The real estate sector is happy that transactions have taken place on a large scale and it will spur business, writes G.V. Prasada Sarma
With the Visakhapatnam Urban Development Authority (VUDA) successfully organising yet another auction of residential plots, the real estate sector is happy that transactions have taken place on a large scale and it will spur business.
Opinion is divided on whether the prices are realistic or not. But a view emerged that VUDA should cap the price by announcing an upper ceiling in the auction. This is seen as one way of arresting speculative bidding. Three plots that attracted attention are the two in the MVP Colony that commanded a record price of Rs.50,200 and Rs.48,000 and the one at Kurmannapalem that went for Rs.33,100. Compared to the price of plots in the other layouts, those at Kurmannapalem attracted higher price and several of them were on the higher side ranging from Rs.12,100 to Rs.28,600.
“Those that fetched higher price appear to be exceptions rather than the rule and there could be specific reasons for such bidding by individuals. The price is exceptionally high. Otherwise, the auction price of the plots in the other layouts appears to be reasonable,” says Chairman of Visakhapatnam chapter of Confederation of Real Estate Developers' Association of India K. Subba Raju. While Sontyam has the advantage of being close to the State highway the Kurmannapalem area is in demand because of the industries there and those coming up. Mr. Subba Raju, however, is of the view that VUDA should control the price when it goes beyond a point by fixing a ceiling.
Architect Y. Narasimha Rao sees the price in the auction as an unhealthy sign that won't help business and more importantly, reduces the availability of housing units. “Take Kurmannapalem for instance. Land has been available currently at much lower price than the one quoted in the auction. But the auction would make land owners hold it expecting the same price. That reduces the available land and the number of housing unit hitting business,” he reasons. Besides, it is the land value going up and purchasing capacity not keeping pace that has hit the real estate sector. While agreeing that the price should be capped to avoid speculative buying, he says VUDA or any other agency should convert 50 per cent of the land into housing units to meet the demand. Otherwise, says Mr. Rao, the layouts will be developed up to 40 km from the city but housing will lag behind. That's not in the larger interests of society as housing needs and proper development will suffer forcing people to live in ill-developed localities.