The proposal of the government to increase land value in the State is drawing wide criticism on the ground that it is being done ignoring the slump in the realty sector due to the pandemic effect. Property buyers feel that the additional burden may deprive the common man of an opportunity to own a house.
The increase in land values may, however, benefit a few to raise bank loans besides helping curb black money to some extent as the scope for undervaluation will be minimised.
When land value increases in the city, common people tend to move to suburbs. A 20% increase in land value in the heart of the city can also result in doubling of the cost in suburbs.
"Builders are already facing problems due to the increased costs. A reasonable hike in land values every year may look all right but will still affect the common people. The urban development authorities have to develop housing layouts and provide houses to the common people at reasonable cost to overcome this problem," says Cheruvu Ramakotaiah, national president of the Builders Association of India - MSME Committee.
"The ground situation is not reflected in the fixation of land values in different areas of the city. The value fixed by the government in Seethammadhara is ₹62,000 per square yard but the market value is almost double the figure. On the contrary, the official cost of one square yard in Old Town is fixed at ₹50,000 but the market value is around ₹20,000," he says.
"A number of completed flats in the city are left unsold as the pandemic has financially crippled almost all sections of people. The hike in values will result in the prices going up further driving away buyers," says CREDAI Visakhapatnam chairman Bayana Srinivasa Rao.
High costs
"The apartments constructed by big builders at Yendada cost ₹6,300 per square foot (sft) while at Madhurawada it ranges between ₹4,500 and ₹6,000. At Oxygen Towers in Seethammadhara it is ₹8,000 per sft. The big builders are mostly constructing flats ranging between 2,000 and 3,500 sft costing around ₹1 crore. On the other hand, the cost of an ordinary 1,050 sft flat at Rama Talkies area is ₹1 crore," says Chamana Srinivasa Rao of Madhuranagar area, who went out scouting to buy a flat, last week.
