Hyderabad: Post Unlock 2.0, the real estate market in Hyderabad is on a recovery path.

The city has reported a 272 percent increase in home sales, while 650 percent growth in new launches in the third quarter (July - September 2021), according to Knight Frank's quarterly report.

Around 5,987 units were sold and 9,256 new units were launched in the third quarter. The average price increase has increased by two percent as compared to the 2020 quarter.

According to Knight Frank's report, the COVID-19 pandemic has had a debilitating impact on most sectors by causing overall demand to wilt with excess capacities, debt traps, and even bankruptcies.

However, its ultimate impact on the real estate residential market has been quite paradoxical as it has reignited the need for personal space and housing in the homebuyers' minds. The acute loss of security felt by the masses during the worst of the pandemic has reinforced this sentiment.

The pandemic imposed severe restrictions on human mobility and people had to stay indoors for the better part of the past 18 months. This vastly increased the perceived value of one's home in the overall scheme of things.

The enhanced need of the homebuyer to own a home, lower house prices, interest rates at a record low of under 7 percent, and stamp duty cuts in some of the key markets, have been the primary drivers of increased sales traction in 2021.

The report noted that lower residential prices, attractive interest rates, and higher household saving rates over the past year should support housing demand going forward. While financial stress remains a significant factor for developers across markets, homebuyers' preference for grade A developers and their access to cheaper credit has positioned them well in this recovering market.

Office spaces

The overall average rent growth across markets during the third quarter of 2021 has decreased by two percent, but the city has seen 363 percent growth in transactions as compared to the 2020 quarter. The city has reported 2.1 million square feet of space in transactions in the third quarter.

However, the completion of office spaces has decreased by 38 percent this quarter as compared to last year. Only, 2.2 million square feet of space have been completed.

Knight Frank noted that transaction volumes have been inversely correlated with the perceived intensity of the pandemic. Market activity peaked in the fourth quarter of 2020, as new COVID-19 cases trended lower and the near-term visibility of a viable vaccine increased.

Similarly, the second wave of infections impacted transacted volumes during the second quarter of 2021 and the current recovery reflects the comparative easing of the impact of the pandemic.

"As things stand now, close to 17 percent of the population is already fully vaccinated and our vastly increased understanding of the pandemic should help avoid a panic situation in the market as was seen in 2020. Thus, it is quite plausible that the fourth quarter of 2021 could see heightened traction as seen in 2020, provided infection levels continue to remain low," said the report.

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