Hyderabad’s Real Estate Bubble Deflates as Prices and Inventory Soar

Hyderabad's real estate market has witnessed the steepest decline in housing sales among India’s top nine cities, according to PropEquity. The data analytics firm reported a staggering 38–43% drop in residential transactions over the past three quarters.

Residents like Shekhar Reddy, a 52-year-old IT professional, have shelved selling plans due to the sluggish market response. His upscale 3BHK apartment in Kokapet attracted only a handful of lowball offers in six months.

The city’s inventory overhang — the time it would take to clear unsold units at the current pace of sales — stands at 20 months, the highest in the country.

Luxury Segment Most Affected

Luxury housing, which comprises 20% of Hyderabad’s real estate pie, has taken a major hit. Properties priced over ₹2 crore saw unsold stock rise 6% year-on-year to touch 30,320 units in Q1 2025 — the highest unsold luxury inventory across Indian metros, as per Anarock.

Experts pointed out that the speculative rush in the post-pandemic boom led to oversized, overpriced offerings that outpaced genuine demand. Projects like Poulomi Palazzo and SAS Crown, soaring to 55–57 floors in Kokapet, initially drew attention but failed to sustain buyer interest.

Mismatch Between Product and Demand

Sameer Jasuja, founder of PropEquity, attributed the drop to excessive supply. Between 2021 and 2023, new launches skyrocketed to 70,000–90,000 units per year, from a modest 20,000–30,000 earlier.

Developers built large 5,000–7,000 sq. ft. apartments costing ₹5–7 crore — offerings that saw limited traction in a city where even affluent buyers often prefer compact formats. Amit Bagri of Kotak Mahindra Investments compared it with Mumbai, where 2,000 sq. ft. is considered sizeable.

The absence of FSI (Floor Space Index) caps in Hyderabad encouraged developers to build taller and larger structures. However, this freedom has contributed to the supply-demand imbalance, industry insiders said.

Office Space Also Under Pressure

The commercial office segment is facing its own woes. Since 2020, Hyderabad has added 59 million sq. ft. of office stock but absorbed only 48.5 million sq. ft. Vacant inventory has ballooned to 28 million sq. ft. as of Q1 2025 — again the highest among top seven cities — and is projected to rise further, according to real estate consultancy Vestian.

Prices Rose Too High, Too Fast

Real estate prices in Hyderabad saw a sharp post-pandemic surge. One developer cited how rates in a flagship project climbed from ₹5,000/sq. ft. to ₹13,000/sq. ft. in less than two years — only to correct back to ₹9,000, still finding few takers.

A significant portion of this volatility is being attributed to speculative investors, who reportedly form 30–35% of the market — a trend matched only by NCR. While end-user demand remains stable, investor-driven purchases have led to artificial spikes and subsequent slowdowns.

Distress on the Horizon?

Private equity firms are closely watching the market, anticipating distress-led investment opportunities. Some firms that exited during the pandemic are now waiting to re-enter if conditions worsen.

However, not all experts are sounding alarm bells. Vivek Rathi, Head of Research at Knight Frank India, felt it was too early to panic, though he acknowledged that a prolonged slowdown could eventually pose challenges.

Disclaimer: The information provided in this article is for general informational purposes only and is based on publicly available data, industry reports, and expert commentary at the time of publication. Ghar.tv does not guarantee the accuracy, completeness, or timeliness of the data and insights shared. Readers are advised to conduct their own research and consult with qualified professionals before making any real estate investment or financial decisions. Ghar.tv shall not be held liable for any loss or damage arising from the use of this information.