Capital difference

THE WEEK|October 20, 2019

Capital difference
With no clarity over its capital status, Amaravati’s real estate market slumps. Hyderabad, meanwhile, shows steady growth
Rahul Devulapalli

Gannavaram is the gateway to Amaravati, the capital of Andhra Pradesh. Over the last few years, the Vijayawada International Airport at Gannavaram got busier after former chief minister N. Chandrababu Naidu announced his choice for the capital. More than the airport, it was the new capital, located some 30km away, that changed the lives of the people in the town and in the neighbouring villages.

After the state was bifurcated in 2014, businessman Kotagiri Prasad, from Gannavaram, was witness to an unprecedented flow of cars into the area in 2015. “There were newspaper reports that the new capital would cover Gannavaram. Overnight, land rates increased from 30 lakh per acre to 4 crore,” he said. “The speculation led to a large number of NRIs and investors from across the state and country hunting for land. It looked like every resident had turned into a realtor.”

But then came the announcement that the capital would come up in a different location, and the land prices dropped to less than 2 crore per acre, said Prasad. “Many of the buyers who had advanced money for registration absconded,” he said. “Many lost money. Real estate boards vanished and big cars stopped coming.”

For the third time in five years, the prices in Prasad’s area have fluctuated again—the slump, this time, is owing to rumours around the status of Amaravati after Y.S. Jagan Mohan Reddy’s YSR Congress Party came to power with an overwhelming majority this year.

The idea of Amaravati, conceptualised under Naidu, was promoted on a grand scale locally and internationally. Baahubali director S.S. Rajamouli made a short video conceptualising a design for Amaravati’s legislative assembly. Globally reputed architects like Norman Foster and Hafeez Contractor were roped in. Miniature models of the proposed capital region appeared at summits and events. The hype greatly pushed the real estate prices even though the project had a delayed take-off, missing many deadlines. A reality check shows that after spending between 8,000 crore and 10,000 crore, not a single permanent structure is ready. The High Court, assembly and secretariat are still housed in temporary buildings.

While there is a slump in the real estate and construction sector across the state owing to demonetisation and shortage of sand, says R.V. Swamy, president of Confederation of Real Estate Developers Association of India (CREDAI), Vijayawada chapter, the rates fell in Amaravati because Chief Minister Jagan Mohan Reddy has not clarified about its status and the government has stopped construction, too. But, it will not upset the local real estate industry, he says. “Land prices should have been controlled in the past, but that did not happen. They were overpriced,” he says. “Now, the land prices are in a good bracket. It has to continue like this so that more number of people can buy properties. The market would have crashed had the prices not decreased. All that the new government has to do is give assurance that the capital will not be shifted and the transactions and construction activity will resume.”

Naidu’s ambitious plan to develop a worldclass capital had two layers to it. While the Amaravati capital city with an extent of 217sqkm covers 29 villages, the Amaravati capital region around it is spread over more than 8,000sqkm with 55 mandals in it.

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October 20, 2019