Bhogapuram, which was once considered a paradise for the investors in the realty sector, has now lost its sheen with the future of the international airport proposed there hanging in the balance.
More than 120 real estate ventures had been developed in Bhogapuram and places such as Rajapulova, Pusapatirega, and Ranasthalam in its vicinity.
Artificial demand
The per-square yard price had gone up to ₹11,000, thanks to the craze to invest in land near the airport. The price quoted for land on the route between Rajapulova junction and Vizianagaram had even touched ₹12,000.
The Visakhapatnam Metropolitan Region Development Authority (VMRDA) too had sold land for ₹12,500 per square yard three years ago in its layout near Raghu Engineering College located between Rajapulova and Aainada junction. With the VMRDA enhancing the price, the realtors too followed suit and created artificial demand for land in several places. People from the State and even NRIs had invested huge amounts in land anticipating decent returns in a couple of years.
The investors thought that the real estate sector in Bhogapuram would develop on the lines of Shamshabad in Hyderabad, Telangana, as they believed that N. Chandrababu Naidu as Chief Minister of the residuary State of Andhra Pradesh would take steps for the construction of the international airport proposed in the area just as he had done in Shamshabad. However, the fate of the real estate sector changed to the worse with the Y.S. Jagan Mohan Reddy government in the State deciding to take a re-look at all the projects of the previous TDP government, including the proposed airport.
The State government’s rethink has an adverse impact on the sector with the land prices plummeting significantly following drastic fall in demand.
Demand plummets
As a result, many realtors are ready to sell land in the VUDA approved layouts for just ₹8,000 per square yard.
The realtors who had invested huge amounts for developing new ventures after buying lands from the villagers are a worried lot following significant drop in demand despite reduction in price.
Irregularities alleged
Chief Minister Y.S. Jagan Mohan Reddy had alleged irregularities in the airport tenders, and highlighted it during his padayatra and election campaign.
Initially, the Airports Authority of India (AAI) had emerged as a successful bidder by offering 30.2% revenue share to the government. The GMR Group stood second by offering 21.6%.
However, the TDP government had cancelled the process in January 2018, and called for fresh tenders with a new set of rules, one of which was that the bidder should have experience in the real estate business to participate in the process.
The AAI, being a government entity, lost the opportunity as a result. Further, instead of revenue share, the government sought share based on passenger traffic.
Under this rule, the GMR Group had emerged successful by offering ₹303 per passenger. The GVK Group had offered ₹202.
Later, the TDP government completed the foundation stone-laying process for the new airport in February 2019, just before the election process began.
“The realty business will not pick up unless the YSRCP government makes a positive statement on the construction of airport. But it is very unlikely as Mr. Jagan Mohan Reddy is reviewing all the decisions taken by the previous government,” said a realtor.
