Among All Other Cities, Hyderabad Emerged As The Most Resilient: JLL-CII Report
According to the JLL-CII report, "Hyderabad Real Estate – A Road Map amid the COVID-19 crisis," launched on 21st August, stated that Hyderabad is displaying tremendous resilience and its dynamics are keeping up the momentum of real estate. It is mentioned in H1 2020, compared to other cities of India, Hyderabad's real estate performance was far better. Immediately after the lockdown rules were relaxed, the city is said to be the first one in urban India to resume to its stability in case of the formal economy.
While the entire nation real estate was suffering due to the lockdown in Q2 2020, Hyderabad still saw good demand for office leasing and residential sales. During May 2020, when the construction works resumed, the city apart from new residential projects also witnessed an excellent supply for new office buildings. In H1 2020, the city led India's office supply with a 30% share, and notably, during the same period, the country's office absorption was driven with an 18% share from the city. Another achievement of the city in the real estate was its strong sales with the least unsold inventory in India that can be divested within two years
Speaking on the same, CEO & Country Head of India, JLL, Ramesh Nair, said, "Hyderabad's resilience comes from the confidence of doing business instilled by the state government. The business-friendly policies of the government have helped corporates leverage the existing ecosystem in the state to maximize output and emerge as the destination of choice. For example, the growth of the IT sector in the state: While national IT exports grew by 8% in 2019-20, IT exports here grew by 18% in the same period. Owing to its robust and fast developing infrastructure along with ease of living, offering a cosmopolitan environment, today, Hyderabad is a major destination for India's young workforce."
According to the latest JLL's Global Real Estate Transparency Index (GRETI) 2020 report, India is in the cusp. It will soon become a transparent economy because of the higher improvement experience in the real estate. This improvement was possible because the government focused on sustainability transparency, along with concentrating on wellness and PropTech adoption.
In the mentioned parameters, Hyderabad is reckoned to be one of the forerunners, increasing and strengthening the investor's confidence in the city's real estate. In the last six years, the city witnessed massive economic growth because of TS-iPass, ICT Policy, and other investment-friendly initiatives introduced by the state government.
Sandip Patnaik, Managing Director of JLL, Hyderabad, said, "Hyderabad's positive reaction to the crisis has reflected tremendously in the city's real estate performance. The focus of the government on business-friendly policies has helped Hyderabad emerge as one of the leaders despite the global pandemic. An important investment in the infrastructure sector and the state's fast track execution has tremendously contributed to the city's real estate growth. An active real estate market and strong economic growth along with a thriving start-up culture have helped the city to gain one of the leading positions globally."
A survey was conducted by JLL to analyze the depth of the crisis and the reaction of the stakeholders. The study is also done to assess the strategies of the top ten developers in various sectors and interviewed Hyderabad's corporate leaders of the companies.
Following are the results of the surveys and discussions in each sector:
• Office Real Estate: As soon as the lockdown was lifted and work was resumed in early May 2020, construction work started in a few projects, and by June 2020, a few office project operations started. In H1 2020, a total supply of 3.7 million sq. Ft was added. It is reported that demand dynamics remained stable as a few vital office leases with the large area were closed after the relaxation of the lockdown in May 2020. In H1 2020, the city reported absorption of 2.1 million sq. Ft that dropped the city's vacancy rate to 9.2%.
• Residential Real Estate: During the lockdown period in Q2 2020, the highest quarterly launches ever were witnessed by the city. The majority of these launches were in the eastern and northern submarkets. Despite the excellent volume of starts, the city is at the lowest in the country for its unsold inventory. And, across the city, the construction projects resumed at a slow pace. It happened because of the reverse migration of the laborers during the lockdown.
• Retail Real Estate: Hyderabad developers let the ongoing crisis battle go smooth for the tenants as they were given rental waivers or rental deferments. And highstreets in Hyderabad, provided some relief to the retailers during this time as they are relatively cost-effective solutions to the malls. Whereas, in Highstreet retail properties, leasing activity continued. In the end, although at a slow pace, upcoming malls construction was resumed.
Urban infrastructure development of the fringe area with tech solutions, diversification of economic base, and development of new commercial hubs will backup Hyderabad's real estate sector to deal with the current situation and emerge stronger. To adeptly manage the urban infrastructure of the city, for gathering accurate data and detect real-time problems, the city can use digital technology solutions like the Internet of Things (IoT), AI, sensors, and geospatial technology. Over the past few years, global institutional investors and sovereign wealth funds displayed an increasing interest in the city, and the office assets showed the confidence of high growth and stable returns for the medium to long-term.
The state government gave confidence to the corporate through its business-friendly policy support. In H1 2020, the government also utilized the lockdown period to enhance the city's urban infrastructure and aesthetics. It employed and engaged the labor for this transformation, who otherwise would have been unemployed during these tough times. According to the recent JLL City Momentum Index (CMI) 2020 report, Hyderabad recorded the highest office net absorption in 2019 (as a proportion of existing stock) compared to any city globally, while standing among the world's best-performing cities for prime office rental growth.