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  • By Anupama Meshram |
  • Jan 29,2018

Driving Forces Of Hyderabad Jobs, Infrastructure, Optimism, NRIs, Govt Initiatives

Hyderabad, the second largest urban agglomeration in the country, which had been rated best in terms of ‘Quality of Living’ by Mercer this year, is emerging as a prime hub for real estate attracting investors into all the asset classes- office, residential and retail. As India’s major IT/ITeS hub and a prime industrial corridor in the south, the city’s realty sector is growing at a healthy pace, driven by optimism.

Telangana Govt Policies

Hyderabad city is fast emerging as south India’s biggest realty hotspot. Political stability, State government’s proactive policies, growing occupier demand, improved infrastructure, quality educational institutions and the availability of a large talent pool have helped bring back attention to the city’s realty market are the factors behind phenomenal growth of Hyderabad

Telangana Government has initiated several reforms to build capacities in major cities of the State and attract investments into key sectors. This has reflected in the growth of realty sub-segments in the recent years.

Hyderabad Infrastructure Scenario

Hyderabad witnessed significant infrastructure developments including the Hyderabad metro, multi-level flyovers, electronic manufacturing clusters and an integrated pharma city over the past two years. The government policies, reforms and developments are aimed at attracting more investments into the city which augurs well for city’s prospects.

There is an abundant growth opportunity in office space.The global organisations continue to driving office growth. Other sectors such as pharma, financial services, data centres, logistics and manufacturing sectors are also adding up to office demand and are expected to continue for some time.

Rise of Retail Spaces

Apart from a robust commercial and industrial growth, Hyderabad is witnessing growth in retail space, with estimates that the organised retail stock to touch 10 million sq ft by 2019 from 4 million sq ft at present. The segment witnessed merely 11 percent CAGR during 2011-16.

Affordable Living Spaces

Telangana which had been ranked No. 1 in Human Development Index has witnessed its capital recognised as one of the most affordable residential markets for residential buyers especially in the premium/luxury and high end/mid-end segments when compared to Bengaluru and Chennai.

Also, residential prices have not gone up much in Hyderabad and it remains an attractive destination for investors. Low-cost residential apartments are still available, which presents a competitive edge to the city.

It commands lowest rentals across top city markets in the south and witnessing a 108 % year-on-year growth in office demand in 2016 at 6 million sq ft from less than 3 million sq ft in 2015. The city saw 4.5 million sq ft leasing till the third quarter of 2017, which is estimated to touch 7-7.5 million sq ft by the end of this month.

Favourite of NRIs

Experts report that NRIs who were earlier thinking of investing in state of Andhra Pradesh are now showing interests Hyderabad, as a better investment option. There is a surge in demand from them in the last six months and this trend will continue in future also.

Demand for Office Spaces

As per the top real estate consulting agency of India - Colliers International India, the Hyderabad city's office market has witnessed a gross absorption of 3.32  million sq ft (year-to-date September 2017), driven by the expansion of large scale technology companies in the year. It is expected that the city is witnessing the upcoming  construction of about 25 million sq ft of office spaces which is likely to increase the total office spaces in the city to about 45% by 2020.

Dynamic Jobs Sector                                  

In spite of concerns of job losses in IT sector, Hyderabad is expected to emerge as a promising city for job seekers over the next six months. A strong presence of IT companies, proactive steps by the government in placing the city as an attractive destination for big companies across sectors and robust infrastructure are leading to new jobs creation.

Jobs in middle level are definitely a  challenge. But at entry level and for those who have expertise in at least one skill set, the job market is positive. As the expansion being done by existing companies of the city which proves that new jobs are being created and is expected that placement season will be good in 2018.

Availability of talented people, infrastructure, favourable social and governance factors are making Hyderabad a target destination for most companies. Already internationally reputed companies like  Microsoft, Deloitte, Google, Amazon are present in the city and also the scene is buzzing. This ensures that the city will witness 10% - 15% jobs growth in 2018.  While there might not be much increase in jobs in IT industry, sectors like e-commerce, logistics, finance,  fintech, retail will create new jobs in considerable number.

Conclusion

The real estate sentiment in Hyderabad is optimistic as growth returns across all verticals. With the government taking several reforms and measures to attract investments, improve ease of doing business and power supply, investors are looking at the city, for their foray or expansion.

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  • By Anupama Meshram |
  • Jan 18,2018

Looking For Commercial Property Investment In Hyderabad – 9 Simple Rules To Follow

Real estate has always been the most favoured places of investment for Indians, from long times. The real estate property investment is considered to be the best long-term investment; it can be a piece of land, plot, flat, agricultural land or a commercial space.

Economy & Commercial Space Trends

With the rise of IT and ITeS sector in India, leasing of commercial property had shown a steady rise in all Tier-I and Tier-II cities of India from last one decade. It has shown a strong resilience and remained positive in 2017 despite a series of policy reforms in the real estate sector.

After the impact of Brexit on businesses in Europe and radical policy changes by Trump administration in the US, directly affected the absorption of commercial spaces all around the world.

Despite of these challenges, Cushman & Wakefield reports have shown that in the year 2017, India's the commercial space net absorption has been more than 30.6 million sq ft and with almost 50 deals has been for above 1,00,000 sq ft each. This shows that India's commercial real estate property market is much healthier and currently there is much scope for growth and expansion. 

The companies which leased large office spaces in the last year included TCS, Alibaba, Amazon, Microsoft, Accenture, Deloitte, Google, Atos Origin and many more.

Normally, we consider investing in residential property a bit easier than commercial real estate property, which may not be true.

9 Simple Rules to Consider Before Investment

If you are looking for long-term investment in a commercial property segment of the real estate market, then check out these simple rules before buying it.

1. Location of the Commercial Property

Commercial Properties provide returns through two avenues i.e. Rent and Capital Appreciation. Both these factors are heavily dependent on the location of a commercial property. The trick is to always invest in that location areas’ where the jobs are more stable or vacancy rate is less than 5%. This helps in steady rent and capital appreciation.

2. Quality Matters

Commercial properties with better quality, infrastructure and facilities always attract better rent returns and premium tenants. This will ultimately assist in better tenant retention, higher capital appreciation and rent returns. Multinational tenants don't mind paying a few bucks more for a better quality building. Commercial building certified with LEED Gold or Platinum ratings or with a better structural design for commercial spaces, fetch better returns and can be sold faster.

3. Demand Vs Supply

One must analyze the demand and supply market of commercial properties in the market before committing to buying it. Each city has a different kind of micro-market, which has a specific amount of office spaces - some are completed, leased or upcoming (supply). A high supply affects the rent cost of both old and new buildings.

4. Judge Actual Rent in Market

One should research on the actual rent prices being charged in the market and how much are they practical to be paid by the tenant in a long time. It is safe to invest in properties with lower price tags than to buy an overrented asset.

5. Quality of Tenant

A good tenant can make a lot of difference in bringing value to your commercial property. As good tenants pay their rents on time, stay longer, pay higher deposits and increase the value of property in the long run. Try to opt for blue-chip multinational companies, registered companies and avoid smaller unknown companies.

6. Better Interiors

Commercial buildings with better flooring, electric fittings, ceiling, air conditioning,  interior cabins, conference rooms, washrooms, lobbies, elevators, lifts and parking facility, etc. fetch premium tenants with better returns to investors.

7. Lease Policy

Commercial properties are generally leased for 9 years or 15 years. In case of 9 years, the lease can be escalated, every 3 years or 5 years in case of 15 years lease. There is also a provision called lock-in period (for 3 or 5 years) during which the tenant cannot vacate the property. These factors need to be analyzed before investment. Longer the lock-in period, it brings better returns to the investor.

8. Security deposit

Security deposits in commercial properties can vary from 10 to 12 months' rent. Tenants looking for lesser security deposit options means that they have cash crunch issues and may not be regular in paying rents on time.

9. Diversified Investment

Diversified investment of your savings reduces the risk factor associated with commercial real estate property investment. If in case tenant vacates, the rents will stop while the maintenance payments, property taxes, etc. will have to be paid on time by the property owner. Therefore, it is considered wise to invest in multiple properties (diversified) - residential as well as commercial properties which ultimately reduces the risk associated with it.

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  • By Anupama |
  • Jan 04,2018

Hyderabad A New Face Of India's Growth Story

The past year has been the most eventful year for the state of Telangana and especially to Hyderabad. It has been in national and international news in every arena, be it sports, business, entertainment, literature, hospitality, ease of businesses, governance or real estate sector. The major credit for all these undoubtedly goes to the Telangana Government, whose long-term measures for economic sustainability and infrastructure growth has helped the state in redefining its identity as a vibrant and prosperous state.

The major contributors to the fast-paced development of the Telangana state and along with its cities - Hyderabad, Warangal, Karimnagar, Nizampet, etc. are discussed below.

Favourite Destination for Businesses

The 2016 World Bank's "ease of doing business" ranking. In 2016-2017, Telangana recorded a 10.1% growth in the Gross State Domestic Product (GSDP), which is almost double the GDP growth of India, also the per capita income (PCI) grew by 12.6%. These achievements can be attributed to the Telangana government that has focused on strategic development initiatives to accelerate economic growth.

Real Estate back on Investment Radar

About 13% of Telangana's GSDP is contributed by the real estate and construction sector as a whole. Hyderabad has seen strong real estate growth in the last three years and Credai has praised the policies of the Telangana government for their efforts in this sector. Due to clear political support, large companies have entered the city and investors have already begun to exploit investment opportunities. The land costs in Hyderabad's prime locations have revived. Commercial office rentals increased by 23% in last three years and absorption of office space was almost 6.5 million square feet in 2016. The vacancy rate went down to 5-7% in the main IT companies. The capital values of residential properties increased by 8-10% in the last three years and residential launches increased 30% since 2014. Also during the demonetization, the implementation of the GST and the introduction of RERA, Hyderabad saw an increase of 6-10. % in residential sales in contrast to other parts of the country.

Hyderabad is a Progressive city

Hyderabad has emerged as one of the progressive and high-value city globally as it is being ranked fifth among the 150 cities in JLL's City Momentum Index report. The index records and tracks the short-term socio-economic and real estate momentum of a city, in combination with the measures of whether that city has more strong long-term foundations and plans for success. Increased investment in infrastructure, the creation of highly skilled jobs and high levels of FDI are characteristics that define Hyderabad, according to the report. The development approach provided a boost to the development of Hyderabad that already had an established business environment. Google, Apple, Uber, Amazon and Ikea are some of the big companies that have invested in the city in recent years.

Positive Investors Approach

Investors are keeping a positive approach towards Hyderabad with many big brands such as Blackstone, Brookfield and Acendas have already invested in the city and many others plan to invest. This is because of the reason as Hyderabad ranks best in construction, absorption, price, office, retail, hotel, investment transactions and transparency. Prices appreciated due to the positive dynamics of the market. Other factors which work in favour of Hyderabad are better education level, international patent applications, innovation capability, IT & technology companies and acceptable environmental quality.

Fashion & Hospitality Businesses

Restaurants and cinemas are the main factors for attracting people in malls and shopping centres. As such, the restaurant space in shopping centres can double approximately to 25% of the total available space. Nearly six million square meters of space in the mall is expected in the next three years. The penetration of the international brand in food and Fashion is also on the rise. International fashion brands like Forever 21 and H&M are well accepted by local buyers, resulting in a healthy increase in sales.

Policy support

The government of Telangana has implemented many key policies such as TS iPass, impact fees, shelter fee, e-STAMPS, Telangana 2BHK program, affordable housing to bridge the gap. Telangana's Data Center Policies will open a new door for real estate development and will create opportunities for the development of housing for middle-income people.

Policy support

Telangana has implemented key policies such as TS iPass, impact fee, shelter fee, e-STAMPS, Telangana 2BHK program, affordable housing to bridge the gap. Telangana's Data Center Policies will open a new door for real estate development and will create opportunities for the development of housing for middle-income people.

Conclusion

The city can witness a large amount of foreign capital that goes into the development of the office in the medium and long term. Residents and retail demand may improve because of increased employment.

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