HYDERABAD: With steady absorption coupled with improving demand, Hyderabad's unsold residential inventory has come down to their lowest point since 2010, bringing some cheer to the lacklustre market, said a report by property consultant Knight Frank.
There was absorption of 14,093 units in 2015 as against the 11,197 launched as new launches dropped by 14 per cent in 2015, continuing the trend from 2014.
"The annual trend in launches shows a clear decline. However, the half yearly trend over the last three periods shows supply numbers stabilising gradually," said Vasudevan Iyer, Branch Director, Knight Frank, Hyderabad.
The report also hinted towards a recovery of 5% in absorption year-on-year during the first half of 2016. According to city developers, price correction is inevitable as Hyderabad property prices are already rock bottom and hence there will be a price appreciation. Residential units witnessed a growth of 3.1 per cent year on year during the second half of 2015.
On the other hand, the office market, despite a minor dip in absorption, posted robust numbers indicating an upward trend in office space absorption. In 2015, there was absorption of 4.6 million square feet as against 4.7 million sft a year ago.
Office space absorption is likely to push up by 23% year-on-year in the first half of 2016, while an approximate 1.9 million sft space is expected to come up, the report said.
Robust absorption coupled with falling supplies pushed vacancy levels to 14.4 per cent at the end of 2015 from 17.7 per cent in 2013. Interestingly, the second half of 2015 experienced the highest absorption levels of any half-yearly period in history on the back of big-ticket transactions by Qualcomm, Salesforce, Unitedhealth Group and J.P. Morgan.
Simultaneously, rentals have been increasing steadily since 2012 and picked up momentum after the second half of 2014, post the resolution of Telangana issue. Also, severe shortage of good quality office space in prime areas has turned the market in favour of landlords, who are asking for higher rents from tenants with each passing quarter. The rentals are expected to rise by 7 per cent in the first half of 2016.