Telangana Government To Scrap GO To Down The Rising Real Estate Prices in Hyderabad

The average property price in Hyderabad is the second-highest in the country. The property rates also increased by 7% YOY in the first quarter of 2022. The average price of a property in the city is Rs. 6000 per square foot. It is the second most costly in the country. So, the Telangana Cabinet's decision to repeal Government Order No. 111 would help to stabilize Hyderabad's skyrocketing real-estate prices.

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government to scrap GO on increasing land rates

The average property price in Hyderabad is the second-highest in the country. Another good news for Hyderabad real estate developers is that the city’s property rates increased by 7% YOY in the first quarter of 2022. The average price of a property in the city is Rs. 6000 per square foot. It is the second most costly in the country.

According to the real estate business PropTiger.com, property in Mumbai is the most costly in the country, costing Rs. 9800 per sqft. Meanwhile, in the same period in 2021, house sales in Hyderabad fell by 15%, while new supply soared by 92% in Q1 of 2022.

In the first quarter of 2022, 14572 new residences got built in the city, but only 6556 got sold. Currently, there are 73651 unsold items. According to estimates, it will take 42 months for a real estate developer in Hyderabad to sell off unsold stock. 

Do not miss Hyderabad: The Emerging destination for commercial real estate investment in India.

Are property prices in Hyderabad expected to skyrocket further?

Property prices in Hyderabad vary from Rs. 6000 to Rs. 6200 per square feet, while in Mumbai range from Rs. 9800 to Rs. 10,000.

The average construction cost for developers has grown by 10 to 12 percent in the last year, mainly to increasing input prices caused by supply-side limitations. Rising costs will have much of an impact on developers in the cheap and mid-market categories, which already have smaller margins. With wholesale price inflation and material costs rising by double digits, building costs might climb by another 8-9 percent by December 2022.

Do not miss Mumbai, Bengaluru, and Hyderabad: Cities leading India’s residential real estate recovery in 2022.

The cost of critical commodities like cement and steel had climbed by more than 20% every year as of March 2022. These account for the lion’s portion of the entire building cost. As the market recovered from the aftermath of Covid-19, developers have been wary about raising prices. However, Colliers reported that developers have begun to feel the squeeze of increased expenses and have also reconsidered their pricing approach.

The average price of a property in Hyderabad and other cities in India is as follows.

Name of the cities

Price per square feet (in Rs.)

Mumbai

9800-10000

Hyderabad

6000-6200

Chennai

5700-5900

Bengaluru

5600-5800

Pune

5400-5600

Delhi NCR

4500-4700

Kolkata

4300-4500

Ahmedabad

3500-3700

Source: Siasat

So, what exactly is this GO?

The GO or Government Order No. 111, passed in 1996, was intended to safeguard the catchment regions of Osmansagar and Himayatsagar, two Nizam-era reservoirs created to suit Hyderabad’s drinking water needs. As a result, the expanse of 1.30 lakh acres has gotten excluded from Hyderabad’s growth story. Per the GO, no industries or housing colonies may be developed within a 10-kilometer radius of the two reservoirs, protecting around 1.30 lakh acres from unrestricted expansion by real-estate players. Aside from conserving the catchment regions, the GO sought to prevent water bodies for drinking water from being contaminated.

But why is the GO getting scraped?

The government is repealing the GO in response to farmer and industrialist worries, the lack of development, and the inability to expand the substantial region that the order safeguards. Telangana Chief Minister K Chandrashekar Rao defends the choice to abolish the GO, claiming that the two reservoirs had fulfilled their function successfully and that the city was no longer reliant on them. He also stated that Hyderabad no longer relies on these reservoirs for water because it now has access to clean drinking water from the Godavari and Krishna rivers. The takeaway for the state is that the decision would put an estimated 25,000 acres at the discretion of the ruling party.

The removal of the GO has gotten hailed by the Telangana Real Estate Developers Association (TREDA), which includes roughly 300 leading builders in the state. The removal of the Order would have little effect on market pricing in neighboring areas. TREDA also requested that the government create Sewerage Treatment Plans (STPs) to handle the drainage water.

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