All about the GRID Policy in Hyderabad

In line with the Look East Policy (LEAP) that aims to fuel realty growth in the eastern part of Hyderabad, the Telangana government has now announced a Growth in Dispersion (GRID) Policy. The prime focus of the GRID is to foster commercial expansion in the northern and southern zones of the city to relieve the western precincts from the existing real estate burden.

Driven by the IT/ITeS sector and Banking, Financial, Services and Insurance (BFSI) industry, Hyderabad has witnessed massive real estate growth in the last five years. However, a significant portion of the development remained restricted only to the western zone of the city primarily on the back of robust infrastructure in the popular micro-markets of HITEC City, Manikonda, Ameerpet and Jubilee Hills, among others. With commercial expansion, residential stakeholders also followed suit. Nevertheless, the accelerated pace of growth over a short span has significantly affected western micro-markets. Population explosion, soaring vehicular traffic, water crisis, and deteriorating infrastructure have made the western quadrant of Hyderabad reel under tremendous pressure, leaving little scope for future development.

Therefore, to tide over the situation, the Telangana government has announced a Growth in Dispersion (GRID) Policy to encourage commercial development in the northern and southern zones of the city. As these zones offer large land tracts, the government aims to create an ecosystem that attracts commercial investors and boosts holistic real estate growth in these regions.

GRID Policy and the proposed incentives

The GRID policy aims to attract developers to establish IT parks, malls, hotels and residential spaces in the north and southbound areas of Hyderabad. For the same, the government has announced financial and flexibility-related incentives across four categories - developers, IT firms, hotel operators and retailers establishing malls and retail markets.

• The financial sops would include reduction or waiver of development fee, impact fee and State Goods and Services Tax (SGST).
• Under flexibility-related incentives, a relaxation in the minimum IT processing area for projects developed on the government allotted land would be offered. Presently, projects established on the government land in west Hyderabad have to dedicate at least 60 percent of the area for IT processing, and the remaining space is utilised for other developments.

Essentially, the prime emphasis of the government is to foster real estate expansion in the under-developed pockets of Pocharam, Uppal, Adibatla, Kollur, Usmannagar, Shamshabad, Bachupally, Kompally and Budwel clusters. Besides, the government would also float tenders for infrastructure improvement projects in these areas to create a desirable ecosystem.

The policy would lay the groundwork for residential developments

Appreciating the government's strategy, Sudheer Reddy, Property Consultant, Ninestar Infra, shares that the commercial development would open new avenues for residential expansion in the city. At present, the majority of the commercial and residential demand in Hyderabad is in the westbound areas due to the accessibility to various infrastructural facilities. However, with soaring population influx and massive real estate growth in the past, the land supply in the west has weakened, which has severely affected the property prices. For instance, capital ‘asks’ in Manikonda has almost doubled from Rs 2,400 per sq ft to Rs 4,500 per sq ft in the last 3-4 years. HITEC City has also displayed a similar trend with housing values increasing from Rs 4,100 per sq ft in 2016 to Rs 7,100 per sq ft in 2019.

Therefore, to curb the disparity in the development of real estate and property values, policies such as LEAP and GRID are utmost essential. Developed infrastructure and business-friendly policies would not only attract more real estate investors to the city but would also keep property values in check.