Hyderabad real estate: Residential property prices in peripheries may surge by 10-20%

Crucial infrastructure projects in Hyderabad, such as the Metro Phase II extension, the proposed regional ring road, and industrial corridors, are expected to drive growth in the real estate sector, with peripheral areas emerging as new growth frontiers. This was revealed by Colliers in its latest report, titled ‘Hyderabad: Emerging Real Estate Growth Hotspots.’

Colliers is a global, diversified professional services and investment management company.

According to the report, peripheral areas of Hyderabad, including the North, South, East, and West peripheries, are expected to account for 5-10% of annual office space demand and 20-25% of new supply over the next three to five years. While hotspots in West and Central Hyderabad will continue to experience real estate growth, average housing prices across the West, South, East, and North Periphery micro-markets are expected to increase by 10-20%. The residential market is also poised to witness significant traction, with property prices in the peripheral areas projected to rise by 10-20% over the next 3-5 years.

Additionally, government policies such as the Information & Communication Technology (ICT) 2.0 policy, the Micro, Small, and Medium Enterprises (MSME) policy, and the Data Center policy, combined with a conducive business environment and relatively affordable real estate price points, are expected to make Hyderabad’s peripheries increasingly attractive to businesses and investors, the report stated.

The report indicates that emerging areas in the city’s periphery will likely account for 20-25% of Hyderabad’s Grade A new supply, up from less than 5% currently. Areas such as Kokapet, Shamshabad, Uppal, and Pocharam are expected to see a significant rise in Grade A space uptake. As a result, peripheral micro-markets could contribute up to 10% of Hyderabad’s annual leasing activity over the next 3-5 years.

The report also highlights that Grade A stock in peripheral areas could increase to 20-25 million sq. ft. in the coming years, up from around 13 million sq. ft. at present. With heightened demand, average rentals across the four peripheral micro-markets could also rise by 5-15% in the near-to-mid term.

The report notes that housing prices in the Western Periphery micro-market have already surged by over 50% in the past five years, with an expected further increase of 10-15% in prominent localities such as Kokapet, Neopolis, and Nalagandla. Meanwhile, affordable and mid-segment housing is expected to gain traction in Tellapur, Lingampally, Bandlaguda, and Miyapur.

Industries, warehouses, and data centers are expected to drive real estate growth in the Southern Periphery market, including Shamshabad, Kothur, and Shadnagar.

In the report, Arpit Mehrotra, Colliers India Managing Director (Office Services), stated, “Hyderabad’s office market continues to mature, driving one-fifth of the demand and over one-fourth of the new supply across the top 6 cities in India during 2024. The city’s peripheral areas are set to enter a transformative growth phase, fueled by upcoming infrastructure projects and supportive government policies.”

He further explained that the West Periphery micro-market, including Kokapet, Neopolis, and Narsingi, is likely to see heightened commercial activity due to price arbitrage compared to established IT hubs like Gachibowli and HITEC City, along with improvements in metro connectivity. Both demand and supply of Grade A office spaces are expected to grow multifold in the coming years.

Mehrotra also noted that while average rentals in the West Periphery micro-market could potentially increase by 10-15% from current levels, the price arbitrage will persist, continuing to make the area an attractive proposition for both domestic and global occupiers, including GCCs (Global Capacity Centres).