With TDP becoming key partner at Centre, greater emphasis in real estate and infra expected in Andhra

New Delhi [India], June 11 : With Telugu Desam Party becoming a key partner in the Union government, there is likely to be greater emphasis on real estate infrastructure and pro-business policies in Andhra Pradesh.
This is expected to draw in more IT firms and other industries, increasing the demand for commercial real estate. Parallelly, this could lead to a moderation in real estate growth in Hyderabad, a key metropolitan in the region.
The recent Lok Sabha election results and N Chandrababu Naidu's Telugu Desam Party joining the NDA as a key partner at the Centre, besides it coming back to power in Andhra Pradesh at the same time with an overwhelming majority paint positive picture for the state's real estate and infrastructure ecosystem.
"The peoples' mandate in neighbouring Andhra Pradesh with a large majority and an important ally at the center may lead to moderation of real estate growth in Hyderabad," real estate consultancy firm Anarock said on Tuesday, analysing consequences of election results and real estate market in booming Hyderabad and neighbouring Andhra Pradesh.
Land prices in Hyderabad had appreciated by over 30 per cent in the last three years, which is an indication of strong real estate market in the major city in Telangana. The inflated land costs have influenced prices rises across real estate asset classes in the metropolitan.
However, with a strong government in Andhra Pradesh which happens to be a key ally in NDA, Anarock asserts that some out-migration of businesses or residents to Andhra Pradesh is possible, especially if the N Chandrababu Naidu-led government offers lucrative incentives.
"This could draw some investments away from Hyderabad, leading to a temporary correction in Hyderabad's real estate prices and a potential dip in the commercial real estate market," said the real estate consultant in its analysis.
The Telugu Desam Party notched up 16 seats in the 2024 Lok Sabha elections in the 25-seat state, becoming the largest partner of the BJP-led NDA alliance, which secured 292 seats to form the government in New Delhi. In the Assembly polls, TDP and other NDA partners together won 164 seats in total out of 175 seats.
N Chandrababu Naidu has already proved his mettle in developing Hyderabad as a major city with world class infrastructure, and was successful in attracting major IT-ITeS, pharmaceutical and industrial companies to the state, when he was the chief minister of the then undivided Andhra Pradesh. Telangana was carved out of Andhra Pradesh in 2014.
The skyrocketing growth in Hyderabad over the decades has been instrumental in generating employment and attracting talent from across the country, thus also spurring rapid real estate development.
According to ANAROCK Research, Hyderabad's residential market has exhibited robust growth between 2021 and Q1 2024, with a cumulative total of approximately 218,800 new residential units launched and 154,300 units sold. 2023 itself witnessed a peak in activity, recording nearly 76,300 units launched and 61,700 units sold.
Property values in Hyderabad also saw a substantial rise between 2021 and 2024. On average, prices appreciated by 45 per cent, reaching Rs 6,350 per sqft in early 2024 from Rs 4,372 per cent sqft in 2021.
"Now, the recently concluded election mandate has renewed the prospects of Amaravati in Andhra Pradesh," Anarock said.
The volume of residential real estate launches in Hyderabad may also "rationalize" as investors and buyers scout for competitive opportunities in neighbouring Andhra Pradesh, it added.
"Andhra Pradesh's potential development can be a double-edged sword for Hyderabad real estate. However, the overall impact is likely to be positive as Andhra Pradesh's growth could spark a ripple effect, attracting businesses and investors to the entire region," it asserted. There could be an increased demand for office and commercial space in Hyderabad, especially along key corridors like the Hyderabad-Vijayawada highway.
On a positive note, it also painted a bright picture for Hyderabad. Anarock believes the presence of a large talent pool and developed infrastructure of the city, with enhanced connectivity, could make it difficult for companies to venture into a new state in the short term.
While Hyderabad's established infrastructure, strong IT base, and cosmopolitan character are unlikely to diminish significantly, the impact on the city's real estate market will be influenced by how development unfolds in Andhra Pradesh, it opined.
Hyderabad, like many others from across the country, are among preferred locations for the people from Andhra Pradesh, as the city offer opportunities for higher education, employment, entertainment, advanced healthcare needs and shopping for special occasions.
"Overall, the long-term outlook for Hyderabad's real estate market remains positive. Nevertheless, national market trends and the evolving situation in Andhra Pradesh bear watching," Anarock added.