Many NRIs are investing in branded gated communities in Hyderabad, especially in the western part of the city, with the expectation that their properties will provide steady rental income along with long-term appreciation.
For many, these apartments are seen as safe investments that can generate returns while they continue to live abroad.
However, the current situation is raising concerns.
In one major branded gated community in West Hyderabad, around 40% of the apartments are reportedly vacant even after handover, with many owners struggling to find tenants.
Another large project from a reputed developer has come up next to it, with nearly twice the number of apartments. This could further increase the supply of rental homes in the area.
The situation is different for owners who actually live in Hyderabad. They occupy their homes and therefore do not depend on rental income.
But investors, particularly NRIs who bought apartments purely as investments, face a difficult situation when tenants are unavailable for months.
Adding to the pressure is the monthly maintenance cost. Depending on the apartment size and community facilities, owners may have to pay anywhere between Rs 10,000 and Rs 20,000 every month when the flat is vacant.
If a tenant occupies the property, the rental income generally helps cover this expense.
As a result, some owners may be forced to rent premium apartments for only Rs 25,000-Rs 30,000 a month, largely to recover maintenance costs.
That is a worrying sign for investors who expected strong rental returns from luxury gated communities.
If rental values remain under pressure because of excessive supply, property appreciation could also slow down.
For NRIs who invested expecting both rental income and capital appreciation, Hyderabad’s gated-community market may therefore become a much tougher investment proposition than anticipated.
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