Hyderabad to Have Excess Residential Units by 2024

Judging from the current numbers of supply and demand for residential housing units in Hyderabad, projections indicate the city will have up to 5 times excess supply of residential units compared to the demand. The city of Hyderabad could have an excess of homes by 2024, as indicated by TS-RERA numbers. The Telangana State Real Estate Regulatory Authority (TS-RERA) data shows that the body has given clearance for more than 60,000 residential units in the period from January to November of this year.

Now that the annual supply/creation of houses has crossed the 60,000 mark this year, the annual absorption of residential units keeps meandering between 10,000 to 15,000 units. As it is, the gap in supply & demand of residential property is already around 35,000 to 50,000 units at the very least. Real-estate industry leaders & experts suggest the gap in supply & demand is going to widen even more over the next couple of years as more projects are receiving approvals and being launched. As a result, the city of Hyderabad might face a surplus of residential units of more than 4-5 times the demand by the year 2024.

The areas with the highest number of flat/villas i.e., residential unit approvals are as listed below:

LocationResidential Units Approved by TS-RERA

Real-estate industry experts believe the supply-demand gap is not going to shrink even if the upcoming projects are released in a phased manner as there are already nearly 70,000 units to be launched in the coming 6 months. If the trend continues or if the demand doesn’t rise, Hyderabad’s real-estate market could face a huge problem in the form of unused/unsold residential units’ inventory. Earlier, developers would build projects which had a maximum of 500 – 600 units are now building projects which have more than 3,000 units in some cases, an increase of 500-600% in number of units being constructed is also contributing to the increasing divide between supply-demand of residential property in Hyderabad.

In most areas of Hyderabad, especially in areas where new projects are coming up, there is no limit on the Floor Space Index (FSI) for construction. Floor Space Index is the ratio of the floor area to the total plot area. Most areas of Hyderabad have a no-cap FSI which is allowing developers & builders to create large structures and leading to excessive construction activity. Many industry experts have been urging the state government and Hyderabad Metropolitan Development Authority (HMDA) to implement a FSI regulation to regulate construction of excessively large projects.

There is another issue with all these new residential projects – these projects are mainly concentrated in a few areas in the Western corridor of Hyderabad, away from the Outer Ring Road and established areas. The growth in demand has been supported by frequent launches over the past 4-5 years. However, this demand is not uniform across all development areas of Hyderabad which is resulting in a skewed growth in the coming years. As new launches come up in areas further away from the city & ORR where there isn’t sufficient physical & social infrastructure, the supply-demand curve will also suffer due to this as buyers & demand for property is less developed areas will be low.

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