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Amaravati – A Dream Turning Into a Nightmare?

October 29, 2016

Amaravati a Disaster in the Making

Amaravati, which is expected to be the new capital of Andhra Pradesh, has been grabbing headlines thanks to its major plans as well as the various initiatives being taken by the state government. After Andhra Pradesh and Telangana were divided, Hyderabad was taken away from the state. This was a crucial loss considering how it was the hub of IT and IT-enabled services. The Andhra Pradesh Re-Organisation Act 2014 says that Hyderabad will remain a capital of the state along with Telangana, but only till 2024. This is why the state government is making all the efforts necessary in order to make sure that Amaravati becomes a world-class city and perhaps a fitting replacement for Hyderabad.

Steps being taken to elevate Amaravati

The state government has already identified 33,000 acres spread across 29 villages as ‘Urban Area’ and taken over the said area as part of its land-pooling scheme. These villages are part of three mandals – Mangalagiri, Thullur and Tadepalle. The new capital is supposed to be located between Guntur and Vijayawada in what can be termed as a strategic location. Once Amaravati is developed, they will become major suburbs to the new capital. What further makes sense in this case is the fact that this huge landmass is located right next to River Krishna.

Accessibility

This location would ensure that Amaravati can be accessed easily from both north and south, as well as the coastal districts. It will also help very much in the development process. The project has also imaginatively been titled as ‘A Brick’, an acronym for Amaravati Brick. The state government expects that this will encourage people to be partners of the development process. The idea is that anyone can donate a brick, worth INR 10, for the project and help in the city’s development.

Japanese factor

A Japanese partner named Maki and Associates has been selected to carry out the master planning of the city. The first phase of construction is supposed to be completed by 2018 and will include The Amaravati Government Complex. The initial seed development of Amaravati will also be done at this time and this is expected to be inclusive of some skyscrapers, housing complexes, government offices and some essential services.

Effect on real estate and other major developments

As may happen in any other city with such announcements, there has been a positive effect on real estate in Amravati of these proclamations. The land prices have increased by a significant margin just as it has happened in Amaravati. They have already increased by 10-15% and in the next five years this growth rate is supposed to come down to 7-8%. Just as major international names such as Apple, Amazon and Google are now leasing huge amounts of commercial office spaces in Hyderabad and coming up with big plans for the city, Amaravati, too, is gaining some international attention. The Government of Singapore has agreed to erect the seed capital region that is expected to cover a distance of eight square km. The state government has also pledged INR 1,500 crore for purposes of capital construction. It is expected that the city will be awarded the status of ‘Smart City’ as well.

Once it becomes a Smart City it will get more financial assistance to develop itself. Several universities are also showing some keenness in developing their campuses on the city, which could supply the talent needed to take the city to the next stage of development in the days ahead. It is also expected that these big plans and development prospects will make Amaravati a lucrative destination for future investment. However, experts are also saying that such investment could be fraught with risks that one should take into account before proceeding. They, however, do feel that Amaravati could grow in the same way that Hyderabad did, considering how proper plans have been drawn up and set in motion. It is expected to become a commercial hub in the days to come.

Real estate development

Real estate of all kinds is developing at an appreciable rate in the proposed capital. Based on the location the price of per sq yard could range anywhere between INR 7,000 to INR 15,000. Experts are saying that before making any investment it would be worthwhile to do some market research and check out the developer’s profile. It is also important to visit the site in person. They say – and justifiably so – that since the region is still being developed plans may change and there would always be some delay or the other.

Knight Frank, a leading property consultant, says that real estate prices could also surge in the metros near Amaravati. Samantak Das, Chief Economist and National Director, Research for Knight Frank, says that it will perform much better than the leading eight cities of India where real estate prices grow at less than 5% per year. It is expected that in the upcoming micro-markets of Vijayawada like Vuyyuru, Kannuru, Auto Nagar and Poranki the real estate prices would vary between INR 1,800-7,000 per sq feet. In the emerging micro markets of Guntur such as Undavalli, Gorantala, and Mangalagiri these prices are expected to be around INR 2,200 to 4,500 per sq feet.

A number of real estate developers such as Mid Valley City and RK Group have already started to build gated complexes that include combinations such as residential-retail and office-residential spaces. The offices being rented in the upscale areas of Vijayawada have been priced at around INR 80-90 per sq feet. This is also applicable to the micro-markets such as Bandar Road and Benz Circle. In the nearby areas such as Patamata, Maruthinagar, and Bhavanipuram this rate is between INR 10-15. As per Knight Frank, Guntur does not have good office spaces to offer and on an average such spaces over there are being rented at between INR 30 and 50 (Arundalpet and Brodipet) and INR 10 and 15 (Patnam Bazar and Lalpaet). The property consultant also feels that when the waterways, metro rail, and other facilities are built here, Amaravati will truly become a city at par with global standards.

How are things turning out?

However, in spite of all the optimism the things on ground may not be that rosy. Not many buyers have shown interest in Amaravati and that is a great source of worry for the landowning farmers as well as the realtors. This has also brought down the real estate prices significantly, soon after the initial appreciation. The layouts of land-pooling scheme have been delayed and this has contributed significantly to the present slump. The government has also been unable to fulfil any of its promises – this, too, is being seen as a major factor in this regard.

Soon, after the capital was announced, the realtors went on a land-buying spree. But now they have no option other than offloading those hasty investments. In some cases, these real estate developers had loaned money from their close friends and relatives, and now are finding it hard to pay them back. These realtors are also worried that they would lose more money once the layout for farmers comes into existence. Farmers, who had been dreaming of selling their lands for handsome prices, are now dismayed at the way things have turned out.

Builders are also saying that the government is intentionally delaying the proceedings so that the land prices come down further. This, according to them, would ensure that the farmers receive less compensation. In fact, the way the government has been dilly-dallying over some reason or the other is only making the rumours appear to be true. The plots that have already been developed should have been distributed by the end of March, but it may take another five months for the process to be completed. Realtors are now saying that they don’t expect the situation to get any better even after all the processes are completed because of the lack of major buyers.

Read More: 

Amaravati City Map

Where is Amaravati

Amaravati: Andhra’s New Capital

Andhra Pradesh Map


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I am from Kolkata. Like any other Bengali I love my fish, eggs and bhaat and sweets but I also feel proud to be a part of the biggest melting pot of the world - India. It is true that I need to go a long way before I finally call it a day but I have come some way and am sure will travel further. Cheers :)

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