Real estate in Amaravati, the new capital of Andhra Pradesh, is on right track. Response is good for the projects which have been taken up in the locations and areas where there is requirement. Like in any other market, there is oversupply in some locations. For example, Guntur has some excess supply. However, market is now slowly absorbing all the inventory there too.The key factor is that so far there is no culture of people from outside coming and purchasing properties here.
Even people living in Vijayawada and surrounding cities used to buy properties in Hyderabad. This trend is changing,and people are now buying properties here.The overwhelming response for HappyNest, a project taken up by Andhra Pradesh Capital Region Development Authority (APCRDA), is an eye opener for those who say there is no demand here. Apartments in the project were sold like hotcakes.
All the flats put up for auction have been sold and there is a waiting list of 18,000. Developers can reach out to the wait listed customers and address their concerns about delivery time and quality. Then, there will be a big opportunity. However, developers should always go for right configuration and pricing that will suit the prospective buyers and their investment capacity.
How big is the real estate market here?
The migration has just started. Andhra Pradesh High Court has come here recently. It is not easy to assess the market size now. It will take a couple of years more. There are 25,000 government employees. Most of them are still commuting between Hyderabad and Vijayawada. Those employees who have service more than 10 years will eventually settle here as good education facilities have come up here. I feel at least 20,000 employees will have their roots here.
What is the ideal price range for a project to succeed in AP capital region?
In my opinion, projects that offer residential units priced from Rs 40 lakh to Rs 90 lakh will do reasonably good as majority of people can buy them. But it doesn’t mean that this is the rule for every location. For instance, higher size units are imperative if one plans a project in the upscale localities in Guntur. What I have quoted is mid-level segment.
But I strongly feel that there will be a huge demand for apartments priced between Rs 25-50 lakh even if the projects are located a little away from the city.However, the key to success lies in identifying right location for such projects and marketing them effectively. Of course, people prefer to buy in areas like Tadigadapa, Poranki, Penamaluru and Patamata where land rates are high, ranging from Rs 25,000 to Rs 50,000 per square yard. In some locations, prices are equivalent to Hyderabad while in other places, they are low.
The problem here is that there is no need for people to sell their lands as they do farming land so are not willing to part with their lands. Of course, land prices also need to come down. At present, land is priced between Rs 75 lakh to Rs 2 crore even on the city outskirts. It is not affordable for people who want to set up industries here.
But there is a talk that people who purchased lands here by investing large sums of money are now feeling that their investments are stuck now. As result, people from Andhra Pradesh are investing more in Hyderabad, leading to steep rise in land prices in the Pearl City. How far is that true?
Real estate markets in Mumbai and New Delhi is stagnant. As result, people from these cities are investing in Hyderabad.
That’s the reason why prices are going up, not because of money from AP. If some people say that their investment is stuck, they need to realize that investing in land is not a lottery which can make someone rich overnight. People from Andhra Pradesh purchased lands in Hyderabad about 30-40 years back and they are reaping benefits now. People should invest in real estate for long-term. Even in Amaravati area, people who bought lands when the prices were around Rs 1 crore per acre saw good appreciation within three years.
Some companies which launched projects in AP capital did not see much traction in sales. Aparna Constructions which has one project here is also going through similar experience. When do you think this will change?
Project configuration, location and budget are the main differentiating factors. The other key factor is that people here don’t have the habit of buying properties in under-construction projects.
They prefer to buy after the completion of a project.It is different in Hyderabad where people buy even during the launch phase. That culture will also take roots here as market matures. But it takes time. However, with RERA in place, there is now guarantee on delivery timeline and completion.
How long does it take for AP capital to mature as a real estate market?
It took 30 years for Hyderabad to reach where it is today. That too, people from all parts of united Andhra Pradesh invested there. Therefore, we can’t expect miracles happening here and Amaravati becoming Hyderabad overnight. It’s an ongoing process. Also, there is no requirement for large number of residential units now. It will take another 10 years for the capital to be developed. People should look at Amaravati from that perspective.
Migration should happen, new jobs should be created, and people should start settling down here. It’s a continuous process. People who say there is no development in Amaravati should first see the place. It’s a historical opportunity for developers.
How the commercial real estate is doing in Amaravati?
Demand from commercial space is very high. But there is no availability of quality commercial space. Many companies are not able to get the kind of commercial space they need. There is a huge demand for small commercial spaces with sizes ranging from 1,500 to 2,000 sft as advocates, architects and small companies are now establishing their operations here.