What about Hyderabad?

March 6, 2014 / By  

As India constitutes its 29th state-Telangana by carving it out from the southern state of Andhra Pradesh, the city of Hyderabad, the capital and the state’s largest city stands at a crossroads. Hyderabad will serve as the joint capital of Telangana and Seema Andhra (the rest of the current Andhra Pradesh State) for the next ten years. Those with either tangible or intangible interests in Hyderabad and in Andhra Pradesh are now speculating on the future of the two and how they will be affected.

Hyderabad, with about seven million people, is four times larger than its nearest competitors, the cities of Vijaywada and Vizag and enjoys a strong multi-faceted economy. It boasts virtues several other Indian cities lack. But the political uncertainty of the last two years has delayed its development. The city has in-place infrastructure capable of sustaining demand for at least the next decade, an availability of land, an easy, fast and transparent development approval process, no development quantum (Floor Space Index) restraints, talented workforce, and a friendly, tolerant society. It was on investors’ radar continually up until two years ago when the process of new state formation picked up speed. Now, with the political uncertainty over, will Hyderabad bounce back to its previous heights?

The real estate environment in Hyderabad has seemed almost inert with hardly any new companies willing to consider it for offices, new construction activity has been limited and investor sentiment has been low. Residential real estate has been in flux with large projects under construction finding few buyers and unsold stock piling up despite the city remaining the most inexpensive of the top seven Indian cities.

Although Seema Andhra will build a new capital, Hyderabad is unlikely to lose any of its strengths. It will be the capital of two states for the next ten years and after that the capital of Telangana. With a vast hinterland to cater to, and the probability that existing businesses will expand into Seema Andhra rather than relocating elsewhere, Hyderabad need not worry too much. People and companies are bound to have mixed feelings about the future but at least they are happy that the uncertainty is over. They now have a clear picture and can plan ahead based on their own judgment of the future prospects of Hyderabad. Ten years is a reasonable period for Seema Andhra to build its new capital and reduce its direct dependence on Hyderabad, and for Telangana to develop enough to compensate for any loss of activity.

Meanwhile, Hyderabad can offer a different kind of opportunity. Its real estate market is struggling and good options are available for both home buyers and investors alike. Real estate is greatly undervalued today, and with many people realising this, the window of opportunity may not remain open for long! Hyderabad’s realty market will pay rich dividends to those who help it out during this so-called crisis and I wish I had loads of money to make a fortune for myself!

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