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State Govt Hit Due To Slowdown In Real Estate
Posted by Pradeep Sadanapalli | April 19, 2008 | 248 views
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Loading ...The state government, which reaped a rich harvest by selling land in and around Hyderabad and helped create a real estate boom, has now been hit by the ebb in the market.
Major real estate companies are now feeling the pinch with fluctuating fortunes at the bourses. This is also affecting investment in land in the city, market sources say.
Big-time realtors who purchased large tracts of government land at high rates are no longer interested in property being sold by state agencies, upsetting the government’s increasingly frantic efforts to garner revenues for infrastructure projects.
The state government unabashedly pursued its real estate interests through agencies like Hyderabad Urban Development Authority, the Andhra Pradesh Housing Board and AP Industrial Infrastructure Corporation, contributing to the abnormal spurt in land values in the last four years.
Huda and the APHB, among the biggest beneficiaries of the boom, are now feeling the impact of the crash in demand. Both agencies earned hefty profits by disposing of large plots in and around Hyderabad for exorbitant sums but are now finding it difficult to sell even prime land.
After a miserable experience with its Empire project at Kokapet, Huda lowered the upset price by Rs 2 crore per acre but still found no takers. APHB could not find takers for its Bay Ridge block.
“This is a cycle,” a major realtor pointed out. “Unless we complete the projects, at least in phases, we obviously can’t invest afresh.”
“The slowdown is not restricted just to Hyderabad but other parts of the country as well,” said Mr Sunil Goel, the joint managing director of Omaxe Limited, which purchased a 25-acre block in the Huda’s Empire venture a few months ago. “This could be a temporary phenomenon,” he added.
Major real estate firms are now backing off. Realtors are citing many reasons for this: The economic slowdown, the fallout of the dollar, volatility in the stock market and a liquidity crunch. Another reason is that companies are tied up with project development.
However, government agencies aren’t willing to give up on the market. “Land is a constant, so is demand. Land prices may stabilise for a while but are unlikely to fall,” a top APHB official said.
SOURCES:
Deccan Chronicle
Topics: Real Estate |
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