Prospective investors who consider investing in the capital region of Andhra Pradesh are in for a shock as the real estate market around Vijayawada is competing with that of California, in the USA Added to the existing fever is the proposed 26 km metro rail project for the metro man E. Sreedharan, who is all set to catapult over the market price.
The illogical increase in land prices - residential and office spaces - can act as a barrier to growth according to industry bodies and NRIs. Bankers also say that such a scenario could be counterproductive to the expected industrial ecosystem.
Ajay K. The NRI based in California, who was considering investing in VGTM (Guntur-Tenali-Vijayawada- Mangalagiri) region, which is declared to be the capital of the state, are put off by the rush of property crazy roots. "This is a price never before and there is no logic behind it. When I make a realistic comparison, California land around it is cheaper to Vijayawada. Investing here has no sense of business," he said.
While an acre near Livemore in California costs about Rs. 5.5 million rupees, the same stretch is priced at Rs. 24 million rupees next to Bandar road on the outskirts of Vijayawada, over Rs. 20 million rupees near Gannavaram airport and more than Rs.15 crores as Ajay near Mangalagiri.
The Confederation of Indian Industries (CII) President VVM area Vijayawada Krishna is of the opinion that the development is certainly a setback for potential investors. "It's not a happy situation. Industry are expected to invest in machinery and other aspects besides the land. Breakeven significantly delay period which may discourage potential investors," he felt.
On the other hand, the current situation is as unique opportunity in life to small and large real estate companies to make money fast. The government has banned the conversion of agricultural land and named hundreds of illegal designs to prevent price increases, but did not get any results. Market experts say it's the real estate bubble in the making in VGTM.
The atmosphere in the region is similar to Hyderabad in the 2000s "People became millionaires overnight, buy luxury cars and blown the money on luxuries. Now you see the bubble burst and no industry settled in various places around Hyderabad. Fabcity some like were setup but never took off, "said a senior official of a private bank.
