Visakhapatnam: The residential real estate market in Visakhapatnam showed mixed performance between 2019–20 and 2023–24. The city recorded an average annual supply of 4,977 units, ranking 8th among the top 10 tier-II cities in terms of new supply.
However, Visakhapatnam experienced an 8% decline in new residential supply during this period, according to a ‘Tier II Residential Overview’ research report conducted by PropEquity. The research covered the residential real estate market performance in 30 major tier-II cities across the country, including Visakhapatnam, Vijayawada, and Guntur from Andhra Pradesh.
The decline in annual supply in Visakhapatnam may be attributed to saturation in key residential zones, cautious developer sentiment amid economic fluctuations and uncertainty surrounding the location of the capital, as well as delays in project approvals and land availability.
For instance, the initial surge in demand was driven by the 2019 announcement of Visakhapatnam as the prospective executive capital. However, this growth plateaued in the last two years leading up to the 2024 elections, suggesting a market slowdown amid shifting political, economic, and demand dynamics.
In terms of absorption growth, Visakhapatnam saw a 63% change in absorption rates between FY2020 and FY2024, ranking 10th among tier-II cities. Of the 30 cities assessed by PropEquity, Visakhapatnam with a score of 400 ranked 14th in the overall rankings.
In contrast, Guntur’s performance was subdued, with a score of 200. While it witnessed a 67% increase in new supply, the absence of price appreciation and limited absorption growth indicated weak demand, possibly due to cautious market sentiment.
Vijayawada fared slightly better, scoring 240, though it also exhibited minimal supply and absorption growth, coupled with stagnant pricing. Both cities underperformed relative to Visakhapatnam, largely due to limited infrastructure development and weak market dynamics. While Vijayawada was placed 24th, Guntur ended up in 25th.
Speaking to TOI, CREDAI Visakhapatnam chapter chairman KSRK Raju stated that the real estate market in the city has somewhat slowed in recent years. “Earlier, we used to receive a lot of enquiries and sales from NRIs, but this has seen a steep decline. The boost in infrastructure and announcements such as the commencement of operations by TCS and Google may change this trend in Visakhapatnam,” said Raju.
The ranking methodology of PropEquity considered six key parameters, including market grade, price appreciation, absorption rate, changes in new supply, market size, and project completion rates. For instance, market grade was scored based on average yearly launches, with cities that had more than 20,000 launches receiving the highest score.
Similarly, price appreciation was evaluated based on the percentage change over a five-year period, with growth above 55% receiving the top score. Changes in absorption and supply were assessed, with higher scores given to cities demonstrating growth above 100%. Market size was gauged by the percentage change in absorption in crore rupees. The cumulative scores from these parameters determined the final rankings, with cities such as Ahmedabad, Gandhinagar, Bhubaneswar, Nashik, and Vadodara emerging as the top-performing tier-II cities during this period.
However, Visakhapatnam experienced an 8% decline in new residential supply during this period, according to a ‘Tier II Residential Overview’ research report conducted by PropEquity. The research covered the residential real estate market performance in 30 major tier-II cities across the country, including Visakhapatnam, Vijayawada, and Guntur from Andhra Pradesh.
The decline in annual supply in Visakhapatnam may be attributed to saturation in key residential zones, cautious developer sentiment amid economic fluctuations and uncertainty surrounding the location of the capital, as well as delays in project approvals and land availability.
For instance, the initial surge in demand was driven by the 2019 announcement of Visakhapatnam as the prospective executive capital. However, this growth plateaued in the last two years leading up to the 2024 elections, suggesting a market slowdown amid shifting political, economic, and demand dynamics.
In terms of absorption growth, Visakhapatnam saw a 63% change in absorption rates between FY2020 and FY2024, ranking 10th among tier-II cities. Of the 30 cities assessed by PropEquity, Visakhapatnam with a score of 400 ranked 14th in the overall rankings.
In contrast, Guntur’s performance was subdued, with a score of 200. While it witnessed a 67% increase in new supply, the absence of price appreciation and limited absorption growth indicated weak demand, possibly due to cautious market sentiment.
Vijayawada fared slightly better, scoring 240, though it also exhibited minimal supply and absorption growth, coupled with stagnant pricing. Both cities underperformed relative to Visakhapatnam, largely due to limited infrastructure development and weak market dynamics. While Vijayawada was placed 24th, Guntur ended up in 25th.
Speaking to TOI, CREDAI Visakhapatnam chapter chairman KSRK Raju stated that the real estate market in the city has somewhat slowed in recent years. “Earlier, we used to receive a lot of enquiries and sales from NRIs, but this has seen a steep decline. The boost in infrastructure and announcements such as the commencement of operations by TCS and Google may change this trend in Visakhapatnam,” said Raju.
The ranking methodology of PropEquity considered six key parameters, including market grade, price appreciation, absorption rate, changes in new supply, market size, and project completion rates. For instance, market grade was scored based on average yearly launches, with cities that had more than 20,000 launches receiving the highest score.
Similarly, price appreciation was evaluated based on the percentage change over a five-year period, with growth above 55% receiving the top score. Changes in absorption and supply were assessed, with higher scores given to cities demonstrating growth above 100%. Market size was gauged by the percentage change in absorption in crore rupees. The cumulative scores from these parameters determined the final rankings, with cities such as Ahmedabad, Gandhinagar, Bhubaneswar, Nashik, and Vadodara emerging as the top-performing tier-II cities during this period.
