Hyderabad competing with Bengaluru in property price growth
The real estate sector in Hyderabad is developing at a significant pace. Despite increasing demand and new supply of homes in the city over the past few years, residential property prices have been rising at the same rate. Particularly since 2023, there has been a substantial increase in home prices, and rents have also risen by at least 30%. In some micro-markets, property price growth has even surpassed that of Bengaluru.
For example, property prices in Kokapet, Hyderabad, have increased by 89% over the past five years. According to a study by real estate consultant Anarock, home prices in Hyderabad have risen by 64% from 2019 to the first half of 2024, compared to a 57% increase in Bengaluru. This trend has led to analyses suggesting that the real estate boom in Hyderabad may soon rival that of Bengaluru.
In Hyderabad, the majority of real estate demand is concentrated in the West Corridor, including areas like Hi-Tech City, Kondapur, and Gachibowli. The presence of numerous IT offices in these areas is the main reason for this demand. South Hyderabad, which is close to the airport, is also gradually developing. In the East, areas like Secunderabad and Ramoji Film City offer office spaces and affordable housing. In the North, the availability of more land banks is leading to an increase in data centres and warehousing units.
There is a high demand in Hyderabad for apartments priced at Rs 60 lakhs or more. This sector still has good property options available and further growth opportunities. “In fact, Bengaluru has been leading the real estate sector for the past three years. It is now somewhat stable,” said Vivek Rathi, Head of Research at Knight Frank India. In the first quarter of this year, home sales in Bengaluru decreased to 13,133 units, a 2% drop compared to last year. After a significant increase in apartment rents in the first two quarters of 2024, apartment rent growth in Bengaluru has decreased by at least 5-10%.
“This trend has led to a 40% increase in demand for 1,000-2,000 square foot apartments in Hyderabad. Due to the imbalance in supply, Hyderabad’s real estate is expected to grow over the next 2-3 years. The high inventory supply currently available is causing demand in Bengaluru to appear satisfied,” said Ritesh Mehta, Senior Director, Head (North & West), JLL India Residential Services and Developer Initiatives.Top of FormBottom of Form
Experts say that since the bifurcation of Telangana and Andhra Pradesh, Hyderabad has gradually established itself as one of the top real estate hubs in the country. Between 2021 and 2024, property values in the city increased by 45%, leading to significant real estate growth. “In June 2024, Chief Minister Chandrababu Naidu declared Amaravati as the sole capital of Andhra Pradesh. This brought a lot of clarity to investors. The city’s budget allocation of over 60% for infrastructure and public amenities led to a rise in real estate prices here,” Mehta explained.
On the other hand, while Bengaluru continues to dominate in commercial activities nationwide, office activities in Hyderabad have resumed in the past two to three years. Hyderabad is also advancing in the commercial sector, holding a 30% share of the country’s market and a 25% share in terms of demand. Regarding Bengaluru, office space absorption has only slightly increased in the past year. Given these circumstances, it is said that Hyderabad’s real estate sector is gradually catching up with Bengaluru. However, despite Hyderabad’s growth potentially outpacing Bengaluru’s, surpassing Bengaluru is not considered easy.
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