Vijayawada builders upset over land rate hike decision

The realtors in Vijayawada are concerned about the potential negative impact on the demand situation due to the state government's proposed increase in land value. Realtors believe that in several areas, the current land value is already relatively high compared to current market prices. Therefore, any potential increase in land value would exacerbate the difference between the book value and the intrinsic value of property. They believe that this situation will have negative effects on the industry.

Although the state government has asserted that the reason for increasing the value of land is to reduce the disparity between the book price and the market value, those in the industry believe that the actual motivation is to boost government earnings through registration and stamp duty fees.

The Vijayawada real estate industry has experienced a period of stagnation for the last five years due to the uncertainty surrounding the location of the state capital. The organic expansion of urban areas is hindered in Vijayawada and the surrounding capital region.

With the state government shelving the plan for the capital city, the real estate sector in Vijayawada and Guntur has only seen promising growth along the national highways and the upcoming NH-16 bypass, which will link the suburbs of Vijayawada with certain parts of Amaravati and Mangalagiri. Industry experts suggest that the rising cost of land will lead to a decrease in demand for properties in those areas.

According to YV Ramana Rao, the president of the CREDAI AP chapter, the current market conditions in Vijayawada and the capital region are not favourable for increasing the value of land. This was shared in an interview with TOI. The uncertainty surrounding the availability of capital and the challenges brought about by the pandemic have presented significant difficulties for the real estate industry.

According to Nuthakki Sunil, a builder based in Vijayawada, the construction industry will experience a domino effect as a result of the increase in land value, as land price serves as a significant determinant in the pricing of property. This rise in land value will have a cascading effect, affecting other sectors as well. In the past few years, the price of building materials has increased by over 50 percent. Together with the adjustment of land prices, this will render low-cost housing initiatives financially unfeasible.

During a recent press conference, B Amarnath, President of the Vijayawada Chapter of the National Real Estate Development Council (NAREDCO), along with G Hariprasad, General Secretary, highlighted the various challenges currently faced by the real estate industry. They further expressed concerns that the increased market value of land could potentially create additional difficulties for numerous realtors, builders, and the general public. They asked the Chief Minister, YS Jagan Mohan Reddy, to reconsider the decision and lend a hand to the real estate industry.

This story was first published by Times of India.

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Vijayawada builders upset over land rate hike decision

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