‘Raw deal’ may burst realty bubble in Capital region
The Capital region has witnessed, unconfirmed reports say, transactions worth close to Rs. 10,000 crore in realty sector
Mar 05, 2015
Source : The Hindu

 

Hyderabad: The real estate sector in Andhra Pradesh, more particularly in the Capital region, is likely to take a beating in the days to come.

The Centre did not make any announcement on special status for the State, dampening the market sentiment. There was no concrete assurance on the incentives to be given for setting up industries in the State, which, in all likelihood, will have a cascading affect on real estate sector, feel realtors.

“The Budget did not deliver what the government had promised. It will have a cascading affect on the real estate sector as the people would not move to Capital region, unless there is industrial growth,” says Gadde Rajling, Chairman of Capital Region Builders Association.

Demand

The Capital region has witnessed, unconfirmed reports say, transactions worth close to Rs. 10,000 crore in realty sector. The builders expected that the demand for housing would be around 5 lakh dwelling units in next five to six years. Now, sales are likely to elude the sector as the government did not announce any direct benefits to housing sector, say realtors.

Confederation of Real Estate Developers Association of India (CREDAI) State president A. Siva Reddy says that the builders expected that the demand would be 2,000 to 3,000 houses a year.

Service tax

The sales are likely to come down in next few months as no direct benefits were announced. More so, the increase in service tax will increase the cost of construction and developers will pass on the burden to buyers. So there may not be sales as the buyers would look for affordable prices, he opines.

Mr. Rajling says, “The budget may not affect the people who invested as part of their long term plans. But, the real estate sector will certainly take a beating as demand for the housing will not go up unless people start moving to the Capital region.”

Investment

“Even common man has invested money on lands expecting a realty boom and the investment would not be less than 30 per cent of total investments in the region. The NRIs’ investment would be around 20 per cent,” explains Mr. Rajling.

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