Many builders who were planning to take up luxury projects in Amaravati, the new capital of Andhra Pradesh, have altered their proposals due to a prolonged period of uncertainty in the market, compounded by factors like demonetisation, the Goods and Services Tax (GST) and the Real Estate (Regulation and Development) Act, 2016.
Post-bifurcation, the hype surrounding Amaravati encouraged many big players, both local and outside the State, to construct luxury ventures in the hope that rapid development of the place would bring them immediate clients.
But the hype waned sooner than it was expected forcing builders planning to construct villas and gated communities with all modern facilities to abandon their proposals abruptly.
Demonetisation resulted in a shift towards cashless economy bringing transparency as people could no longer buy property using cash. Then came RERA that mandates that all ongoing and new projects should be registered with the regulator before putting homes or flats up for sale. Builders should not even advertise housing projects without registering with the regulator. All real estate projects and property agents also have to register themselves with the regulatory authorities.
“The prevailing uncertainty is causing stress on the market,” says V. Venkat, Managing Partner of GEV Properties, a firm that has taken up construction of the first tallest building in the heart of the city. His basement-plus-15 floors-structure is coming up where the Krishna Institute of Medical Science (KIMS) existed on the Pinnamaneni Polyclinic Road. “We have completed 65 % of the project and have already sold over 80 apartments from the developer’s quota,” he informs.
Mr. Venkat admits that they have dropped the initial plans of constructing high-end ventures in Vijayawada and Visakhapatnam as “people seem to be in no hurry to buy properties in view of the ambiguity”.
The demand now is for apartments for middle and lower-middle classes thanks to Prime Minister Narendra Modi’s push to ‘housing for all’ which comes with sops that make owning a property affordable.
Lured by the sops rolled out by the Centre for ‘affordable housing’ projects, even big players are targeting smaller projects which are higher in volume. “It was thought that Andhra employees working in Hyderabad will buy properties after shifting here but that does not seem to be happening. Most of them have taken temporary accommodation here and buying a house here is clearly not a priority for them now,” says Gadde Rajaling, Chairman, Capital Region Builders Association (CRBA), Vijayawada.
