Middle class home aspirants tread with caution
Nestled on the banks of the River Krishna, Vijayawada was once known as the beating commercial heart of united Andhra Pradesh, a city that buzzed with trade, transport, and ambition.
Today, it’s also seen as the gateway to Amaravati with readymade access to national highways, railways and airport (Gannavaram). On paper, the city should be thriving. However, the boom in Amaravati is proving to be a bane to the real estate market in Vijayawada.
With the return of the TDP-led NDA government in 2014 land prices have skyrocketed in the city and its surroundings.
As per some sources land prices in and around the capital region, Amaravati, have witnessed a significant surge with prices increasing from ‘20,000 per square yard to ‘60-70,000 in a couple of months. Similarly, realtors in Vijayawada also have upped the property prices, and in some instances, by about ‘15,000 to ‘20,000 more per yard than real market prices in the suburbs and even in new residential ventures.
This as per many buyers has created a bubble in the real estate market, shooing away their chance of buying a home in Vijayawada.
Recent trends point to a significant real estate market slowdown. As per local sources, land and house registrations dropped by 70% in the last year alone and by nearly 40% over the past four years.
As per the data accessed by Vizag Industrial Scan, Vijayawada revenue division (overall) recorded a negative -29.88% growth rate.
As for the revenue, the division collected 27,165 lakhs against the cumulative target of 39,823 lakhs so far.As for the revenue, the division collected 21,758.48 lakhs against the cumulative target of 27,865.72 lakhs so far (See table).
“Many realtors are holding on to elevated prices, hoping to gain from the Amaravati development boom.
But it is not working,” said Mr A Siva Reddy, former chairman of CREDAI Andhra Pradesh (Confederation of Real Estate Developers’ Associations of India) speaking to Vizag Industrial Scan.
“Whatever real estate activity is happening, it is mostly for investment purposes, that too by a few. The average middle-class family can no longer afford the inflated prices.
Without financial stability, the middle class cannot risk buying properties at such high prices,” he added.
Realtors who have held onto their properties for the past four or five years are reluctant to sell for slimmer margins, even as sales decline in Vijayawada.
They believe that if they could hold onto their properties longer, it might lead to a recovery in the real estate sector following the development of Amaravati, a primary reason for the current inflated prices.
On the other hand, the NRIs who have a significant presence in Krishna and NTR districts are also abstaining from fresh investments. “NRIs are not buying properties due to prevailing economic conditions in the US and are also uncertain about investing in areas surrounding Vijayawada or near Amaravati due to significant overpricing,” observed the President of the Andhra Pradesh Document Writers Association Mr Tummalapalli Hari Krishna.
Many would-be homeowners say that they are simply waiting for the market to cool down. It may be noted that the State government has recently revised several regulations to give an impetus to the real estate sector and market experts hope that this would also correct real estate prices for the benefit of the common buyer.
