Rent shock: Hyderabad rises, affordable living falls

Hyderabad’s rental market is experiencing a dramatic shift, propelled by the city’s rapid economic growth and the influx of migrants drawn to its thriving IT sector and quality of life. While the city continues to attract professionals and businesses at an unprecedented pace, rents have soared, leaving middle-class families and new residents struggling to find affordable housing. With post-pandemic economic trends, rising construction costs and urban migration, Hyderabad is facing the dual challenge of sustaining growth while maintaining livability.
A rising demand fueled by the IT boom
The technology sector remains Hyderabad’s biggest growth engine, with the city emerging as a prime hub for IT and related industries. High-paying jobs in the tech corridors of HITEC City, Gachibowli and the Financial District have led to surging demand for housing, particularly among migrant professionals who prefer to live close to their workplaces.
Prakash Yadav, Chief Operating Officer at INDIS Group, explains the phenomenon: “With the influx of professionals from across the country, particularly from cities like Mumbai, Delhi, Lucknow and Bengaluru, there is an increased demand for housing in close proximity to workplaces. While local residents may not mind commuting from more distant areas, migrants often prefer to live near their offices, further driving up demand and rental prices in areas like the Financial District and HITEC City.”
For migrants like Aniket Sharma, an IT professional who relocated from Lucknow, rising rents have begun to limit housing options. “When I moved to Hyderabad two years ago, a decent 2BHK was within my budget. Today, the same apartment costs nearly 25% more. I’m now looking at places farther from the tech hubs, but the commute will be tough,” he says.
The emergence of ancillary industries, such as retail and hospitality, has further compounded demand. “The creation of additional jobs in sectors like hospitality—with the rise of new star hotels—has created exponential demand for both residential and service-oriented accommodations,” Yadav adds.
The city’s rental prices are not just a reflection of demand but also increasing development costs. The pandemic disrupted the supply chain, driving up the prices of construction materials like cement and steel while creating labor shortages. Developers are passing these costs onto buyers and renters alike.
Rajasekhar Reddy, President of the Telangana Builders Association, underscores this critical aspect: “Construction costs have increased by over 30% in the last two years, driven by inflation in raw materials and a shortage of skilled labour. Developers have little choice but to adjust pricing, which ultimately impacts renters.”
At the same time, changes to Floor Space Index (FSI) regulations have encouraged high-density projects, but the supply of affordable housing remains limited. The bulk of new developments cater to premium buyers or high-income tenants, leaving a growing section of middle-class families in the lurch.
Migration and market dynamics
The affordability that once distinguished Hyderabad from cities like Mumbai and Delhi is gradually eroding. Rents in the western corridor—traditionally a preferred zone for IT professionals—are now catching up with metro benchmarks.
Prakash Yadav reflects on this trend: “Compared to cities like Mumbai and Delhi, Hyderabad still offers a lower cost of living. However, rental costs are steadily catching up, reflecting the broader transformation of Hyderabad into a cosmopolitan city.”
For example, a 2BHK apartment in Gachibowli or HITEC City now commands monthly rents of Rs35,000—half of what similar apartments cost in Mumbai—but that figure represents a 20% hike over the past year alone. For new migrants to Hyderabad, these numbers are a reality check. “Migration into the city, both from within India and abroad, has surged,” Reddy observes. “Hyderabad’s infrastructure, climate, and work opportunities are key attractions, but with every new resident, competition for affordable rental properties intensifies.”
The shift in demographics has reshaped neighbourhoods. Localities like Banjara Hills and Jubilee Hills cater to premium clientele, while areas like Miyapur and Kukatpally—once known for affordability—are becoming increasingly expensive. The result is a growing affordability crisis, pushing lower and middle-income tenants to the city’s outskirts.
For renters like Preeti Menon, a marketing executive who relocated from Bengaluru, this has been an unexpected challenge. “I came to Hyderabad for better opportunities and a better quality of life, but I didn’t expect rents to escalate so quickly. Co-living spaces help for now, but I wonder how sustainable it is,” she shares.
In response to soaring rents, co-living spaces have emerged as an attractive alternative for young professionals and singles. These shared housing arrangements offer amenities and flexibility at relatively lower costs.
“As the cost of living rises, co-living spaces have emerged as a potential solution, particularly for younger professionals,” Yadav explains. “However, even co-living units are feeling the pinch, with property owners converting apartments to capitalize on short-term rentals. This trend, while innovative, does not address the deeper need for affordable housing.”
The co-living boom may temporarily cushion the rental surge for some, but it underscores Hyderabad’s transformation. The city’s rising costs, once unthinkable, are now a defining feature of its real estate market.
A city at the crossroads
Despite these challenges, Hyderabad continues to hold a competitive edge over Mumbai, Delhi and Bengaluru, where the cost of living remains significantly higher. Yet the city risks alienating its growing migrant workforce if rents remain unchecked.
Rajasekhar Reddy believes that targeted policies can help: “To sustain Hyderabad’s growth, there needs to be a focus on affordable housing. Incentivising developers, regulating construction costs and expanding infrastructure to the city’s outskirts can ease the current pressures on renters.”
Experts argue that unless supply catches up with demand, Hyderabad’s affordability advantage will fade. In areas like Kompally and Bachupally, newer projects are catering to budget-conscious buyers, but these localities still lack the connectivity and infrastructure of central tech hubs.
Hyderabad’s real estate boom is a testament to its economic ascent, but the city now faces a critical test: Can it sustain its growth while remaining livable for its expanding population? The city’s future hinges on policies that bridge the gap between supply and demand, ensuring housing options for all income groups.
As Prakash Yadav concludes: “Hyderabad’s transformation into a premium real estate destination is undeniable, but this growth must be inclusive. Without affordable housing solutions, renters will face increasing hardship in what is otherwise a city of immense opportunity.”
For now, Hyderabad stands at the crossroads—its soaring rents a reflection of its success but also a warning that unchecked growth can come at a cost.