setbacks. Had the Raidurg-Shamshabad Metro project been completed, construction in the region would have progressed even faster.
Mucharla Future City-4.0 announcement
The Telangana government has announced the construction of the Mucharla Future City, after canceling the previous BRS government’s proposed Mucharla Pharma City project. On July 31, Telangana Chief Minister Revanth Reddy announced the development of the fourth city in the Hyderabad, Secunderabad, and Cyberabad style. The government is planning to expand various sectors in the Future City, including education, healthcare, sports, electronics, electrical, and skill development. A Skill Development University will be established here to develop the necessary skills for the youth in modern society, with the foundation stone already laid. The Future City will also feature a world-class Artificial Intelligence City spanning 200 acres. Metro rail and various greenfield and radial roads will be developed, connecting the city with surrounding areas. Along with several government entities, many international IT and other companies will set up operations here. As a result, the Future City is expected to become a hub for future real estate development.
Metro Phase II Expansion
The Telangana government has given the green signal for the second phase of the Hyderabad Metro Rail, which will improve connectivity to the city’s peripheral areas. The estimated cost for the construction of 76.4 kilometers of metro rail in the second phase is Rs 24,269 crore, with the state government issuing administrative approvals for the project. Currently, around 5 lakh people travel daily on the metro, and with the second phase, authorities estimate an additional 8 lakh passengers daily. The construction work for the second phase will take place across five corridors, covering a total distance of 76.4 kilometers. The corridors will include Nagole to Shamshabad Airport (36.8 km), Raidurg to Kokapet Neopolis (11.6 km), MG Bus Station to Chandrayangutta (7.5 km), Miyapur to Patancheru (13.4 km), and LB Nagar to Hayathnagar (7.1 km). Experts anticipate that this expansion will boost construction activities even in the peripheral areas of the city.
Fluctuations in home sales
In terms of real estate, Hyderabad is competing with major cities like Mumbai, Delhi, Chennai, and Bengaluru. At times, it even surpasses these cities in growth. According to a report by the prominent real estate consultant Knight Frank India, between January and September 2024, a total of 59,386 homes were registered in Hyderabad, with a value exceeding Rs 36,000 crores. This is a 13% increase compared to the same period in 2023, when 52,591 homes were registered. Knight Frank also revealed that there is a higher demand for homes priced over Rs 1 crore, with a 79% growth in these properties. In January 2024, 5,444 units were registered, and the highest number of 8,781 homes were registered in July. However, in September, the number of registrations dropped significantly to just 4,903 units. While registrations were steady in August, the number for September halved compared to July. After that, the real estate market gradually recovered and stabilised.
Impact of Hydra
The impact of Hydra on Hyderabad’s real estate was clearly visible. To protect the people of Hyderabad from disasters and take strict actions on violations related to government properties, the state government established a new system for asset protection and enforcement. In July, an independent system called the Hyderabad Disaster Response and Asset Protection Agency was created. There is no doubt that Hydra had a major effect on reducing real estate transactions in the city. The drop in registrations in August serves as a clear indication of this impact.
Registrations in Hyderabad and surrounding districts
In July, 58,000 registrations took place in Hyderabad, Rangareddy, Medchal-Malkajgiri, and Sangareddy districts. However, in August, this number dropped to 41,000, clearly indicating the extent of the impact of Hydra. Criticism has been widespread as Hydra also demolished buildings that had already received permits. As a result, Hydra has slightly reduced its aggressive actions and started conducting surveys of lakes. It also issued a statement that it will not touch structures built before July. This gradual shift has helped the real estate sector begin to recover, with home sales in Hyderabad slowly increasing.
Building construction permits
Compared to last year (2023), the real estate market in 2024 has seen growth, evidenced by the number of applications received by GHMC and HMDA. Up until November this year, GHMC received 21,346 applications for building construction, out of which 20,240 were resolved by the authorities. This marks a 20% increase in building construction permit applications compared to last year. At the same time, the resolution of these applications saw a 40% increase this year. Similarly, applications for layouts, building construction, occupancy, and other permits at HMDA have risen by 45%. The resolution of these applications at HMDA has also increased by 24%. In an effort to speed up building construction permits, officials in the planning department are using technology and AI services in both GHMC and HMDA.
Record office leasing
Hyderabad is leading the country in attracting foreign direct investment. This year, a record 25 million square feet of office space leasing was registered. Real estate experts say this is an 11% increase compared to the average quarterly lease agreements of the previous year.
On approvals…
In Hyderabad, to build more than 200,000 square feet of space on an acre of land, approvals are reportedly being granted only when requests are made through influential people in the government. News is circulating in the market that approvals are being granted only when one meets with certain high-ranking government officials and submits their recommendations. This is considered one of the main reasons why new projects have not started in Hyderabad, according to experts. In conclusion, there are several reasons for the downfall of the Hyderabad real estate market, similar to how a thousand reasons can be given for someone’s death.
