As 'T' word gets blotchy, realty withers

Vijayawada-Guntur realty boom punctured by uncertainty over separate 'Telangana' state

Uncertainty over the formation of a separate Telangana state has left scores of real estate deals worth at least Rs 500 crore in the areas between Vijayawada and Guntur in a quandary.

As the prospects of a separate Andhra, in case of a separate Telangana has receded, the prospective buyers are going back on the deals.

The prospective buyers, who had paid advance amounts between Rs 1 lakh and Rs 2 lakh, are now not coming forward to get the lands registered by paying the full amounts to the landowners.

Land rates had soared as coastal Andhra settlers in Hyderabad, and non-resident Indians (NRIs) had approached real estate companies, asking them to buy as much land as possible between Vijayawada and Guntur with no ceiling on price tag.

The real estate price boom began when the Congress and Telangana Rashtra Samithi (TRS) joined hands before the elections. After the poll victory, the seemingly great importance Congress supremo Sonia Gandhi gave to the TRS and its leaders K Chandrasekhara Rao and A Narendra gave a big boost to the land prices.

The mention of the 'Telangana' word in the common minimum programme (CMC) of the coalition at the Centre and by President Abdul Kalam in his address to Parliament acted as a catalyst for land rates to zoom.

Consequently, an acre of land, located farther to the Vijayawada-Guntur national highway and valued at Rs 60,000, started commanding a price of about Rs 20 lakh, land valued at Rs 1 lakh commanded a price of Rs 60 lakh and the price of an acre of land, adjoining the national highway, and valued at Rs 3 lakh, touched an unprecedented rate of Rs 1 crore. Buyers paid advances of between Rs 1lakh and Rs 2 lakh to the land owners.

In the case of old agreements, land owners evaded registration of lands to the buyers, making it clear to the latter that they should cough up new rates.

As a fallout of the confusion of whether Telangana will be formed or not, a further rise in land prices between Guntur and Vijayawada has halted. Apparently, the buyers are not keen on registering the land in their names. The prospective buyers have not even bothered the land owners for the return of their deposits.

The news that Sonia Gandhi would chide Chandrasekhara Rao and Narendra has ensured that land deals have been left uncompleted. The people in coastal Andhra in general feel that the print and TV media, controlled and dominated by the coastal Andhra people, would succeed in discrediting TRS leaders before the Telangana people.

However, landowners hope that transactions would materialise into land registrations if the TRS takes to the streets.

Realisation has also dawned on prospective buyers that even if a separate Andhra state is formed, Vijayawada-Guntur may not be considered for locating the capital.

Even if the capital is located between the two cities, the government might acquire the land at market rates for construction of an Assembly, MLA quarters and secretariat. In that case they would be heavy losers. Though land valuations have gone up there are no buyers for them.

Vijayawada Real Estates and Builders' Association president V Rangaprasad told Business Standard that some unscrupulous builders and mafia elements orchestrated the frenzy racket to skyrocket real estate prices.

Unfortunately, certain sections in the press also joined them. These people played on the fears of Andhra settlers in Telangana and campaigned that if a separate Andhra was formed, the new capital would be located between Vijayawada and Guntur. The victims lost advance amounts. Only a few deals materialised into registrations.

He said even if a separate Andhra was formed and Vijayawada-Guntur chosen for locating the new capital, the government would require at least 45,000 acres of land. The government owns only around 3,700 acres of land between the two cities. It would have to acquire the remaining land from the farmers under the Land Acquisition Act. Then the present buyers would lose heavily.

This realisation has already dawned on prospective buyers. He cast doubts on the formation of a separate Telangana in the near future. K Pitcheswara Rao, managing director of Lakshmi Real Estates and Flats, said that though land rates have gone up beyond imagination, there are no concrete buyers for the lands. However, the land owners hope that the land deals would materialise into registrations if the TRS leaders take to the streets.

He said the apartment rates, meanwhile, have gone up due to the steep hike in steel rates. The price of a two-bedroom apartment (old rate Rs 8-10 lakh) has gone up by Rs 70,000 and that of a three- bedroom apartment (old rate Rs 20-25 lakh) by Rs 1-2 lakh.

The announcement by SAIL and Tata Steel that they have cut down steel rates by Rs 1,000-2,000 per tonne would not the change the situation. Steel rates escalated from Rs 14,000 to Rs 28,000 per tonne in just 10 months.

For the widely used 8 mm steel, builders are paying Rs 28,800 per tonne plus some amount in black. And 12 mm steel is available at Rs 27,800 per tonne, 16 mm at Rs 27,800 per tonne and 20 mm at Rs 27,000 per tonne. "The truckers' strike has only added to their problems," he added.