Telangana Impact on Hyderabad Real Estate. Upward Price Movement Expected in Hyderabad after Telangana Announcement

The Politics Behind Division

(Hyderabad) After dithering for many years, Congress has been forced to accord approval on 30 July 2013 for Telangana, due to the precarious position it had found itself.

The emergence of YSR Congress as a force to reckon with, in Coastal Andhra & Rayalaseema, had made Congress look weak, in the undivided Andhra Pradesh. As long as Congress blocked formation of Telangana State, its rout by TRS in Telangana region in forthcoming general election was a foregone conclusion. In effect, Congress would have lost seats in all three Regions, if AP was undivided.

The only way out of the mess for Congress, was to weaken TRS and keep YSRC in control. The best way to make TRS irrelevant was to go ahead and declare division and take all the credit for it. That would boost Congress in Telangana, for sure. In Andhra & Rayalaseema, its a 3 way fight between Congress, TDP (Naidu unexpectedly put up a good show in the Panchayat Elections) and YSRC. With Congress assured of leadership in Telangana, it can now concentrate on Andhra & Rayalaseema and try and wrest advantage.

In a three cornered fight, Congress knows it can win, if YSRC is kept under control. The recent Panchayat elections were held with the news of Congress proceeding towards Telangana formation. Though it made a good show, YSRC was not able to knock Congress off in Andhra & Rayalaseema. Hence, Congress smells a good chance to win General Elections in Andhra Region, even with Telangana formation. Congress would want YSRC to merge with it before elections or YSRC would have to face the prospect of finding Jagan in jail, for longer period!

Absence of Uncertainty & Arrival of Stability will Boost Hyderabad Real Estate Market

Since 2009 December, a lot of water has flowed in the Godavari! The agitations were forgotten and the people in all the regions had taken for granted that Telangana will be formed. The strident voices in Coastal Andhra against division had already died down. Only politicians were making noises since they were worried about their illegal / benami investments in Hyderabad Real Estate!

After it became clear to the Politicians, that the people in Hyderabad do not care whether they are in Telangana or Andhra, the argument that Real Estate will collapse in the city fell flat. (This is evident from the way Real Estate Rates have gone up during the last 1 year, in Hyderabad). Since people are going to stay put in Hyderabad, after division, the real estate demand will continue and would only increase with absence of uncertainty and arrival of stability.

Impact of Declaration of Hyderabad as Common Capital for 10 Years on Hyderabad Real Estate

This has been a Masterstroke by the Congress to ensure Andhra Politicians and Businessmen continue to remain with it. A common capital is natural when states are decided. But 10 years is a VERY LONG time! And this has been done precisely to make investors happy. There will be no sudden pull outs and hence market will only move up.

There will be additional infrastructure built to take care of the requirement of two States. This will boost the demand for land and residences in Hyderabad. The shifting of people and offices out of Hyderabad will be very slow and gradual and the impact of that will never be felt, since the strength of TelanganaState staff will be increasing, over the period. Also during the next 7 years, Hyderabad as such will develop commercially with more employment and the influx of people from outside will nullify the gradual exit of serving Govt Staff.

There will also be flow of people from Telangana to take up jobs created by the new Government. Demand for Real Estate is definitely going to go up in Hyderabad.

The Real Estate Developers & Infrastructure Contractors would be one of the happiest community with the announcement!

Real Estate Price in Hyderabad after Telangana Announcement

Land Rates: Expect spurt from current levels in core areas of the city. The land price along outer ring road will increase substantially since base rates are low even now, in most parts. Spurt from 1 Crore level to 3 Crore level can be expected along Outer Ring Road.

Plot Rates: Whether we like it or not, expect jump in plot rates in core city areas as well as outskirts, except in oversold locations like areas beyond Shamshabad. Incidentally, plot rates in outskirts in demand during last year, like Adibhatla, Raviriyala, Mokila had seen rates increase by almost 80 to 100% (Doubled in 1 year). From this level, another 20% increase can be expected.

Apartment Rates: Apartment rates have been going up over the last 1 year. The increase has been to extent of Rs.600 to Rs.800/sft. (For example Kondapur has gone up from Rs.2800/sft to Rs.3400/sft) Over the next 1 or 2 Months, we expect all projects to raise rates by Rs.200 to 300/sft.

Villa Rates: Since the available inventory is comparatively much less, increase in price of Villas will be sharper. For example, we were asked to close pre launch offer for the Villas in Tellapur on 29th July and the developer raised the price from Rs.78L to Rs.95L. This has already happened. And such changes would be happening in projects across Hyderabad, not only in the Western part. If you had negotiated rates recently, go ahead and close the deals.

Districts of Telangana











Map of Telanagana