Is there something more than meets the eye behind the unending rise in the prices of residential properties in Hyderabad, despite the apparent slump in demand over the past few months?
Sources in the know of developments in the real estate sector told South First that top builders have been advised by people in high places in the state government not to drop the prices, lest it create an impression that Hyderabad was losing some of its sheen.
It is said that the powers that be do not want the current hype around Hyderabad as the most-favoured destination to be lost in any manner, particularly with elections to the state Assembly due by year-end.
At an unofficial meeting recently, the builders were apparently promised that the government would take up more infrastructure projects after the upcoming elections, which would push up demand further.
Any reduction in prices at this point will only dampen the mood and lead to a lull, they were told.
Government showcases real estate prices
The booming real estate market in the capital is one of the markers being used by the BRS to keep reiterating how Telangana has been flourishing in the two terms that the party has been in power since the formation of the state in 2014.
A case in point is the recent auction of government lands at Kokapet in the west of Hyderabad, which had fetched a record ₹100 crore per acre for the state treasury.
Not surprisingly, government representatives claimed this was yet another example of how Hyderabad has emerged as a favourite investment spot for a host of industries. They cited the growing number of IT companies that are setting up shop in the city, and thereby creating demand for residential units.
There is, however, a flip side to this story.
Multiple reports from agencies involved in the study of the real estate markets across the country suggest the picture is not all that rosy.
Post-Covid, the Hyderabad market has seen prices of residential apartments and villas shoot up by 30 to 50 percent, practically making them unaffordable to middle-class and even upper middle-class sections.
A recent report named Hyderabad as the second-most expensive market in the country, after Mumbai, in terms of affordability versus income levels.
Not surprisingly, another report put the number of unsold houses at over one lakh in the city.
Yet, in terms of prices, there has been no drop at all, with almost all the big builders apparently willing to hold their inventory for some months instead of resorting to any cost reduction.
On the contrary, in the wake of the Kokapet auction, builders of high-rise residential complexes actually jacked up the prices by ₹500 to ₹1,000 per sq ft.
Meanwhile, mid-level builders, affected by rising land costs and dropping demand, are being pushed out of the business.
And just buying a home has become an unachievable dream for middle-income citizens.