The Ripple Effects of IT Boom In Hyderabad

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Written By Financial master






This capital city of Andhra Pradesh is full of history and is deeply mired in traditions. The transition from an ancient historical city to a bustling mega polis can mainly be contributed to the Information Technology wave. It’s on this wave that Hyderabad has ridden towards development and boom. The real estate has been the first and the most to have been effected by the IT boom. The property prices have quadrupled in a few years there has been a tremendous increase not only in prices but also property rentals in Hyderabad.

The home of engineering based industries and traders plying the pearl trade has given way to the new and emerging sector of Information and Technology. Hyderabad has been one of the most favored destinations for IT and ITeS companies coming into India. With a pro active government setting up IT SEZ’s and land prices cheap initially, the IT sector in Hyderabad saw a huge surge.

A direct ripple effect has been on the commercial space value which is predominately occupied by the IT companies. Almost 75% of the commercial space is either owned or rented by IT / ITeS companies in Hyderabad. Companies like IBM, Accenture, Perrot Systems, CA, Convergys’s etc have spun the real estate market on its heads. Never before had anybody heard of such high rentals in Hyderabad, which these dollar rich companies were ready to pay. No doubt, their invasion saw the quality of construction reach new standards in India.

The main activity especially in the property rentals was seen in the central Business District of Begumpet and Ameerpet, Banjara Hills and Jubilee Hills. This area has seen one of the most concentrated commercial developments in Hyderabad. At one time the property rates at Jubilee Hills and Banjara Hills had topped the all India property price index. Banjara and Jubilee hills still have some of the most expensive rentals in the country.

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This high demand, low supply, high rental scenario has made the commercial market shift its focus from the Central to the Southern Business District.  With land being much cheaper and more in availability in the southern side of the city, the shift was but natural. This shift towards the southern side saw correction in rental prices a bit in the Central District.

Another effect of the IT boom has been the increase in the living standard of the population. As many people migrated from all over the country to Hyderabad, pulled by the availability of Tech jobs, the cultural and social fiber of the city has also changed. The Hyderabad of recent times has become more cosmopolitan than ever.  This influx has also seen the demand for more retail spaces. Deeper pockets of the customers have led to many Malls and retail spaces springing up all over the city. This has also added to the commercial retail prices and rentals going up.

Hyderabad has seen a flurry of activity in the real estate scenario especially since the mid 2000’s. Majority of it can be attributed to the IT sector. Sensing a demand for commercial property, many builders jumped onto the band wagon. 2006-07 saw many commercial projects getting completed but the timing was not right as the market was immediately hit by recession. This spiked up the vacancy percentage to more than 20%. With more projects nearing finish, the market looked gloomy.

But the revival of the economy has improved the situation and the rentals in Hyderabad are also looking up. The same is the case in the residential market as the prices and rentals have now stabilized with the demand and supply nearing equality

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