Exploring the hidden secrets of Hyderabad. HNN discovers a high-tech boomtown with new hotels and renovated palaces.

The draw of Hyderabad is its astonishing backstory, which can make you feel at times as if you are in India’s Oz. How else to explain the peculiar magic of this city deep in south-central India? Part Brigadoon and part Epcot, it pulls you almost immediately into its hallucinatory past. On a balmy night in November, down the narrow lanes of the old city, we drive through the pearl bazaar and the throng of auto rickshaws near the Charminar, the grand arch and mosque that is the central artery of Hyderabad.

Suddenly, I see goats. Thousands of goats. A wall of goats. Children carrying goats on the backs of bicycles, goats in rickshaws being held by young boys in white kurtas and caps. Goats with horns painted pink and yellow, wearing bells. Goats being led toward festive striped tents. Music! “Is this a goat festival?” I ask my guide. “Madam, no! This is the night before Eid al-Adha—a most holy day on the Muslim calendar. Tonight, there are prayers, tomorrow, they will be halal.”

The quick and holy execution of ritual slaughter continues in Hyderabad as if its storied former ruler, the nizam, still hid his jewels in the engines of his rusty Rolls-Royces in his 60-car garage. I look out the window to see clusters of women in hijabs gliding slowly through the pearl souk. Hyderabad has the medieval grace of the Persian and Urdu courts. As we drive into the Chowmahalla palace complex, I hear the astonishing cascade of goat brays, horns, and the call to prayer.

Once the finest royal residence in the country, this palace in the old city was a derelict Xanadu for decades. Inside, a frail older man in a black jinah makes his regal way through a bejeweled audience in his former childhood home. A whisper goes through the crowd. “It’s the nizam! The nizam!” Suddenly, there is a cascade of royal salaams, an elaborate davening as Hyderabad’s elite and guests flown in by the Taj hotel company for the grand opening of its newly renovated property, the Taj Falaknuma Palace, raise their hands toward their faces, bow their heads, and pay tribute to the prince who managed to lose what was not so long ago the largest fortune in the world. Gazing at the group gathered, the nizam, Mukarram Jah, managed to look both terrified and furious, as if he were none too happy to be on display along with the newly reupholstered sofas and refurbished chandeliers from his grandfather’s day.

One of his sons, a friendly young Australian real estate man, spent some minutes looking for the nizam’s vanished medications. “Has anyone seen my father’s pills?” he asked me. “He loses everything.” Was he trying for a double entendre? Indeed, the nizam had managed to squander most of what was left of his meager inheritance. When he fled these now-restored palaces to tend a sheep station in the Australian bush, he left behind a legacy of titles: His Exalted Highness, the Regulator of the Realm, the Rustam of the Age, the Aristotle of the Times, the Victor in Battles, the Leader of Armies.

Here, in the old city, was the Islamic center of India, the center of Deccan arts and culture, known for its gracious court manners and such lavish jewels as the Jacob diamond, which the previous nizam once used as a paperweight on his desk.

I first came to Hyderabad by accident. Stuck in Goa last year with bad weather and a newly arrived throng of beefy tourists from the Ukraine at our hotel, I came across a tattered copy of The Last Nizam, Australian journalist John Zubrzycki’s riveting history of the court. The city was only a two-hour flight away. The next day, I landed in one of the most automated airports in the world and drove past ugly quarries of dusty granite, passing women walking on the road wearing hijabs and herding goats.

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Although vast fortunes were made here in the granite and cement industries, Hyderabad at first appeared grimy and run-down. There were travel alerts from the U.S. State Department about riots by a local separatist movement. Passing the Tata Motors showrooms I saw broken windows. Time to eat: my first dinner was at the bustling Paradise Restaurant, a shrine to Hyderabad’s prized cuisine, biryani. In a long room filled with noisy families, I shared a table with two young software engineers diving into mounds of the pillowy rice-and-meat mix. “Everyone is working too hard now in India,” one told me. “What has happened to our way of life?”

Hyderabad has become a hub of India’s high-tech boom; Google’s India headquarters is in what’s known as Cyberabad, just a short drive away. Microsoft, Oracle, Infosys, and Dell are also here, and Facebook chose the city for its first office in India. Communications guru Suhel Seth always comes to test-market his campaigns in hitec (Hyderabad Information Technology Engineering Consulting) City, Cyberabad’s official name. At night, sleek geeks meet at the gleaming bar of the Park, Hyderabad, a new hotel with a terrace that overlooks the swampy lake in the center of town. That lagoon reflects the paradox of Hyderabad and of the vast state of Andhra Pradesh. The lake divides the city and has a Muslim name, Hussain Sagar—sagar meaning ocean in Hindi.

In the center of the lake there is an island with a towering statue of Buddha. Northeast of the lake is Hyderabad’s twin city, Secunderabad, an oasis of green space and low yellow buildings used by the British military during colonial days. The clubs and the golf courses that used to ban Indians are now just as exclusive and reserved for Hyderabad’s professional elite. I stopped to see a little-known building marked the retreat and discovered an elegant bungalow where Winston Churchill stayed when he was posted to the east. On the way back, I ate a quick dosa at Tibbs Frankie, a new chain of stands that you find in places where India’s surging upper-middle class lives, such as nearby Banjara Hills and Jubilee Hills.

Not that long ago, the Hyderabad court threatened the creation of the new nation. Descended from the caliphate of Islam, the seventh nizam (the current nizam’s grandfather) made his fortune from the vast stores of minerals and diamonds in the region—and the tributes paid by people who requested an audience with him. One of the more compelling, and possibly apocryphal, stories was that the jewels—and hundreds of millions of rupees—were kept unattended and unlocked in the basements of the Chowmahalla palace. The cash was hidden in newspapers. When at last the storerooms were opened, it was discovered that rats had nibbled their way through $30 million or so.

I was staying at the Taj Banjara, and one day, killing time, I sorted through a stack of dusty curios in a shop off the lobby. “I’m Babu’s brother,” the manager said, with the snobbery of old Hyderabad and the assumption that I would know who “Babu” was—or care. I spotted an album that looked like a prop from The Jewel in the Crown. Dark and faded, the front was stamped in white: mixed bag 26 september 27 to june 1937. Inside was a sepia world of old Hyderabad—nawabs posed in their turbans, playing tennis. “Can you tell me the history of this?” I asked. An hour later I was still in the shop. Babu, his brother insisted, was one of the dealers who had been brought in by the nizam to unload his basements of storied treasures. I bought the album to discover that I had indeed found an authentic royal book—but it had belonged to a lesser heir.

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The next day, Babu himself offered to take me on a brief tour of the old city. Our first stop was not the massive Salar Jung museum, mentioned in the guidebooks, but the smaller H.E.H. the Nizam’s Museum, the home of the sixth nizam, who ruled from 1869 to 1911. I followed Babu through a decaying and dusty garden that fronted a school. In the back, we discovered the smaller and very run-down former servants’ quarters, kept only half lit and overseen by what appeared to be a single geriatric attendant. We stepped into a dingy but vast hall that once served as an enormous closet. Then the lights went out. We were forced to consider the 150 empty walnut cabinets and the pulley elevator with just a flashlight. The surrounding rooms had solid silver and gold tributes from his silver jubilee. This nizam was rumored to have never worn the same outfit or pair of shoes twice.

The royal ruler had multiple palaces, hundreds of acres, 200 wives, 14,000 legal dependents, and a kingdom half the size of France supported in part by the diamonds that came from the nearby Golconda reserve. With 20 million Hindus and 3 million Muslims in his territory, the canny nizam wanted a separate state when India became independent and had a militia to back him up. If you half closed your eyes in the city, you could imagine the current nizam’s grandfather still shuffling around the palace, hoarding a secret treasure of priceless diamonds, rubies, and pearls the size of jawbreakers.

Famously ascetic, he lived in one room in the vast complex and served visitors a single tea biscuit, yet he donated a squad of fighter planes to the war effort during World War I, for which a grateful England gave him the title His Exalted Highness. When his then-34-year-old grandson came back to Hyderabad in 1967 to take over the title, he discovered a snake pit of intrigue. His dying grandfather was convinced that he would be poisoned. Jah shared the belief and pitched a tent on the palace grounds. Soon after, he discovered the open vaults of the nizam’s treasures—emeralds and rubies and parrots made of enormous Golconda diamonds. All of them were covered in webs of dust (one of the nizam’s most stirring beliefs was that dust protected his riches from theft).

There were thousands of harem photographs, family albums, and warehouses of ceremonial coats with solid-gold threads. Scheming financial advisers managed to plunder most of the estate. After years of court fights, the government of India whirled in and took the gems for a national museum. Jah was paid $40 million—a fraction of the stones’ worth. And that money was frozen by litigation. Soon after, Jah fled to Australia to ride around on tractors most of the day. He eventually wound up in a small apartment in Turkey.

Hyderabad has long vexed the rest of India. There is the matter of the language—Telugu—which most people outside India have never heard of but that is spoken here by a population larger than the U.K.’s. The writer David Shulman, an expert on Indian languages, describes Telugu’s mesmerizing musicality as having more syllables per second than almost any other spoken language. (Urdu is another major language in Hyderabad.)

I was on my way to Ramoji Film City, the largest moviemaking facility in the world, a good hour from town. Tollywood is almost as huge a movie industry as Bollywood, yet the films and TV shows it cranks out each year are rarely shown outside the state. The day we went to Ramoji, the studio had been virtually shut down by the news on the front pages. The star of the current epic hit had spoken out against the separatist movement. Riots had erupted at some theaters. We drove up a two-mile hill and discovered yet another Ruritania. Soundstages, Indian villages and train stations, and Ramoji’s Tuileries were eerily empty. I asked to meet the reclusive billionaire, Ramoji Rao, who is South India’s Rupert Murdoch and controls the largest Telugu newspaper and all the screens—television and film—and was amazed when he agreed.

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Taken by golf cart to his corporate headquarters, I found Rao in an office to rival that of Louis B. Mayer. I was strictly warned to stay off politics. When I walked into his office, Rao, who made one fortune from the manufacture of Priya brand chutneys and other prepared foods, stared gloomily into a wall of TV’s, each screen with a different broadcast. He wore a white shirt and spoke in a low tone. Rao could not wait to plunge into the day’s news. “The separatists are ruining our business!” For the next hour I was treated to an inside-India barrage of political intrigue that few outsiders could ever hope to comprehend.

After leaving Ramoji, I stopped at the Golconda Fort, necessary to understand Hyderabad’s grandiose xenophobia. You go through a dusty warren of streets and arrive at the massive ramparts and stone walls. In the 17th century, the citadel was able to stave off the Moghul armies for months. The fort towers over a granite hill and is protected by massive gates with iron spikes to obstruct war elephants.

A short drive away is the nizam’s elegant Falaknuma Palace, on its own granite hill to the south of the city. The more than decade-long Taj hotel renovation project was the dream of the nizam’s former wife, Turkish socialite Princess Esra. As steely and determined as she is visionary, she oversaw every detail with autocratic zeal—reportedly, hundreds of carpets were rejected until she was sure that she had the correct color—meticulously restoring the neo-Palladian whimsy.

In November, during the grand opening, Hyderabad was awash in nizam nostalgia. I was greeted by a man in an elegant jacket who handed me his card. Prabhakar Mahindrakar, the Taj Falaknuma Palace’s historian, it said. He had been hired decades earlier by the Indian government as a security guard. “It was my dream to be here,” he said. All that weekend, he conducted tours for Bo Derek and Princess Michael of Kent, among many others, of the Falaknuma’s wonders. The library has now been restocked with the nizam’s nearly 6,000 rare books and manuscripts.

Sitting at a desk now used by guests in what was the nizam’s office, I reached for a sheet of stationery that said falaknuma castle. Mahindrakar gasped. “That is the nizam’s original letterhead!” he said. From the desk, I could see out to the front entrance where the nizam’s original carriage galloped up the hills, passing gardens and gatehouses. That carriage had been reconstructed from parts in the storage rooms for a lavish weekend of lunches, dinners, and rides. Over and over again, Mahindrakar repeated: “Falaknuma. It means ‘mirror in the sky.’” I looked out to the courtyard to see the nizam’s gazebo, where Princess Esra greeted guests. The call to prayer suddenly blared from below. It was dusk, and the lights of the old city glowed in the pink sky. #KhabarLive