With Amaravati back in focus after Naidu as CM, what happens to Hyderabad real estate prices?

Property prices in Hyderabad may have increased by 45% in 2021 and Q1 2024 but with renewed focus on Amaravati, prices may witness a temporary correction. With Chandrababu Naidu taking over as the chief minister of Andhra Pradesh for the fourth term, there is expected to be greater emphasis on infrastructure and pro-business policies in both Telugu states, especially in the capital city Hyderabad. However, real estate experts say that given the resurgence of Amaravati, there may be some out-migration of businesses and residents to Andhra Pradesh, which could result in a temporary correction in Hyderabad’s real estate prices. A day before he was set to be sworn in as Andhra Pradesh Chief Minister, Telugu Desam Party chief N Chandrababu Naidu had said that Amaravati would be the state capital. As the first chief minister of the bifurcated state from 2014 to 2019, Naidu had proposed Amaravati as the capital city. Located between Vijayawada and Guntur, and spanning 29 villages, it was planned to be environmentally sustainable. Naidu had acquired around 30,000 acres of land from farmers for the construction of Amaravati through land pooling. But the plan encountered a major setback in 2019 as TDP lost power to the YSRCP. Real estate experts say the volume of residential real estate launches in Hyderabad may also rationalize as investors and buyers scout for competitive opportunities in Andhra Pradesh, given the focus on Amaravati, which is expected to witness a surge in development along the new growth corridors. “While this dream project was shelved by the previous government, there are now very distinct possibilities of its revival. However, developments of a new capital city and the massive eco-system it entails is a task of epic proportions. Despite all political will and support, it will take time to fructify – and to emerge as real competition to Hyderabad,” said Prashant Thakur, Regional Director and Head – Research, ANAROCK Group. According to data shared by Anarock Research, the average property prices in Hyderabad have increased by 45% 2021 and Q1 2024. As many as 2.18 lakh new homes launched and 1.54 lakh residential units sold in Hyderabad between 2021 and Q1 2024.  Hyderabad’s residential market has exhibited growth between 2021 and Q1 2024, with a cumulative total of approximately 218,800 new residential units launched and 154,300 units sold. The year 2023 witnessed a peak in activity, recording nearly 76,300 units launched and 61,700 units sold. This represents a significant increase of 48% and 143% respectively, compared to figures from 2021.