Hyderabad real-estate recalibration, anyone?

State of Real Estate

1. Unsold residential inventory skyrocketed by 21%
2. year-on-year, reaching approximately 1.42 lakh units in the first half of 2026
3. The average home ticket size in Hyderabad crossed Rs 2.03 crore (a 10% year-on-year hike), effectively pricing out middle-class and affordable segment buyers
4. Only 3% of new supply targets the affordable segment
5. Gulf based NRIs are delaying real estate commitments above Rs 3 Cr

C Srikanth Director, Metro India

The Hyderabad real-estate market has experienced a demand-supply mismatch in the last two years (2024-2026) due to a severe corporate-led demand freeze, geopolitical friction from the War in the Middle East alongside local structural and IT employment factors resulting in choked developer cash flows. The fallout: Falling sales volumes, a massive surge in unsold inventory and NRIs delaying real estate commitments. Additional pressures from the drought situation in Telangana, water and power shortages, funding constraints, delayed government projects, elevated approach road costs, legal hurdles, and delayed payments to contractors further intensify the strain on the sector.

The demand-supply mismatch

Unsold residential inventory skyrocketed by 21% year-on-year, reaching approximately 1.42 lakh units in the first half of 2026. Despite slowing absorption, developers launched 49,656 new units in H1 2026 alone—a steep 37% increase that continues to outpace actual demand. The time required to clear existing stock has ballooned to 28–29 months, meaning it will take nearly two and a half years to absorb current inventory at current sales speeds. The average home ticket size in Hyderabad crossed Rs 2.03 crore (a 10% year-on-year hike), effectively pricing out middle-class and affordable segment buyers. Only 3% of new supply targets the affordable segment.

These figures underscore a structural imbalance. New supply continues to enter the market at a rapid pace while buyer absorption lags, creating an overhang that pressures both pricing power and developer liquidity. The escalation in average ticket sizes has further narrowed the pool of eligible end-users, particularly in the mid-income category that traditionally sustained volume growth in the city. Acute shortages of water and power disrupt construction schedules, raise operational costs for ongoing projects, and deter end-users concerned about basic utilities in new residential developments.

Geopolitical transmission layer

The ongoing conflict in West Asia acts as a direct macro-economic shockwaves filter, squeezing the local real estate ecosystem through multiple transmission channels. Gulf-based Non-Resident Indians (NRIs)—historically key anchors for high-ticket primary residential sales in premium micro-markets like Kokapet and Tellapur—have moved into a defensive cash conservation mode. Faced with regional uncertainty, airspace disruptions, and employment caution in the Gulf, NRIs are delaying real estate commitments above Rs 3 Crore.

The war has disrupted major shipping routes triggering global supply chain shocks, driving crude oil and freight costs through the roof. Essential construction materials like steel (up 20%), aluminium, copper, and electrical wiring have spiked, placing an unplanned 10% premium on project budgets. Global corporate caution stemming from the war has caused multinational tech companies—who anchor Hyderabad’s commercial leasing demand—to freeze expansion budgets. This macro tightening flows directly downstream into local white-collar employment.

The combined effect of capital hesitation from overseas buyers and elevated input costs has compounded the strain on project economics. Developers face higher construction outlays at the same time that high-value sales from the NRI segment have slowed markedly.

The tech-sector link

Hyderabad’s housing market is heavily dependent on the IT sector, and corporate cost-cutting has weakened residential demand. IT companies have reduced bench strength and shifted to just-in-time hiring, creating employment uncertainty and delaying property purchases.

Automation, AI integration and global restructuring have intensified job insecurity among mid-level professionals. Layoffs, stagnant salaries and shrinking disposable incomes have reduced consumer confidence. This segment was a key buyer base for 2BHK and 3BHK homes, particularly in peripheral areas, and its withdrawal has slowed sales. Banks have also tightened home loan scrutiny for IT employees, with employment gaps and concerns over company stability affecting loan eligibility and disbursements. Consequently, weaker buyer confidence has slowed bookings and disrupted builders’ cash flows across IT-dependent residential markets.

Specific Product Segments & Zones Flat Sales (Apartments)

Actual sales volumes for flats dropped by 13% to 26,068 units in H1 2026, marking a 4.5-year low. Only about 20% to 21% of the 1.42 lakh unsold units are fully ready for possession. The remaining 79% are under-construction projects slated for 2027 and beyond, increasing capital lock-up risk for developers. The concentration of inventory in incomplete stages heightens financial exposure for both builders and buyers who have already committed funds. Water and power shortages linked to the state-wide drought further slow finishing works and possession timelines.

Plot Sales (Open Plots)

Plot sales are heavily reliant on speculative investor capital. With liquidity tightening due to global macro fears and local regulatory scrutiny, secondary plot transactions have sharply decelerated. Massive layout launches in far-flung suburban corridors lack immediate groundwater infrastructure and approach roads, causing end-users to defer purchases. High costs of building approach roads, combined with legal issues surrounding land and access rights, add further delays and expenses. The slowdown in speculative activity has removed an important source of early cash flow that many developers previously depended upon.

Zonal Highlights (Southwest Zone & Kompally Area)

Heavily driven by pre-launch investor flipping, a strict regulatory crackdown on unauthorized pre-launches has frozen local speculative capital in the Southwest. Real transactions are moving at a crawl. In the North peripheral belt, Kompally apartment prices have stabilized around Rs 5,850 to Rs 7,140 per sq. ft. However, the area is suffering from an infrastructure deficit (water scarcity and traffic bottlenecks), keeping mid-income end-users highly cautious. These local constraints, intensified by broader drought-driven water and power shortages across Telangana, reinforce the pattern of cautious buyer behaviour.

Ultra-luxury & ultra-large flats (Beyond 5,000 sq. ft.)

The hyper-luxury segment consisting of massive sky-villas exceeding 5,000 sq. ft. is facing a severe liquidity crisis. These units command ticket sizes crossing Rs 6 Crore to Rs 8 Crore, where the pool of qualified buyers has shrunk drastically due to global macroeconomic tightening. Buyers are shifting away from sprawling layouts that carry massive monthly maintenance premiums with low functional utility, turning instead to optimized 2,300–3,000 sq. ft. formats. Demand for oversized ultra-luxury inventory has contracted sharply as preferences move toward more efficient living spaces.

Core reasons for tight developer cash flows (Last 1–2 Years)

Developers heavily depended on unregulated pre-launch sales to raise funds for land acquisition. Strict TG-RERA enforcement has curtailed this funding channel. Rising material costs, driven by geopolitical tensions and domestic pressures, have added Rs 150–Rs 300 per sq. ft. to builders’ burden, as they cannot revise prices for existing buyers.

HYDRAA action, Section 22A registration scrutiny and delays in government approvals have further affected buyer confidence and bank disbursements. Record unsold inventory has prompted banks and NBFCs to tighten construction finance. Cash-flow shortages have led to delayed vendor payments, forcing suppliers to demand advance payments instead of extending credit.

Delays in public infrastructure projects, contractor payments and civic amenities have added to project costs and timelines.

Together, weak demand, rising costs, regulatory tightening and restricted funding have triggered a significant recalibration of Hyderabad’s residential market, constraining developer operations and project momentum through 2026.