Hyderabad- Apartment Rate Review & Report on Property Exhibition at Taj Krishna-18 to 20th July

The market remains tight but the large developers are holding-on to price levels. Under normal circumstances, a low demand should have resulted in overall price correction, of significant nature. However no appreciable correction is seen. In fact, new projects like PBEL at APPA and Sunway Properties at Borampet are quoting unbelievable rates at these locations .

>>All about Price Trend, Demand, Potential -Hyderabad Real Estate
1.0 Factors influencing price.

There are several factors in the market which makes price to remain high. This include overall inflation, rising raw material costs (Especially Cement & Steel)and shortage of labor force. The high inflation should automatically make a rate of Rs. 3000/sft to increase to 3300/sft in a year (10% rise) but developers who commit price of Rs.3000/sft has to hold it, whatever be the inflation and increase in cement /steel prices.

This situation exposes projects to under recovery risk and obviously, to mitigate this, developers are forced to quote price, with LARGER Margins. In addition to this, the Govt. has been increasing approval fees, drastically and all increases have to be borne by Developer once price is committed.

The above factors have made it impractical for developers to offer considerable reduction in price. However, developers who bought land early, at cheap rates should in fact pass on benefit to buyers. But this is not happening at all.
2.0 Major Property Expo by Times at Taj Krishna

On July 18th to 20th a major Property exhibition was held at Taj Krishna. Times had given wide publicity over last 3 weeks. The News paper carried list of participants with full page ads over several days. Since this was a big effort, we decided to check out the scene and get a low down on Rates and marker response.
Major Participants:

• Aparna Nallagadla - Base rate of 3500/sft + Extras
• Aliens Tellapur - Base rate of 3500/sft + Extras
• SMR (Miyapur) - Base rate of 3200/sft + Extras
• SMR (Guchibowli) -- Base rate of 5500/sft + Extras
• Sunway Properties, beside Borampet - Incredible 3600/sft with 400 Rs/sft special discount at Borampet in 2008 July? Hope sense will prevail. Wonder wthere any Hyderbadi got wooed by Malaysian girls whi manned teh sales desk! We are sure people here are smart enough, to see through he scheme of things. (The price is unusally high considering the location. Definitely this Company is not passing on low land acquisition rate, to buyers instead, its asking for extremely high premium even if quality is outstanding)
• PBEL, at APPA - Rs.3500/sft at APPA in 2008 with Express Highway still in early stage of NON-COMPLETION?! Wonder whether people would run and buy, at APPA at 3500/sft while apartments are available at lower prices near Narsingi, Tellapur, Nallagdla and even all around Kondapur, Nanakramguda etc The price is a bit unusual considering the location and status of Express Highway. Buyers may review quality/amenities, density (flats per acre) etc and reach own conclusion.
• Maytas at Hill County -Rs.3400/sft. So over-confident earlier, now even Maytas is forced to particpate in Property Shows to try and get odd bookings.
• Giridhari Constructions at APPA - Rs.3200/sft is asking price. This is said to be negotiable down to 2800/sft
• Aditya Tellapur - Villas -Above 225 Lakhs

There were several smaller firms all quoting Rs.3000/sft and above, even in Kukatpalli, Chanda Nagar and beyond. Indu was around with its project near Nagole. The new "kid" on the block, BHARAT was not at Exhibition. But they are quoting 3600 to 5600/sft opposite to Guchibowli University! Its going to be an uphill task for it too.

3.0 Market Response:

2 or 2.5 years ago, property Exhibitions were hot bed of action with buyers swarming the counters. Many Counters used to Display SOLD-OUT boards within hours! The Visitor Card Boxes would over-flow. Guest books would have little space to sign. However, recently, Property Expos have been virtual disasters for Developers. Only the organizers made money.

The current Exhibition has been no different. Even with high profile Ad campaign, it has flopped badly. Even at peak time, there were only some 50 people around the spacious hall. Some of the Sales Executives confided the fact that not a single booking has taken place. And with a wink they added that their competitors, were in the same boat! Even casual visitors who used to come with wife and kids in tow, to enjoy 5 star ambience and partake snacks and coffee, were conspicuous by their absence! Obviously hearing rates above 3000/sft is an irritant, even to those who come for time-pass!

We have commented extensively in the Annual Trend Report, on Price Vs Demand situation and have projected when demand could meet prices of around 3500/sft to 3900/sft, in prime areas like Hitec City, Guchibowli, Nallagdla, Tellapur etc. The New developers like PBEL, Sunway, Bharat etc are rushing with their projects in far off suburbs, at very high rates. They may get the quoted rates after quite sometime; Definitely not in 2008 when such rates are not seeing booking, even in prime central localities.
4.0 What will happen to these New Projects:

Those who book unknowingly in Projects like PBEL and Sunway, are definitely going to face long delay in delivery. Also the developers are going to construct only one or two blocks, instead of 10 or 15. This results in very bad environment for early buyers, with the whole place around dug up with construction continuing for may be 5 more years, after they occupy.

Obviously older Projects with Approval in hand, like Aparna, have better chance of delivering in time, without exposing buyes to project risk.
5.0 Vanishing Plot Developers

The most striking feature of the exhibition apart from low turnout, was absence of plot layot developers. Earlier, layout developers would book all stalls, leaving little space to Builders. This time around, except for one brave soul, who was reduced to squatting flies, there were no layout developers anywhere around! (By the way, do note that a Company from Nagpur had come all the way to sell his non-moving plots in Nagpur...pity him! )
>>All about Price Trend, Demand, Potential -Hyderabad Real Estate