Telangana stir evens out Andhra realty

Real estate prices in Hyderabad have fallen by 20-30 per cent, while those in Visakhapatnam have risen in the same range.

The real estate sector in Andhra Pradesh is stabilising. The Telangana agitation over the last one year has seen real estate prices dipping in Hyderabad and soaring in coastal Andhra. Gradually, prices in both areas have settled.

In Hyderabad and its surrounding areas, prices fell 20-30 per cent, while those in Visakhapatnam and other districts of Andhra and Rayalaseema regions increased by the same range.

But now, prices have reached a point where they will not fall further in Hyderabad nor rise in other regions.

The reason? "A majority of people had put off their decision to buy property in Hyderabad over the last one year in the hope that prices would fall further in the wake of the Telangana agitation. However, they are realising that the price correction will not be big in the days to come. Prices are at their lowest now: 25-30 per cent less than what they were in 2008-09,"' says K Ravinder Reddy, chairman & managing director of Janapriya Projects.

In terms of sales, there was an acute dip in and around Hyderabad and a sharp rise in Vijayawada, Visakhapatnam and Kurnool areas for almost a year from December 2009.

But now, demand has stabilised. "People who have property in Telangana could not dispose of it due to a steep fall in the prices in Hyderabad. Moreover, buyers too, were shying away," says A V Subba Raju, managing director of Lotus Group, which has developed a gated community - Lotus Landmark -  in Vijayawada.

C Shekar Reddy, vice-president, Confederation of Real Estate Developers, says prices crashed in the second half of 2009 when the movement for a separate Telangana state peaked.

Premium projects in Hyderabad that fetched Rs3,800 a sq ft now get Rs2,900 a sq ft, he points out.

With the Telangana agitation gaining momentum, several Hyderabad-based companies started venturing into the Visakhapatnam market finding it a safe bet. This, in turn, raised land prices. "Land prices here have gone up by 35-50 per cent," says D R K Raju, managing director of Aruna Constructions in Visakhapatnam.

For example, land in Seethammadhara is now Rs 50,000 a sq yard from Rs 38,000 a year ago. In MVP Colony, it is Rs 48,000 a sq yard from Rs 34,000.

The outskirts, too, saw a sharp rise. The cost in Madhurawada a year ago was Rs 14,000 a sq yard and is now almost double that at Rs 21,000.

In Gopalapatnam and Pendurthi areas, too, land prices have climbed to Rs 10,000-12,000 from the earlier Rs 6,000-8,000, he informs.

"Last year, we sold our plots in the Kothavalasa area at Rs 2,500 a square yard. Land in the same are is now being priced at between Rs 3,500 and Rs 3,700 a square yard," says Bollineni Sridhar, managing director of Visakhapatnam-based Suvarnabhoomi Real Estates.

The increased activity in the real estate segment in Visakhapatnam is reflected in the increased revenues to the state exchequer.

According to Venkateswara Rao, district registrar-Visakhapatnam, the department's revenue on account of stamp duty and registrations between April and December 2009-10 stood at Rs98 crore and jumped to Rs 185 crore during the same period of 2010-11.

With one more quarter to go, revenues by March-end are expected to be Rs 214 crore, compared with Rs 143 crore for the full financial year of 2009-10.

In Hyderabad, too, according to Reddy, the wait-and-watch game is nearing an end. The city is now seeing a rise in demand after going through a lull for over eight months.

"Supply, though, will be lower," he says. It is estimated that 15,000-18,000 flats are sold in a year in Hyderabad and surrounding areas.

A few commercial properties that were vacant are also being filled up as new employees join the workforce. Also, not many new ventures are coming up in the city, as sales were not up to the mark in the last one year.

In associate with V D S Rama Raju & D Gopi.