Division not to affect Real Estate Industry: Experts
At times, actions speak for themselves. By giving a clean mandate for the Bharatiya Janata Party to form the government at the Centre as also for Telangana Rashtra Samithi and the Telugu Desam Party both in Telangana and Seemandhra respectively, citizens of erstwhile Andhra Pradesh are more than eager to see what lies ahead beyond the pain of separation.
While the borders for the newly formed states are almost on the verge of finalization, over the last 60 years and more, a sizable population from the 13 districts of Seemandhra has made Hyderabad their home for being the capital city of Andhra Pradesh and several other inherent factors like quality of life and its accepting nature.
Naturally, now with the division, and the formation of a residual Andhra Pradesh, apprehensions are high among the people in Telangana, Seemandhra and others across the globe on what will be the fate of their properties in Telangana (especially Hyderabad). At the same time, the investor community is quite enthusiastic about return on investment in Seemandhra for the short-term as of now.
Vizag Industrial Scan, caught up with heads of major Real Estate Associations of Andhra Pradesh (they have not divided themselves yet) to find out how would property rates fluctuate in the next one, five and 10 years when Hyderabad will no longer be the joint capital for Telangana and Seemandhra.
According to Shekar Reddy, National President, The Confederation of Real Estate Developers’ Associations of India (CREDAI), people and political leaders have to come out of the mindset that there is some competition between Telangana and Seemandhra.
He says, “Both Telangana and Seemandhra have their own advantages. Till date, we had 28 states out of which seven or eight have been prominent in terms of growth. Now, it is time to ensure that the 29th state of Telangana is also as competitive as the other top states. At the same time, utilize this opportunity to build a world class smart city as a capital for Andhra Pradesh.”
“The Narendra Modi Government has been talking about developing 100 “Green Smart Cities” across India of which, at least two or three can be identified for Seemandhra. Visakhapatnam with several PSUs to its credit, a decent port and its cosmopolitan culture can be developed as one of the “smart cities” and business capital of Andhra Pradesh,” said Mr. Shekar Reddy and added “grant of central institutions, special packages, new capital funding, irrigation project funding can all be utilized to propel growth in Seemandhra in addition to the Oil and Gas exploration along the long coastal line.”
Echoing similar opinion, Mr. Dasharath Reddy, President, APREDA (Andhra Pradesh Real Estate Developers’ Association) said, “Seemandhra as a State is ahead of Telangana with four Seaports, five Airports and lot of potential for tourism due to long coastline and National Highways going from Chennai to Orissa. Real Estate Development is bound to happen and rates will pick up in due course of time though it might take anywhere from five to 10 years.”
On Telangana, Shekar Reddy said that unlike Seemandhra where a majority of the 13 districts have a moderate growth rate and are developed, the development of Telangana hinges on the growth of Hyderabad.
Stating that Hyderabad is a “global city,” and it has reached certain population across country because of being centrally located, moderate climate, low cost of living, Hindi & Urdu as common languages and affordable healthcare, Shekar Reddy said, “Hyderabad as on today is the biggest hub for education. It was long known as ‘Bulk Drug’ capital of India and IT and Bio-tech sectors have fuelled the growth like anything.”
Speaking on similar lines, Mr. Raj Padmanabhan, former President of Andhra Pradesh Realtors Association said, “Hyderabad is a great ‘smart city’ prospect with the ‘Metro’ to be commissioned by mid-2015. The new rail system will reduce the traffic chaos as also fuel development along the ITIR corridor of 160 kms where land will be available at reasonable prices.”
Mr Jaiveer Reddy, President, Credai Hyderabad said, “The FSI policy in Telangana is the best in Asia with no limit on the number of floors to be constructed. With commercial built up space rate being 1/3rd of the national rate and surplus manpower, Hyderabad provides the best alternative for an end-product given the lowest built-up rates.”
“Hyderabad will bounce back from the uncertainty created in the last five years and more due to the bifurcation issue,” said Dasharath Reddy and added, “the proposed ITIR Corridor worth Rs 2.19 lakh crore will create 15 lakh direct jobs and 55 lakh indirect jobs taking the total employment count to 70 lakh jobs over a period of 25 years.
This requires Hyderabad to grow by three to four times which is a great opportunity for the realty sector. Within six months, property values will grow by 15-20% (increase in rates and growth) and within two years will grow to 40-50%. This will be followed by a healthy growth of 10-15% in the next five to 10 years.”
Stating that Seemandhra or Telangana, the biggest beneficiaries of the bifurcation are the backward districts in both the States, Shekar said, “Since the districts have been reduced to 13 and 10 both in Seemandhra and Telangana respectively, the growth concentration will reach till the Mandal level as a result of which land costs in those areas will increase and people there can have better standard of living. Seemandhra can put to optimum use of the packages it is due for by developing industrial clusters in these remote areas based on the availability of natural resources like minerals and ore in those areas.”
Shekar Reddy, cautioned people in Seemandhra not to fall prey to the speculative tactics of “brokers” in real estate who are literally gambling on where the capital will be located. Instead, he said that investing in backward districts is a viable option.
“Telangana needs to develop a industrial corridor all along the river Godavari starting from Adilabad (Coal), Karimnagar (Turmeric and Sugar Cane), Khammam (Iron Ore)and Warangal (IT) as Medak, Mahbubnagar, Ranga Reddy and Nalgonda are already on the development part and two or three “smart cities” can be developed in these districts,” said Dasharath Reddy and added growth in tier-I and tier-II cities is must if urbanization has to increase to 30 per cent in Telangana as against the current rate of 24 per cent. Pilferage of growth to tier-2 and tier-3 cities will reflect growth from the root level which is always good and stable, opined the experts.