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Telangana: to be or not to be……

PHOTO: K. R. DEEPAK

TAKING A DIP: Land prices in Visakhapatnam have come down, thanks to a variety of reasons including the Telangana factor.

The outcome of the byelections in Telangana region appears to have left the builders and real estate agents in and around Vijayawada a tad disappointed. Real estate agents here feel that the land prices on the city outskirts will drop and the present slump in construction industry, in all likelihood, could continue for another six months.

Whenever the issue of separate Telangana took centre-stage, real estate business in this region has been witnessing a sudden boom. Particularly, since the inception of the TRS seven years ago, political statements given by the party in a way stimulated the real estate business here.

The builders, who are facing several challenges like spiralling prices of material, non-availability of labour and a drop in sales due to inflation, pinned their hopes on the outcome of the byelections and assessed that in case the TRS emerged victorious, it would provide a breather to their businesses.

“The result is a major setback to the construction industry,” avers G. Raja, a senior builder in the city. “Had the verdict been in favour of a separate Telangana, those settled in Hyderabad would have come here to invest their savings in real estate. Now, we don’t think there is any reason for them to invest here,” he reasons out.

“Once there is a drop in land prices, the buyers will expect reduction in the cost of flats. Practically, it is not possible for us to do so, as we have already made huge investments by procuring material at higher costs and engaging labour by paying higher wages,” says Y.V. Ramana Rao, general secretary of the Builders Association, Vijayawada.

“At present, we haven’t found any factor that stimulates the real estate market. A change in political equations in the State perhaps will provide a boost to our business in coming days,” he says in an optimistic tone.

Vizag real estate facing temporary lull, writes B. MADHU GOPAL

After the boom in past few years, there is a temporary lull in real estate for past few months in Visakhapatnam. The costs, however, continue to be high despite the lull in sales.

The initial boom was attributed to the talk of north Andhra becoming a separate State with either Vijayawada or Visakhapatnam as the capital. The talk triggered a spurt in land prices not only in Visakhapatnam but also in Vijayawada and Guntur. With prices of land rising dramatically in a matter of just two years, prospective buyers started fanning out into the suburbs.

“The prices of land increased four to five times in the city and doubled in the suburbs. The minimum cost is Rs.3,500 per sft in the city and there are hardly any sales for past few months. The hike in interest rate on home loans also contributed to the drop in sales,” says M.V.V. Satyanarayana, chairman of Apartment Builders Association and managing partner of MVV Builders. He expressed the view that the prices would have increased further had the Telangana issue not suffered a setback during the recent byelections.

K.S. Chandran, a senior builder and past president of the Builders Association, attributes the stagnation in sales to the high prices and says, “I have never heard of land prices coming down in the city in my 20 years of experience as a builder”.

He, however, admits that whenever the Telangana issue comes to the fore, land prices spiral. But they did not go down even after it almost became a ‘dead issue’.

A licensed document writer at Akkayyapalem G. Ramesh concedes on not many registrations happening in last few weeks but feels it to be due inauspicious ‘moodam’ .

Poor cash flow, declining share market and abnormal prices were the reasons for the slowdown in sales, feels B.R. Raju, proprietor of B.R. Raju & Company. “The quantum jump in prices can be attributed to real estate developers’ anxiety to woo more customers ,” he says.

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