The real estate scenario has begun to look up in Hyderabad during the past few weeks, with the number of enquiries and deals increasing. The builders' fraternity see this momentum and general sentiment taking them through to a much better quarter ahead, as they close the current financial year.
Interactions with a cross-section of builders in the city shows that they are ending the year on a happier note, with the political uncertainty regarding the Telangana stir behind them, at least for the time being, and people generally factoring its impact on the sector.
Mr Prem Kumar, President of Andhra Pradesh Real Estate Developers Association (APREDA), told
“But with the agitation put behind and the Telangana movement factored, the market is looking up,” Mr Prem Kumar, speaking on behalf of the realtors, said.
In fact, the past few weeks have been very eventful, with the enquiries going up and a good number of them translating into deals. What is important is that if this momentum continues, we may see a much better quarter ahead, with sales volumes increasing and prices too firming up, another builder said.
GO NO. 45 CONCERNS
Mr Prem Kumar said that the launch of new projects has been affected due to the State Government GO No. 45, which calls upon the developers to earmark 20 per cent for EWS (economically weaker sections) and LIG (lower income group) housing, within a gated community.
While the builders are supportive of the whole concept, they feel that this is too harsh. This has meant delay in launch of larger gated community projects.
The builders have given a representation to the Government, asking it to reconsider the move and fine-tune it so that it becomes a win-win situation for all, he said.
Mr D. R. Patnaik, General Manager of Ramky Estates, said the relative peace and normalcy has meant better times for the real estate business in the State. The last fortnight has been exceptionally good, and many people who have been postponing any plans to buy property are once again in the market, as they feel that the stir is unlikely to impact the sector any more.
Yet, a good number of potential buyers are holding up their investments, hoping there could be some more fall. But from a realtors' perspective, Mr Patnaik said “the prices are at their low. If at all, builders may consider gradual increase in prices, factoring the increase in input costs and labour costs; the latter has shot up significantly.”
Mr M. P. Agrawall, Managing Director of Koncept Ambience, which is into luxury housing projects around the city, felt that real estate prices have been subdued in Hyderabad for quite a long time due to various factors, including the agitation. A comparison with some cities in the State and some other Tier-II cities in the other states shows that the prices could increase any time, as this isn't sustainable.
He felt that the builders would, in fact, no longer be able to offer properties at the current prices, if they consider the market conditions and growing input costs, including that of labour. It has been particularly difficult to get quality labour for projects, as most of them get attracted to the National Rural Employment Guarantee Scheme (NREGS), he said.
IT, A MAJOR DRIVER
During an interactive session at the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), Mr Ponnala Lakshmaiah, Minister for Information and Technology, Government of Andhra Pradesh, said “the IT sector, along with services, would be a major driver for commercial property consumption in the twin cities of Hyderabad and Secunderabad, and surrounding areas. If the agitation was a dampener for some time, the property absorption numbers show that, in 2010, the IT sector accounted for a big chunk.”
The Minister said that in 2010, the IT sector accounted for consumption of approximately 4.2 million square feet of office area, which was equivalent to what the city accounted for in three previous years. According to data, approximately 8.2 million square feet of office space is under various stages of development.
OUTLOOK
Consultancy company Cushman and Wakefield, providing the third quarter report on residential consumption in Hyderabad, stated that there was sluggishness in the launch of new projects, largely due to difficulties faced by the developers due to GO 45. While the rental values saw a little appreciation in certain key locations, the capital values witnessed some mixed patterns.
Providing its outlook, the report suggested that new projects are getting delayed as developers are anticipating revision of the clauses in the GO.
It also felt that the capital values may remain stable in the peripheral areas. It also noted that the demand for SEZ spaces is likely to continue in the coming quarters.
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