Infrastructure updates

Manjeera Pipeline road, Madinaguda - Chandanagar stretch - 4 laning in progress
Upcoming projects by My Home - Jewel 2
New Alekhya project

Botanical Garden-Masjid Banda road - 4 laning in progress
New Aparna project ready for launch - approx. 30 acres - behind SBI compound - infront of HCU

Gachibowli - Khajaguda - Raidurgam - Road expansion in progress
Alekhya + Hallmark projects on Lanco Hills road
Ace Atlantis
Lanco Hills

 

Bharat Iconia becomes SMR Vinay Iconia

SMR has taken over similar projects in the past and delivered them. SMR Vinay City is one example. Hopefully, this project also sees the day soon. The road infront of the project is being expanded to 120 ft coming from Botanical gardens.

Sept 2015 - Project launched - likely at 4,500/- as listed by Proptiger

Hyderabad - 1 BHK

Though 1 BHK has been seeing increasing acceptance in high rise projects in Bangalore and Chennai in the South market, these units (<700 sft) remain an unheard concept in Hyderabad.  But, some projects have started offering them in ground floor adjacent to the cellar ramps where they have limited areas to construct.  Usually, these are badly ventilated but you have to be on the look out for good ones.

Such projects include - Silpa HillTop, RV Panchanjanya, Prajapati Elite.  And, projects which have such units in regular layout include NSK Blisslands, Venkatadri Towers in Pocharam and Vajra Sree Nivasam. Also, Prestige High Fields is an addition to this list.  The project has about 400 1 BHKs in 614 and 655 sqft in one single tower at the end of the project. And, Hill County in Nizampet also has a complete block with 1.5 BHKs at 975sft. This remains a jinxed project started by Maytas (Satyam sister concern) now with IL&FS. Muppa's Aishwarya and Aaradhya in Narsingi also offer 1 BHK/ Studios in the range of 350 to 620 sq.ft.

And, to top it all the 'ever yet-to-be-complete' Mantri Celestia has some sizes that qualify as super compact 2 BHK, which would be of interest to people looking at these options.

Hyderabad Real Estate - Manjeera Water Connection

Many people know that Hyderabad is on top of the Deccan Plateau. So, the plans of depending on bore water for apartments is not a feasible solution due to the rocky terrain and unpredictability of rock formations to hold water. The low rainfall received this monsoon has aggravated the situation and apartments in Kondapur and Gachibowli belt are spending Rs 4000-5000/- against Rs. 1800/- to overcome the situation.  I would like to strongly advise the buyer/ renting community to prefer apartments/ properties with Manjeera/ Municipal water connection to avoid such experiences.

I would liken the apartments with no Manjeera connection to farms which are rain dependent and ones with Manjeera connection with farm connected to the irrigation canals.  We know the fate of the farmers dependent on rains!!!  We cannot depend on bore-wells and the city should ban bore-wells to ensure sanctity of underground water and ensure water supply to all homes. 

Hyderabad RE - West Zone Performance

Zones	Localities	2007	Jul-Sept 2011	Oct-Dec 2011	Jan-Mar 2012	Apr-Jun 2012	Jul-Sep 2012	Oct-Dec 2012	Jan-Mar 2013	Apr-Jun 2012	Jul-Sep 2013	Oct- Dec 2013	Jan-March 2014
West Zone	Serilingampally, Patancheruvu / Ramachandrapuram,  Kukatpally	100	90	80	88	94	96	108	106	104	112	108	107

Affordable Housing

Affordable housing is no small game, this is the space that will need excellent planning and execution skills.  Operating on lower margins would mean any delays can kill the commercial viability of the projects.  This is the space in real estate that will separate the men from the boys.  Think about affordable housing doing the same to real estate companies like the sachet story establishing the road to riches for the consumer / FMCG companies.  Brands/ corporate ethics really matter here.

Some top brands in the affordable housing space include:


Tata Housing              - Tata Value Homes
Mahindra Lifespaces  - Happinest
Puravankara                - Provident Housing
(Launched a 24 acre township at Rajendranagar, Hyderabad near Walmart Best price under the PVNR expressway)
Lodha                         - Casa

Another one is VBHC promoted by Jerry Rao of Mphasis (not sure about the track record)

Drivers -

Pradhan Mantri Awas Yojana - A subsidy of 2.5 lacs provided to first time home buyers
RERA - Only the best companies with brand and financial heft can with stand the strict norms
Limiting Loss against housing to 2 lacs - Reduces demand for housing as an investment. So, the developers need to build most (50%) of the units that fit the bill for 1st time buyers or buyers planning self occupation.

Innovative price discovery for real estate projects - Book building method

Puravankara Projects, a leading real estate developer in India, for the pre-launch of the project Purva Palm Beach in Bangalore adopted a book building method to sell the project. The project saw an oversubscription of 3 times with over 1,200 applications received as opposed to the units released for allocation during the initial pre-launch stage. This scheme has attracted buyers from Mumbai, Delhi and Chennai.

The homebuyer needs to submit a request expressing his interest. The expression of interest will be within a price range of Rs. 4290 to Rs. 4650. The people who have expressed their interest will be allotted a reference number. Once the price is discovered, the allotment would be made on a ‘FIFO’ (first-in-first-out) basis. Homebuyers who have been allotted the unit of their choice can buy, and for other the company will refund the booking amount paid.

Puravankara adopted book building method with a base price of Rs 4,392/- offered customers an opportunity to book their dream home through a transparent price discovery mechanism. The same mechanism was followed for the launch of Purva Westend in Bangalore.

REITs and FII funds into Indian Real Estate

A lot has been written about these topics since budget, but don't expect lot of help to individuals in near term.  The beneficiaries, in near term, would be the banks and real estate companies. The heavily indebted real estate companies will turn their office/ IT parks and Mall properties, essentially lease rental holdings, into Real Estate Investment Trusts (REITs) and realize lot of value or cash (selling shares in the trusts) that they can pay back to the banks. The REITs would mean a lot to the average Indians when the future REIT investments go into quality affordable housing, which is in much shortage in India. Rent is the biggest component of any middle-class working individual across the globe. So, a professionally managed community/ society aimed at maximizing rentals with superior upkeep will be a welcome for India's middle-class who dream of quality housing which is also 'affordable'.  But, the funds flows will definitely have an impact on the real estate prices as the best of the locations will be bid for premium prices.

REITs as an investment will be popular in India as Indian investors swear by real estate.  If the objective to collect rents, REITS provide access to investors to well located, well maintained rental holdings on a piece meal basis/ shares. Usually, 90% of rents collected need to be distributed as dividends compulsorily with some tax breaks as well. An ideal investment choice in the US/ West to park retirement money.    

Hyderabad Property Hotspots - Driven by Metro connectivity

Great cities in the world revolve around connectivity. And, metro or tubes play a major role. I am sharing the locations that would be touched by the new Hyderabad metro project. 2 Km from any of the stations can present pretty good opportunities if you can strike a bargain because the areas remain not so connected today. Look at areas highlighted.

CORRIDOR 1 - Miyapur to L. B. Nagar

1. Miyapur 2. JNTU College 3. Housing Board Colony 4. Kukatpally 5. Balanagar 6. Moosapet 7. Bharatnagar 8. Erragadda 9. ESI Hospital

10. S R Nagar 11. Ameerpet 12. Punjagutta 13. Erra Manzil 14. Khairatabad 15. Secretariat 16. Assembly 17. Nampally 18. Gandhi Bhawan

19. Koti 20. MG Bus Station 21. Malakpet 22. Super Market 23. Musarambagh 24. Dilsukhnagar 25. Chaitanyapuri 26. Kothapet 27. L B Nagar

CORRIDOR 2 - Jubilee Bus station to Falaknuma

1. JBS 2. Parade Grounds 3.Secunderabad R.S 4.Gandhi Hospital 5.Ram Nagar Junction 6.RTC ' X' Roads

7. Chikkadpally 8. Narayanguda 9. Sultan Bazaar 10.M.G.Bus Station 11.Salarjung Museum

12. Charminar 13. Shalibanda 14. Shamsheergunj 15. Jangammet 16. Falaknuma

CORRIDOR 3 - Nagole to Hitec City

1. Nagole 2. Uppal 3. NGRI 4. Habsiguda 5. Tarnaka 6. Lalaguda 7. Mettuguda 8. Secunderabad

09. Parade Ground 10. Paradise 11. Rasoolpura 12. Prakash Nagar 13. Begumpet 14. Ameerpet 15. Madhura Nagar 16. Yusufguda

17. Jubilee Hills Road No.5 18. Jubilee Hills Check Post 19. Peddamma Temple 20. Madhapur PS 21. COD 22. Hitech City 23. Shilparamam

New Hyderabad Villa projects - So close to the city

Several developers are now taking the Villa projects route to keep their business moving.  Villa projects don't have the dependencies like apartment projects of having minimum bookings to slow progress in a construction.  Whoever pays on time will get his villa delivered.  For instance, the Miyapur - Medchal road is seeing a lot of Villa developments.  The area is very close to the Cyberabad area and was seeing rampant construction activity with scores of apartments coming up but now the Villa projects are the main advertisers on the road. The same is the path taken by builders who have not had a good experience with apartment projects like Manjeera and Mantri.  A lot of builders like Raja Pushpa and Aparna are now preferring to do Villas and Apartments together to keep the momentum going in the location. 

Hyderabad rental market - New breed of renters - Intracity movers

With most of the job creation happening in Cyberabad, the commute time from Hyderabad and Secunderabad has been on the increase because of the peak hour traffic and Metro train construction work. The offices were in Banjara Hills and Begumpet belt then moved to Jubilee Hills and Madhapur and are now to Gachibowli. 

In the past 15 years, the office commute distance has increased from an average of 8-10 km to 25-35 km now.  So, a lot of housing on the Cyberabad side is seeing people, with own property in Secunderabad and Hyderabad, moving in as renters. Many have lived in the original twin cities for generations, but are now planning property purchases or renting out in Cyberabad area.

With the Metro not staring anytime soon and not exactly taking them to their office door step, many people are choosing to move to West Hyderabad - Chandanagar, Kondapur, Gachibowli, KPHB, Miyapur.

Hyderabad real estate market - No new lauches - Rents bound to go up

With Hyderabad in a freeze mode, no new launches are happening.  I guess, the builders will wait till August to understand the mood of the market.  The builders with standing inventory/ finished stock need to clear the stock. But, the supposedly more intelligent buyer also will wait out till he sees a good bargain down from current levels. So, most likely, the houses available for rent will be drastically down and the rents will start inching up at good pace. People looking for cheaper rents with the freeze mode in real estate would be disappointed. 

Lower sales mean Higher rents.

Hyderabad - Kukatpally - Gulf Oil Township

Gulf Oil Corporation Limited has entered into a joint development agreement with Hinduja Estates Private Limited to develop 76 acre of the former’s land at Kukatpally in Hyderabad. The whole master plan of 100 acres has been submitted for approval to GHMC in May 2016.

Hinduja Estates will invest around Rs 3,500 crore in the township project, which will house residential and commercial complexes.

A part of the deal with GHMC for permissions, a 100 ft road has also been laid bang in the middle of the land connecting NH 9 to Rainbow Vistas at the back of Gulf Oil compound.  This road is now ready and the company is awaiting stable market conditions to announce the project. The raod is seeing heavy traffic and the company is expecting 85-90 crores compensation from GHMC for the road.

The township will have offices, apartments, IT parks and Malls along entertainment and maybe hospital as well.

Check this presentation for what to expect...

http://www.hindujarealty.in/images/hrvl-presentation02.pdf

pg 21 to 25

New Aparna projects - Mid market Category - Hyderabad real estate

Aparna is going to launch a new project called Parnika (Villas) and Elina (Apartments) on the road connecting Botanical garden to HCU. It is closer to HCU Bus Depot after Maseed Banda Village. Aparna has another project by the same name Elina in Bangalore as well. The 30 acre venture is ready for launch.  The model house and marketing office are ready near the Sutherland BPO office behind Indian Immunologicals and close to RV Panchajanya.

Aparna is planning another project called Cyber Life in Nallagandla. It will benefit from the developed infrastructure and liveability as it will finish only in 2018. It surrounds the Citizens Hospital.  

Telangana done - What next for real estate in Hyderabad - March 2015

In Hyderabad, residential real estate looks good compared to the pathetic state of retail real estate and office real estate.  Office real estate, on the verge of bounce back, is decent and has no excessive capacity built up.  Retail real estate seems to be cutting losses by bringing rentals down and increasing occupancy. 

Residential rental yields seem to be inching up as not many units
1. were built
2. not enough were sold (if sold, mostly for end-use)
3. so, not enough rented out (a tight market for rentals)

But, I don't think the activity is going to pick up in hurry. June 2015 is crucial.  March 2015 will see close of the current academic year and any petty business dealers or govt. servants of Andhra Pradesh planning to move out will result in the demand scenario becoming clear.

There might be some rub off effect in already frozen market providing opportunities in finished and second sale market.  Look out....

Update March 2015 - There is pressure on rentals even in the West of the city home to the IT crowd. But, the office market is reporting good absorption.  If the new office place taken is for net-net new business- should result in new hiring and the demand for housing coming back in 6-8 months.  The housing market is poised to go through some more pain.

US mortgage rates reaching 4.6% - Good and Bad news for the world and India

US home mortgage rates that were hovering around 2.5-3.5% during 2009-2011 have started moving up and have reached 4.6% now.  The rates can move further if Fed hints at any increase in interest rates in late 2014 or early 2015.  The early anticipated move in mid 2015 might come much earlier as the economy picks up steam.  The housing market is already up 40-60% in areas like Arizona. Good news for US.

Bad news for India. Such a scenario is the worst case for emerging markets like India.  Most of the fixed income money will move back to enjoy the higher rates in US. The returns would be higher than India because the exchange rates eat up any returns from fixed income earned in India. The withdrawal might provide an opportunity in both stock markets and property markets with a lag of 6 months to each other.  I guess, who ever is saving up for a home, should wait for these events to roll in.  Obviously, lot of macro management both in India and US might move the date of reckoning by 8-14 months.  But, it has to eventually happen, there is no stopping it. So, no need to hurry into a decision, looking at the increase in prices in cities like Chennai and Bangalore. Good news for the customer.

Happy shopping!!!