At a time when the real estate sector is looking at a bleak future in Andhra Pradesh due to an official review of development projects in capital city Amaravati, the state government has increased land rates by up to 10%, raising concerns over additional burden of registration fee on property buyers and a further dip in demand. While the state government is putting a bold face to say that all is well in the real estate sector, realtors claim that increasing the registration charges at this point in time is a worrisome move.
For Andhra Pradesh, realty business started to develop largely around capital city Amaravati as investors from all over the state, other states and even NRIs purchased plots and flats in the past five years. However, the review of Amaravati project by the government has virtually caused panic in the sector.
“We are studying the Amaravati project in detail. Discussions are going on over development of Amaravati capital. We will announce a decision very soon,” minister for municipal affairs Botsa Satyanarayana said.
Construction activities around Amaravati have been halted as the government is reviewing the progress. The state government has decided to cancel all works which have not commenced yet or stop payments for works in which less than 25% progress has been made, he added.
According to real estate players, the latest increase in land rates is only to fill the coffers as the state is facing a serious financial crisis.
“The state government has increased the registration value of property across the state. Post this, the registration rates have also increased thus putting extra burden on buyers. This move could have been avoided at this point in time when the whole sector is clueless about growth,’’ a member from Credai said, adding that the inventory is piling up with no takers.
Niranjan Hiranandani, founder and MD of Hiranandani group and president of National Real Estate Development Council (Naredco), said, “The creation of a new state capital brings in challenges as also opportunities. From Gandhinagar (Gujarat) in the 1960s to Naya Raipur (Chhattisgarh), we have seen government-led infrastructure growth and planned development creating opportunities for the private sector to drive growth of the new urban conglomerations.’’
Amaravati, the planned capital city of Andhra Pradesh, had a good start in terms of planning and roping in right sort of global partners to create a city that would be the best incorporating Telugu culture and history in the design form of the new city. “As Amaravati grows and the capital region, which includes Vijayawada and Guntur, keeps pace, it opens up opportunities galore. A positive and constructive approach will pave the way for further development and growth in Andhra Pradesh’s new capital city,’’ he added.
According to Satish Vadaga, city lead – Hyderabad, Anarock Property Consultants, Amaravati was an ambitious project where, rather than buying land, it was pooled to build the city under the new law passed in 2014 known as the Andhra Pradesh Capital Region Development Authority (APCRDA) Act.
“Under the previous state government, the area witnessed a lot of real estate activity and evoked interest by major investors such as World Bank, AIIB, among others. However, with the new government taking charge, there is uncertainty prevailing and real estate demand is currently tepid in the area. The change in guard has also impacted prices with few areas seeing a dip,’’ he said.
Most recently, after World Bank opted out of this mega project, investors are in a wait-and-watch mode and waiting for the new government’s plans and announcements to develop Amaravati. “The prevailing price of apartments here is anywhere between Rs 3,000-Rs 5,000 per sq ft while land rates hover between Rs 13,000-Rs 27,000 per sq yard. The dip in demand is largely due to the uncertainty looming over the real estate market here. Moreover, the new government has categorically stated that it will order a probe into land acquisition in previous years. If done, it may give a big jolt to the realty market,’’ he added.
According to local reports, projects worth over Rs 20,000 crore were awarded to Singapore and few other infrastructure companies for urban planning and development, transportation, waste and water management, power, building and construction, public healthcare and public libraries.
“The status of projects is not known as the previous government created a lot of hype than reality,’’ said an official from the revenue department. “There has been distress sale across Vijayawada and Guntur. Land rates have dropped alarmingly in the last few weeks. There is no clarity on the new government’s vision on Amaravati. If the government wants Amaravati to be only a functional city, with some administrative buildings, the real estate market will further crash,’’ a member from Credai said.
