Potential investors considering investing in the capital region of Andhra Pradesh are in for a shock as the realty market around Vijayawada is competing with that of California, in the U.S. Added to the existing rush is the proposed 26 km metro rail project by the metro man E. Sreedharan, which is all set to catapult the market price further.
The illogical rise in prices of land — residential and office spaces — may act as a stumbling block for the growth according to the industry bodies and NRIs. Bankers too opine that such a scenario would prove to be counter-productive to the expected industrial eco-system.
The California-based NRI K. Ajay, who was contemplating investing in the VGTM (Vijayawada- Guntur-Tenali-Mangalagiri) region, which is declared to be the capital of the State, was put off by the mad realty rush. “This is a never-before-price and there is no logic behind it. When I make a realistic comparison, land around California is cheaper than Vijayawada. Investing here doesn’t make any business sense” he said.
While an acre near Livemore in California costs about Rs. 5.5 crore, the same stretch is priced at Rs. 24 crore beside Bandar Road on the outskirts of Vijayawada, over Rs. 20 crore near Gannavaram airport and more than Rs.15 crore near Mangalagiri according to Ajay.
The Confederation of Indian Industries (CII) Vijayawada zone chairman V.V.M. Krishna is of the opinion that the development is definitely a setback for the potential investors. “Not a happy situation. Industrialists are expected to invest on machinery and other aspects besides land. The break-even period will be delayed significantly which may discourage potential investors,” he felt.
On the other hand, the present situation is seen as once-in-a-lifetime opportunity for the small and big real estate firms to make a quick buck. The government has banned conversion of agricultural land and named hundreds of illegal layouts to prevent price rise but it did not yield any result. Market experts say that it’s realty bubble in the making in VGTM.
The environment in the region is akin to that in Hyderabad in the early 2000. “People became millionaires overnight, purchased swanky cars and blown up money on luxuries. Now you see the bubble bursting and no industry was established in several places around Hyderabad. Some like Fabcity were setup but never took off,” said a senior official of a private bank.
