City realty: lakhs are out, crores are in....

Interview of M.L.Rao. Equate Realtors, M.D.

 
PICTURE OF GROWTH? The concrete jungle will only get denser this year. — PHOTO: P. V. Sivakumar

Bygones usually remain bygones. But not for the real estate sector in Hyderabad. The past has only galvanized the realtors.

Things were certainly looking up for them in 2005 and this year, though most realtors are yet to finalise their profit accounts for the previous year, the hope of better times, and bigger returns is already catching up.

The still echoing boom of 2005 is expected to gain further strength and wavelengths in 2006 as well, if current trends are any indication. While the commercial real estate scenario had received its share of impetus in 2005 itself with the announcement of at least six new IT setups in and around Raidurg and Manikonda, the residential sector too had a glimpse of what was in stock with the stunning auction of Housing Board plots in Kukatpally.

In between all this, there was the Telangana angle adding fuel to the speculations. If realtors are to be believed, the T-factor could still loom large over 2006 as well, what with no concrete Government policy announced so far.

The jacking up of land prices at Kukatpally to a staggering Rs.50,000 per square yard, though the deal did not come through, was enough indication of the strategy to be employed by realtors in the coming days. Stoking their fire further is the endlessly growing demand for land from all quarters in and around the city, thanks to the growth of the IT and IT enabled services sector.

Bank loses, land gains

More companies mean more people coming here. Says M.L. Rao, a seasoned professional real estate service provider in the city:

\"The capabilities of people have changed over the years, the facilities too. Housing loans, housing schemes, income tax exemptions etc have changed the scenario. And because of so many banks ending up in trouble, more people invest in property now.\\\"\\\"The increasing appreciation in value of property too is encouraging them. The appreciation chances for row houses and independent houses are more than ever, at a rate of 20 to 25 percent per annum. In comparison, appreciation of value of flats is around 8 to 12 percent per annum. Both the rates will only increase with time,\" says Mr. Rao, who has been running the agency Equate Realtors (www.equaterealtors.com) in the city for 19 years now.

Eight years ago, there were only a few gated communities in the city, with a plot hardly touching Rs.35 lakhs. The fact that the same plots now cost around Rs.1.25 crore reveals how the situation has been changing, and how it will keep changing.

Even NRIs, according to Mr. Rao, are investing more in property these days. From around 30-40 percent of their money, investments in property nowadays take up around 60 to 70 percent of their finance.

Neighbour\\\'s problem..

The commercial real estate scenario is perhaps the fastest changing one. With Bangalore and Delhi being saturated to at least 98 percent, Hyderabad is becoming a favoured destination for builders from Bangalore, Pune, Mumbai and even Gurgaon. \\\"A Bangalore-based builder bought 37.25 acres in Gachibowli at the rate of Rs.3.75 crore per acre, while another major construction company has bought 108 acres at the rate of Rs.4.25 crore per acre at Manikonda. These mean more companies, more jobs and naturally increased demand for land and rise in prices,\\\" one realtor predicts.

However, realtors feel that if the Government does something about the land ceilings and urban land ceiling act, supply will meet demand and prices will be under control.

Places that matter

The places that could be hotspots in 2006 and coming years include Vattinagulpally, Nallagandla, Tellapur, Kokapet, Shankarpally road, the Bangalore ring road, areas adjoining the upcoming Outer Ring Road where the appreciation is already past 50-60 percent and Chevella, they add.

Another major factor that could electrify the real estate scenario, dealers say, is the prospects of foreign direct investment in the sector. \\\"FDI in real estate might take some time, but will definitely help the sector. It will mean that common man will find it more difficult to purchase a piece of land,\\\" they state.

No doubt the `Happy New Year\\\' greetings from real estate dealers this time came from the heart.

Interview of M.L.Rao. Equate Realtors, M.D.

http://www.thehindu.com/pp/2006/01/14/stories/2006011401290100.htm