After a four year hiatus, residential real estate prices are set to rise at a relatively faster pace in Hyderabad with the Government move to carve out a separate State of Telangana.

The research arm of credit rating firm Crisil stated that due to the Telangana agitation residential capital values in Hyderabad had stagnated since 2009. Some of the investors had opted for other cities such as Bangalore and Chennai.

Given the business potential of Hyderabad, the decision to carve out Telangana, the demand will pick up over the next few months, according to Sandip Patnaik, Managing Director, Hyderabad, Jones Lang LaSalle India.

The decision, which was hanging fire for the last 3-4 years, had given rise to a lot of doubt in the minds of residential end users, investors as well companies that were considering Hyderabad’s for its unique business potential.

Investors who had been playing with the notion of pulling out of Hyderabad because of the unresolved political climate there will now have the requisite level of assurance that they had made the right decision, and more investments will now pour in. The fact that Hyderabad will become the joint capital for the next ten years is especially encouraging for this city’s real estate market, Patnaik said.

The commercial real estate segment is also likely to pick up. This decision will prove to be a game-changer for Hyderabad real estate.

According to Crisil, the real estate prices are likely to pick up due to buoyed investor sentiment of political and economic stability. This will pave way for resurgence in corporate investments, demand for more space and help create new jobs.

The rate of growth of capital values is projected to grow by more than 6-7 per cent, which was its earlier estimate.

The gap of prices between Hyderabad and Pune, Bengaluru and Chennai will narrow.

Real estate sector players in Hyderabad, who were hoping a decision will clear the confusion in the minds of potential investors, are happy with the move.

(This article was published on July 31, 2013)
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