VW row slows down real estate boom in Vizag

The controversy and uncertainty surrounding Volkswagen (VW) have slowed the real estate boom in Vizag district.

The number of land purchase transactions saw a decline in the last ten days at Aganampudi, Parawada and Achuthapuram areas of the Visakhapatnam district. It had been widely reported that VW was planning to set up its manufacturing plant at Vizag.

"Following the controversy on VW project, land transactions in these areas have slowed down. Besides, the land prices too have marginally dropped in the last ten days. A few buyers are even thinking of cancelling their earlier deals and have asked for refund of the advances," Kondaiah Choudhary, a senior real estate broker, told Business Standard.

During the past two years, real estate prices skyrocketed in and around Visakhapatnam. The major triggers included expansion of the existing NH-5 road into 4-lane road , acquisition of about 9,000 acres of land for Special Economic Zone at Rambilli Achutapuram, Beach road expansion plans, Apparel Park, Pharma City, Gangavaram port, tourism projects, allotment of lands to IT firms and construction of mega housing projects in collaboration with foreign companies by Visakhapatnam Urban Development Authority (VUDA), P Surya Narayana Raju (Ravi), chairman, VUDA, told Business Standard.

Land prices were raised abnormally not just in the city limits but also in the surrounding area and included agricultural land prices as well. Around one-and-a-half years back, plenty of land was available at Rs 4,000-5,000 per sq yard in the city limits. But now it's impossible to find land below Rs 10,000 per sq yard.

In Madhurawada, land prices have increased to Rs 3,000-5,000 per sq yard, whereas one-and-a-half years back, the rates were only between Rs 500 and Rs 800.

In Parawada, and Aganampudi areas NH-5 facing, agricultural land prices rose sharply from Rs 5-8 lakh to Rs 35-40 lakh while other land costs were raised to Rs 8-12 lakh from Rs 2-4 lakh. Madhurawada, Anandapuram and Bhimili beach road land prices increased to Rs 80 lakh to Rs 1 crore per acre, as against Rs 15-20 lakh two years back.

Analysts, however, are terming this as just a temporary phenomena.

"People are expecting more industrial activity in these area due to the proposed Special Economic Zone, Pharma city, Gangavaram port and Textile city. For some months, the existing rates may not increase further, but land prices will not see a sharp fall in these areas," B Suresh, director, Steel Exchange India Limited, which is into real estate business, said.