COVID-19 pandemic deals big blow to Hyderabad real estate: Report

The city also saw a decline of 32% in new office space completions, according to Knight Frank India’s report

Hyderabad real estate, Knight Frank India, COVID 19 pandemic, Fall in new launches, Samson Arthur

Real estate in Hyderabad has been greatly affected by the COVID-19 pandemic. Office transactions in Hyderabad saw a 43% year-over-year (YoY) decline in H1 2020 (first half of 2020), in comparison to H1 2019.

Transaction in H1 2020 has been the lowest in the past four years, since 2016. The city also saw a decline of 32% in new office space completions, according to Knight Frank India’s report on real estate trends in Hyderabad.

The report also stated that residential sales in Hyderabad witnessed a decline of 43% YoY in H1 2020 whereas new project launches fell by 19% YoY during this period. Sales recorded a 43% YoY fall, with 4,782 units sold in H1 2020. This has been the lowest recorded sales figure for the city in this decade.

Demand was strong until the pre-COVID period of January to March 2020, and was only restricted by the low availability of supply. Things took a sharp turn in the aftermath of the COVID-19 crisis and the subsequent lockdowns. The report also noted that over the past two years, prices in the Hyderabad residential market have been rising on the back of growing demand and limited supply.

This price trend continued until Q1 2020, with prices increasing 7% YoY. Q2 2020 saw no movement in prices as the crisis severely impacted business and transaction activity. Samson Arthur, branch director — Hyderabad, Knight Frank India, said, "On the demand side, large occupiers are looking to recalibrate their space needs. The focus on employee health, de-densification and higher hygiene standards will help revitalise the need for quality space take-up in the long term. The pandemic and subsequent lockdown has slowed the pace but not the sentiment for grade A developers in Hyderabad."

However, the market has turned in tenants' favour and is likely to remain so upon return of normalcy, he said. Further, Arthur said, "Once markets ease in, commercial leasing activity is likely to pick up pace. While there is a seeming resilience in certain micro markets of Hyderabad, we are watching closely the amount of sub-lease and surrendered space that is being added to the market. This offers an opportunity for occupiers to snap up quality space at flexible terms."

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