After taking the example of Hyderabad Real Estate to demonstrate our Rent by Price Ratio for Valuation <link> and sharing views on other Real Estate Valuation Methods <link>, today we are taking up a very hot
topic of Indian realty sector after much reluctance – Hyderabad post Telangana.
We did not want to discuss it on the public forum but due to increasing demand
from our readers, we are finally expressing our views on Telanganized
Hyderabad.
What is Telangana?
For our international readers,
let us first introduce the issue. Telangana is going to be the next state in
India which will be formed by dividing existing state - Andhra Pradesh. There
are a lot of issues prevailing around this topic and a lot of political and
social arguments have already been exchanged. Finally the air is – the state
Andhra Pradesh will be divided to make way for a new state Telangana.
But this gives rise to another
domino issue – where will the golden hen, Hyderabad go? – Andhra Pradesh or
Telangana? Government seems to be struggling hard with this issue and looks
like Hyderabad will act as shared Capital for both the states or will be given
a status of Union Territory. So which way the real estate market of Hyderabad
take turn – will it shoot up; or will it experience an avalanche? Let’s explore
the possibilities.
Effect on Social, Political & Economic Scenario
Now
|
Then
|
Social Impact
|
|
Social unrest, communal riots now and then, clashes between pro &
anti-Telangana communities.
|
No unrest, demands of both the groups shall be considered.
|
People not sure of their identity – whether they belong to Andhra
Pradesh or Telangana!
|
Well defined boundaries, identity certainty.
|
Political impact
|
|
This has been a long political agenda and leaders too are divided
over the issue.
|
Along with the views, leaders will be divided geographically too.
Politics will focus more on development rather than the division agenda.
|
Development work is crawling at a slow pace as the leaders from
different groups don’t promote regional developments.
|
New projects will emerge and existing projects will pick up pace.
|
Economic Impact
|
|
Hyderabad, being the IT capital of India, attracts software
investments worth billions of dollars every year. But due to this
uncertainty, international firms are being hesitant in investing in Hyderabad
market.
|
With incorporation of Telangana, this uncertainty will do away and
investors will be more confident in investing there. Companies like Facebook,
Google & Apple have long awaited plans to spread their legs in Hyderabad.
|
Due to restricted investments, new jobs are not being created in this
market – very less immigration.
|
Once the scenario gets clear and investors start investing in
Hyderabad, new jobs will be created and huge chunk of IT population will
migrate to the town.
|
Effect on Real Estate markets
As is clear from the above table,
the social, political & economic scenarios provide a promising picture once
division is complete. So if we extrapolate them, there seems to be no reason
why Real Estate market shouldn’t flourish. But that would be a vague approach
to come to any conclusion. Let’s try to add rationale to this extrapolation.
Sector
|
Change
|
Effect on Real Estate
|
Social
|
A more sustained & stable social scenario
|
Definitely gives a boost to sentiments of locals and prices shall go
up
|
Political
|
Leading towards a stable and productive government
|
New development projects => Boost to real estate
|
Economic
|
A safer investment paradise for investors
|
Increase in immigration => higher paying capacity => increase
in demand => increase in real estate pace
|
So if we consolidate the above
factors, it looks like that you should rush and grab a property in Hyderabad as
soon as possible. We have done it, following our instincts and analysis; will
you?
Disclaimer: The above analysis is done solely by RealT
Horizon. These are our views and you should add yours before going for an
investment or disinvestment in Hyderabad. <Long term position in
Hyderabad>
------ Thanks for reading RealT Horizon, your feedback is appreciated J ------
