Real estate on deathbed in Amaravati
Amaravati: The recent announcement of the YSRCP Government in Andhra Pradesh that it might develop three capital cities instead of one, has taken a heavy toll on the real estate sector in Amaravati, the Greenfield capital city planned by the previous government, with sales collapsing and prices nosediving.
The tremors of the capital-shifting are also being felt in Vijayawada and other key local real estate markets that surround Amaravati.
"Real estate sector came to a standstill in Amaravati area as no one expected Andhra Pradesh government to shift core capital from here.
This decision came as bolt from blue and people are a confused lot now. Sentiment is very weak in all the local markets," said Vijaya Sai Meka, founder of S&S Green Projects, which is currently developing real estate projects in Vijayawada and Hyderabad.
In the last few years, large number of builders launched apartment and other residential real estate projects in Mangalagiri, Tadepalli, Vijayawada, Guntur and other areas that are in close vicinity to Amaravati, in the anticipation of rise in demand for new residential units owing to the presence of the Greenfield capital city.
These builders and their projects landed in trouble now as demand disappeared into thin air after the YSRCP president and AP Chief Minister Y S Jagan Mohan Reddy announced in the Assembly last month that AP would have three capitals with Executive Capital (administrative setup) coming up in Visakhapatnam.
Under these plans, legislature will be in Amaravati while AP High Court will be shifted to Kurnool, thus splitting administrative machinery three-way.
Visakhapatnam will be the capital for all practical purposes as Secretariat and CM's office will be located there.
Venu Srinivas of Price2Buy, a Vijayawada-based real estate consultancy, told The Hans India that sales in Vijayawada fell by 40 to 50 per cent while prices were down by around 25 per cent after the proposal of three capitals came up.
"In Amaravati area, the sector is in standstill mode as there are no buyers. In Vijayawada town, buyers are playing waiting game as they expect prices to fall further. The sector is in chaos now," he said.
In Vijayawada, prices of residential units range from Rs 40 lakh to Rs 1.25 crore.
Realty sector insiders say it will take a long time for the sector to come out of the present crisis. "Land price in Amaravati area was hovering around Rs 1.5 crore per acre.
The price has drastically fallen after the AP government's latest announcement. Furthermore, people are also not ready to buy now.
Same is the case with sellers. It will take one to two years for the sector to come out of this shock," said Ramanjaneyalu, another real estate agent.
Interestingly, some big real estate players initially evinced interest in launching projects in Amaravati after the then TDP government finalised the location of the capital and announced Land Pooling Scheme in January 2015 to acquire land.
However, these big realty companies backed off later as there was an inordinate delay in grounding the capital city works.
These companies may be heaving a sigh of relief now for not venturing into Amaravati market given the current developments.
However, some feel that the capital issue is unlikely impact to land prices in areas like Jaggayyapeta which also falls under AP CRDA (Andhra Pradesh Capital Region Development Authority).
"People are very rich here. They don't make distress sales. I don't think land values will come down even if capital is shifted from Amaravati," said Venkateshwara Rao, a resident of Jaggayyapeta.
Land prices are still hovering around 2-2.5 lakh per cent near highway road at Jaggayyapeta, he added.
However, Vijaya Sai Meka says that Amaravati can still be developed as capital city without much investment. "The investment of over Rs 1 lakh crore that people are talking about will be done over next 15-20 year.
Amaravati is a market-driven project. If the AP government kick-starts the development, the city will grow on its own. But we don't know what will happen now," he remarked.