The Telangana Factor, Effects on Hyderabad real estate market

Hyderabad real estate pounced like a tiger in the past 2 years apartment prices shot up by 300% in certain areas, People who bought early and developers made merry!, but then as the old saying goes you should make hay while the sun shines.

300% in 2 years? Does that ring alarm bells… well land prices in Hyderabad actually shot up by around 1000% in the out skirts to a high around 9 months back.

Owing to heavy pressure on liquidity and lack of direction to the market, the Hyderabad real estate market softened a little 9 months back but apartment prices remain steady.

But the situation today is much different compared to what was couple of months back owing to the lack of political direction towards separation of the state and the regular meetings and rallies in support of telangana raised an alarm in the minds of real estate investors. Net effect land prices in the outskirts of Hyderabad started softening.

Prices of undeveloped land near the srisailam highway which had touched peaks of 1Crore per acre are have dropped to 50 Lakhs an acre.

But will separating the state and forming smaller states lead to  drop in the real estate prices?

Telangana integrally comprises of Hyderabad and Ranga Reddy Districts which are the economically developed areas, rest tier two cities include Mahboob nagar, Warangal, Khammam. But revenues for telangana would only be from Hyderabad. Now to analyse, lets think Hyderabad which recently has been converted in Greater Hyderabad adding many areas from R.R.District is proposed to be given to telangana, would a business established in Hyderabad by non Telangana people leave their assets and companies and shift to their native area? And why should one shift?? Is it a different country that is being formed?

There is a popular that forming telangana will reduce the development in Hyderabad but I would differ from this and say that smaller states are better for development and already the development in progress in Hyderabad cannot be stopped real estate majors have started development of huge projects in Hyderabad, and still they are on an acquisition spree only in Hyderabad, a smaller state is easier for them to convince the government into giving them more sops!!

In all probabilities my view is Telanagana would be announced before this elections and Hyderabad would be retained as an union territory making it the combined capital of the split states.

If you are investor keep your money ready as prices would drop further and you can strike real good deals!!

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The author of the article Mayur Mullaguri is a seasoned real estate investor who has been investing the Indian real estate market for long and runs a construction company and real estate portals.