Guide For Hyderabad Commercial Real Estate Investment
Hyderabad is not just the largest city but also the capital of Telangana. Moreover, it has become the HITEC city of India, making it a prime location for commercial real estate investment. The city has an estimated average GDP of $50 billion, and estimates show that it is likely to increase to $201.4 billion by 2035. This growth, along with the city’s thriving tech and business sectors, make it an attractive destination for commercial real estate investment. If you are considering investing in commercial real estate in Hyderabad, it is important to do your research and understand the local market conditions before making a decision.
Besides being one of India’s wealthiest cities, Hyderabad is also one of India’s most productive metro areas. It has also become dominant in the service industry, with a workforce engagement of 90%.
Moreover, as of 2021, the IT exports from Hyderabad stood at ₹1,45,522 crore; more than 1500 IT and ITeS companies in Hyderabad provide more than 6,00,000 jobs. All this has made the commercial real estate sector in Hyderabad highly attractive.
Let’s see how investing in Hyderabad’s commercial real estate can benefit you.
Reason for Hyderabad Commercial Real Estate Investment
The primary reasons why an individual should invest in commercial real estate in Hyderabad are as follows:
Emerging IT Hub
The emerging IT hub of Hyderabad has created a massive influx of working professionals. In the last six years, this city has witnessed rapid development and has emerged as a new tech hub of India. Owing to this massive consumer base, commercial real estate investment in Hyderabad can be beneficial in the long run.
Hyderabad’s infrastructure is developing daily to keep the city buzzing with activity. The 168 km Outer Ring Road provides access to the airport and IT corridor from every corner of this city. It has massively reduced the travel time of working professionals. Moreover, the Hyderabad metro construction phases are advancing rapidly, with the first phase already in use to provide better connectivity.
Hyderabad’s commercial real estate prices are relatively low compared to all other metro cities in India. The market here is yet to reach its peak growth; hence, if you invest today, you might enjoy exceptionally high returns in future. According to experts, the price of real estate in Hyderabad will rise in the next five years.
Growing Employment Rate
Due to the emerging IT sector and many other essential industries, Hyderabad has witnessed a growing employment rate for a few years. As more organisations set up their offices in Hyderabad, it creates a massive job market and an enormous commercial space requirement.
Moreover, this city is flourishing in other sectors, including manufacturing, defence and aerospace, financial services, engineering, pharma and hospitality.
Commercial Real Estate Investment Opportunities in Hyderabad
Some of the primary locations in Hyderabad that are ideal for commercial real estate investment are:
Narsingi has excellent connectivity through Narsingi Main Road, Financial District, Gachibowli, Hitech City, Manikonda and Bandlaguda. It is also near many important IT hubs and enjoys a decent locality. Moreover, it is near Outer Ring Road and a 10-minute drive from some crucial financial districts.
Tellapur is a quiet place with a peaceful ambience which is very important for office surroundings. The infrastructure and connectivity here are also going through massive development, with new roads connecting Tellapur to IT Hubs and Outer Ring Road. Moreover, the mega-integrated township development has also been proposed in the area by the Hyderabad Metropolitan Development Authority (HMDA).
Things to Consider Before Purchasing a Commercial Real Estate in Hyderabad
The important things to keep in mind while purchasing commercial real estate property in Hyderabad are as follows:
Check Authenticity through RERA
If you are planning to invest in an under-construction commercial property, verify the authenticity of its builder by checking the credentials on the RERA portal.
The Real Estate Regulatory Authority (RERA) is a statutory body notified by the Government under the Real Estate (Regulation and Development) Act of 2016. Its main aim is to maintain transparency and accountability in the real estate industry.
You can check the authenticity of a builder or a property by visiting the RERA website of Telangana. Doing so will prevent your investment from getting tangled with fraudulent activities and secures you financially.
A lease is a legal agreement defining the relationship between a property owner and its occupier. Therefore, the buyer or tenant must understand its lease structure and risk before investing in a commercial property. Moreover, you can also seek advice from legal counsel in this regard.
Check whether the commercial property you wish to invest in is easily accessible from all parts of the city. For example, commercial properties should be close to restaurants, retail stores, etc. Investigate the transportation facilities and connectivity before making any investment decision.
Stamp Duty Rates in Hyderabad, Telangana
When investing in a commercial property, keeping stamp duty rates and registration charges in mind is crucial because these will be a part of your real estate investment amount.
Let us see the stamp duty rate applicable in Hyderabad:
|Gender||Stamp Duty Rate (% of property value)|
|Joint (Male + Female)||4%|
|Joint (Male + Male)||4%|
|Joint (Female + Female)||4%|
Registration Charges in Hyderabad, Telangana
Other than stamp duty, it is also mandatory to transfer the ownership of the property in your favour by paying registration charges to the State Government. The registration charges in Hyderabad are in the table below:
|Gender||Registration Charges (% of property value)|
|Joint (Male + Female)||0.5%|
|Joint (Male + Male)||0.5%|
|Joint (Female + Female)||0.5%|
Commercial Real Estate Sector Forecast in Hyderabad
Hyderabad has witnessed tremendous growth in the net absorption of commercial real estate owing to the expansion of the IT and Business Process Management (BPM) Industry. As a result, in Q3 of FY 2022, Hyderabad recorded a gross leasing volume (GLV) of 2.2 million square foot (msf), which is almost 180% higher on a YoY basis. Moreover, IT-BPM was a major contributor in this quarter with 34% shares, and professional services and flexible workspaces had shares of 24% and 13%, respectively.
Commercial spaces in Hyderabad recorded a 12% growth compared to the FY 2021. Additionally, in FY 2022, Hyderabad witnessed absorption of around 5.2 msf and continues to be one of the front runners of commercial leasing activities in India.
Commercial Real Estate vs Other Asset Classes
The difference between the returns from commercial real estate and other asset classes are as follows:
Commercial Real Estate vs Stocks & Equity Mutual Funds
Stock and equity mutual funds witness significant price fluctuation compared to commercial real estate. However, they also provide higher returns, while
commercial real estate offers fixed returns with direct asset ownership. Thus, if you are a conservative investor looking for moderate-risk investment opportunities, you can consider investing in commercial properties.
Commercial Real Estate vs Gold
Investment in real estate brings mental satisfaction as price appreciation can secure your future. On the other hand, gold prices fluctuate rapidly as per market sentiments.. Moreover, commercial real estate is a stable investment option that offers tax benefits and generates passive income. On the contrary, gold is a highly volatile commodity that requires protected storage.
- Commercial Real Estate vs Residential Real estate
Commercial real estate demand is more than residential real estate property, especially in its premium category. Due to frequent tenant turnover, the vacancy risks are also lower in commercial real estate spaces than in residential real estate properties. Moreover, you can lease office spaces for longer tenures, whereas in the case of residential property, you need to lease it annually.
- Commercial Real Estate vs Bonds
Commercial real estate properties can be a stable source of passive income. However, bonds (AAA-rated) have a low credit risk when compared to commercial real estate because the latter is exposed to the credit risk associated with tenants.
Commercial real estate investment can be more illiquid than bonds because the transaction costs are high. Finding a suitable buyer for the property also takes a long time.
A tabular representation to compare these assets on the basis of returns, liquidity, risk, volatility and ticket size is as follows:
|Parameters||Commercial Real Estate||Stocks & Equity Mutual Funds||Gold||Residential Real Estate||Bonds|
If you wish to invest in bonds that are comparatively less risky and offer stable returns. Here, you will get some of the top-rated bonds available in the market. So, register now and start investing at zero additional charges and hidden costs.
Steps to Invest in Commercial Real Estate in Hyderabad
The steps you can follow to invest in commercial real estate in Hyderabad are as follows:
Step 1: Evaluate your budget and decide the amount you want to invest.
Step 2: Conduct proper research to acquire market knowledge about potential sites which will experience price boom and simultaneous development in future.
Step 3: Shortlist a few sites matching your requirements after conducting thorough research.
Step 4: Take a field tour of all these sites to analyse them minutely. You may also take references from real estate consultants and agents about the profitability and prospects of all these sites.
Step 5: Choose a commercial space that meets all of your requirements.
Step 6: After finalising a commercial property, prepare official documents like a property assessment extract, foundation certificate, title deed, etc., to proceed with the purchase.
Step 7: Pay the stamp duty and registration charges to transfer the ownership of the property in your name.
Step 8: Pay the service fees of real estate brokers and consultants if you have availed of their services.
Step 9: Consider covering your newly purchased commercial property with an insurance plan. It will secure you and your family financially and assist you if the property incurs any damage.
Hyderabad is experiencing high employment in its emerging IT sector and other important industries, which, in turn, is increasing the demand for commercial real estate investment here. Moreover, its rapid development in terms of connectivity and infrastructure attracts both large and small-scale industries. Thus, investing in Hyderabad’s real estate can prove to be highly beneficial in the long run.
Frequently Asked Questions (FAQs)
What is the price of land per square foot in Hyderabad?
In general, the price of land is ₹4,500 per square foot in Hyderabad. It is much lower than any other metro city in India.
What are some of the best places for real estate investment in Hyderabad?
The best places for commercial real estate investment in Hyderabad are Narsingi, Tellapur, Adibatla, Pocharam and Ghatkesar.
Is Hyderabad a good place to invest?
Hyderabad is an ideal location for commercial real estate investment due to its affordability. Moreover, the emerging IT sector and other important industries are helping the commercial market by bringing in many working professionals.
How is the quality of living in Hyderabad?
As per recent reports, Hyderabad is holding the top place in terms of living standards than many metro cities. The lower rates of crime level, growing connectivity and infrastructure, and low pollution levels add to the quality of life here.