Hyderabad realty aglow, speculation may burst bubble
The real estate market in Hyderabad is going through a golden period. From the state government to developers and companies, all are rushing to get their hands on land parcels to make money. The Hyderabad Metropolitan Development Authority (HMDA) has raised Rs 7,000-odd crore through auctions in the last 10 days. It is going in for yet another auction to rake in at least Rs 800 crore. There is a reason for HMDA, of course. It is in a hurry to pool resources for the cash-strapped state government.
In the auction in Mokila, the square yard cost touched Rs 1.05 lakh when the upset price was Rs 25,000. HMDA received Rs 100 crore per acre in the auction at Kokapet. Who are the buyers? Mostly real estate companies. The fact that land values have skyrocketed in this manner is cited as a mark of development by the state government.
Even TDP chief N Chandrababu Naidu rued that if in the past one could buy 10 acres in Telangana by selling one acre in Andhra, the situation has now turned quite the opposite. Now, let us look at the number of registrations in Hyderabad. A total of 15,355 housing units were registered in the first six months, as opposed to 14,693 during the same period last year. Compare it to the unsold inventory, and we see that anywhere between 80,000 to one lakh units are unsold, even if assuming a good part of them is under construction. Hyderabad has become expensive in housing only after Mumbai, with the average
cost of a square foot hovering around Rs 10,000. Housing has become unaffordable for the middle class. If one were to analyse the registrations, a majority are in the Rs 20–50 lakh bracket, which begs the question: who will purchase the costly units popping all around?
With inflation rising and construction materials also costing a lot, there is an element of speculation at play. The government, too, is encouraging the same. For instance, it scrapped GO 111, opening up lands in 84 villages for real estate. Banking heavily on real estate and jacking up the prices may eventually hurt the consumer. A case in point is China, where President Xi Jinping cautioned that “housing is for living, not for speculation.” Hyderabad is riding a tiger. The government may seek to mobilise resources but should refrain from promoting speculation.