GUNTUR: A week after Chief Minister N Chandrababu Naidu relaunched works in Amaravati, prices of land have shot up to record highs. According to local realtors, land prices in the region have surged by 60% to 100% to Rs 50,000 to Rs 60,000 per sq. yard. The boom in land prices has triggered a debate on whether it is artificial or if it will sustain in the long run.
Over the past 10 years, Amaravati has seen a V-shaped recovery in the real estate segment. Following the bifurcation of Andhra Pradesh in 2014, N Chandrababu Naidu, the then Chief Minister, had announced Amaravati as the capital of the residual State, triggering a surge in land prices. As a result, real estate in the greenfield city, spanning 217 square kilometres, became a subject of much debate and speculation.
However, when YSRC president YS Jagan Mohan Reddy took charge in 2019 and announced the three-capital proposal, land prices in the region crashed, reportedly by 70%. According to a realty agent, land prices in Amaravati were around Rs 25,000 to Rs 40,000 per sq yard in 2019 and dropped to almost Rs 9,000 to Rs 18,000 per sq yard under the Jagan government. With the TDP-led NDA coming back to power in the State and Naidu asserting that Amaravati will be the sole capital of Andhra Pradesh, the prices shot up to Rs 3 crore to Rs 6 crore per acre in prime areas in all 29 villages of the capital region.
Realtors in Amaravati opined that the sharp rise in land rates reflects the investors’ interest in Amaravati and confidence in Naidu. “We are seeing a huge rise in prices for both commercial and residential projects in Velagapudi, Kondampalem, and localities near educational institutes like VIT, and SRM,” said Kondaveeti Srinivasa Rao, chairman of Kondaveeti Developers.
With Amaravati gaining positive traction, real estate players and investors in Hyderabad are keen on returning to Andhra Pradesh, Rao said and further predicted that the prices might further increase in the next few years as more promising projects are likely to come up in the capital city.
On the other hand, CREDAI (Confederation of Real Estate Developers’ Associations of India) State president YV Ramana Rao predicted that prices might not increase. He pointed out that investors are still waiting for development of basic infrastructure, including construction of roads, proper sewer system, and electricity. This will also enable to develop more residential projects in the region, he said.
‘Current realty boom is artificially inflated by local agents’
Stating that the current boom is artificially inflated by local agents, he noted, “The prices are at an all-time high. It is not profitable for any investor to purchase land at such prices. It might take another six months to have an actual real-estate boom. A price correction of 10-20% is likely.” Despite the rise in land prices, the real estate market in Vijayawada and Guntur have not been impacted.
Land registrations in Amaravati mandal of Palnadu district witnessed a growth rate of 47.05% in the current financial year. As per data available on the official website of the Registration and Stamps Department, registrations worth Rs 12.54 crore have been done till September this year against Rs 9.59 crore in the previous year.
It may be pointed out that in the last three months, the World Bank and the Asian Development Bank (ADB) have come forward to lend Rs 15,000 crore. Recently, HUDCO (Housing and Urban Development Corporation) also approved to extend a loan of Rs 11,000 crore for the development of Amaravati.
With the total sum of Rs 26,000 crore, the government aims to complete phase-1 works in the capital city. Additionally, the Centre has also approved key projects in Amaravati, including the construction of the outer ring road, and the railway line project, connecting major cities of Chennai, Hyderabad, Kolkata and Nagpur. The recent developments have led to more people investing in real estate.