COVID-19 hits Hyderabad real estate market; sale of properties down by 43%

Hyderabad: The real estate sector in Hyderabad seems to have taken a hit due to the COVID-19 pandemic. The sale of housing units decreased by 43 per cent in Hyderabad during the first six months of 2020 when compared to the corresponding period last year, according to the latest data provided by Knight Frank.

Between January and June 2020, 4,782 housing units were sold in Hyderabad, while during the same period in 2019, 8,334 units were sold. The number of new housing units launched in the first half of 2020 also decreased by 19 per cent. In 2019, 5,430 new units were launched while in 2020, only 4,422 new units were launched.

Both launches and sales seemed to be on track at the beginning of 2020. The outbreak of COVID-19 and the subsequent national lockdown, however, put a dampener on the reviving Hyderabad residential market.

“The key factors contributing to this fall include a halt in all construction activities during the lockdown period, low sales on account of market uncertainties, scarcer credit availability for developers, hike in prices of inputs such as steel and cement, and the lack of availability of construction workers in the post-lockdown phase,” the report said.

West Hyderabad, by virtue of being the centre stage of office activity, has always had the highest share in both demand and supply. In the first half of 2020, 59 per cent of the total launches were based in this part of the city.

The report also stated that market uncertainties in the wake of the ongoing pandemic have made home-buyers more risk-averse. Consequently, they seem to have put their home purchase decisions on hold. Further, as banks and financial institutions have tightened their lending norms, buyers are finding it increasingly difficult to avail credit and have had to eventually postpone or cancel their purchase decisions. Both these factors took a serious toll on sales between April and June this year.

“Compared to Delhi and Mumbai, the Hyderabad market is much better. On 2 May, the construction industry was allowed to start operating. It will be difficult to complete projects on time, but the market will become normal by early next year. People are showing interest in whatever inventory is available in the market right now,” said Raghunath Bellapuram, the head of digital marketing, Aparna Constructions.

Over the last two years, prices in the Hyderabad residential market have been rising on the back of growing demand and limited supply. According to the report, prices increased by seven per cent. In 2019, the average price for one square foot was Rs. 4,373 which increased to Rs. 4,673 in 2020.

According to the report, all construction activities came to a complete halt during the last week of March and in April. Post-lockdown, developers are having trouble finding labour as most of the migrant labourers have returned to their hometowns. Both these events will together result in project delays, estimated presently at eight-10 months, that will impact new launches that are lined up.