Hyderabad Real Estate and Foreign Investments

by : George Gonigal

While billions of dollars are chasing Hyderabad-based real estate developers, the city markets are expected to be vibrant in the medium to long term. The end-user is likely to be benefited the most as the property builders will get enough of funds to maintain liquidity. Availability of channelised finance will also cut costs and bring greater efficiency in the system.

According to market analysts, one more advantage that foreign investment giants can bring Hyderabad real estate is technological exposure. Vis-Ã?-vis the gestation period that a property project takes to reach completion, technology plays a critical role. This is the period when a property builder has to manage liquidity bearing interest on the capital being invested in the project. That's where the cost of property rises significantly. After all, a developer has to add all these overheads on to the cost of property and even manage profitability for his own survival. Use of advanced technology help reduce this period and therefore the cost of construction comes down, which is then passed on to the customer in proportion.

Availability of sufficient finance also enable volume building in the markets. For instance, when Europe-based JM Financial declared to invest Rs 600 crore in Hyderabad-based Maytas Properties, the first thing that the developer announced was to expand its benchmark Hill County township project to phase II. The builder, at firsthand, look towards the advantages of scale the moment it gets sufficient capital to support its plans.

Counter View

Though these developments are taken as positive for the property end-user, there are many who apprehend that foreign money would push property prices up in sky. Investment groups eye Indian markets for its wealth building potential and they are not concerned about the end-user, they say. Property development costs may come down for the developer but it is no guarantee that they will pass on the benefit to its customer, given the pressure of generating returns for its investing partner.

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