Hyderabad realty sector in doldrums

Six years post the global recession, Hyderabad's realty story continues to be bleak. In fact, in recent times, shutters have come down on over a dozen residential projects in the city, leaving customers in a soup even as roughly 6,000 units are crying for buyers.

While builders put the blame squarely on "unfavourable circumstances" -- first the meltdown and then the bifurcation keen observers of the sector tell a different story. According to them, the financial crisis that developers claim to be in, is in many cases highly exaggerated. "If it was true, how are they able to invest in projects outside Hyderabad?" asked a prominent realtor from the city, pointing out how many realty firms, including Janapriya Engineers Syndicate, Keerthi Estates Pvt Ltd, SMR Holdings and Aditya Infra among others, have entered the Bangalore, Chennai and Pune markets over the past one year.

This, despite some of them holding a vast number of unsold properties in Hyderabad. "The reality is that developers cannot sell these units because there is genuinely no demand. And that is not as much to do with pricing as it is to do with their inability to complete any venture over the last three-four years," sources said. The dwindling reputation has kept buyers at bay, with even modestly-priced homes (anywhere between Rs 2,800 and Rs 3,500 per sft) waiting for takers.

Incidentally, most of the dying projects are those that jumped on to the private equity bandwagon (partnering with private investors) that chugged into the city between 2006 and 2008. The concept, then new to Hyderabad, was lapped by primarily because it did not require the developer to bear the initial capital alone. Over time, however, the economic turmoil coupled with an almost 50% depreciation in land value spelt doom for these partnerships.

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