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It has been good year, only for New Home buyers with prices of apartments and plots coming down from the highs of 2007 /08. While year 2008 and saw consistent fall throughout which continued till first quarter of 2009. The price fall stopped after April 09 elections.
In third quarter, it looked as if prices are creeping up but then it stopped and have been stable since then.
The Telanagana separation issue heated up by end November. Though the general perception was that market will nose dive, what we see is absolute stability. There has not been any price fall so far due to Telanagana agitation, which is against normal expectations.
All of the NRI visitors who came down in December and have been looking around for special deals, have unfortunately failed to find any.
The reason is not hard to find. The prices came down from the peak of 2007 in several sudden jerks. The major reasons were the change in building regulations, previous TRS agitation and then the economic slow down which hit the country in last quarter of 2008 and continued well into second half of 2009. After having fallen a good deal over 2 years, there seem to be no more leeway for builders to reduce.
In fact, Hyderabad apartment rates are now comparable to those in tier 2 cities like Pune, Cochin, Coimbatore, Vizag, Vijaywada etc in equivalent localities, unlike earlier.
2.0 QUICK LOOK AT HISTORIC YEAR END APARTMENT PRICES NEAR HITEC CITY
Fall from the peak rate of 2007 near Hitec City is 21.4%.
So value of your investment in any apartment near Hitec made in 2007, has come down by 21.4%.
This is nothing compared to erosion in Nizampet road, where fall is close to 30% . (Prices have fallen from 2800/sft to Rs.2000/sft now, which amounts to 28.6% fall)
3.0 Constructed Area Vs Land
The possible impact of division of the state seem to have already been discounted by the market. Also pure speculative investment by Andhraites in Apartments is miniscule and will have no impact on the market. There is NRI investment but that will NOT get wholly pulled out if state splits tomorrow. Even if there is some pull out that will be insignificant to cause any concern in market.
So even if there is a division tomorrow we can not expect significant fall in apartment rates. No new projects will get launched for quite some time now, helping market to slowly absorb the current excess inventory, while prices remain relatively stable.
But this may not be true in the case of land. Unlike apartments, almost 90% investment in land is speculative and most of this has been by Builders and Investors from Andhra Region. NRI investment is insignificant compared to thousands and thousands of acres held by people from Andhra for pure investment or for business purposes 360 degrees around and inside the core areas of the city.
Since the land inventors are largely into big business, knee-jerk business interest could drive land holders to sell and re-invest in Andhra hoping to get positive return earlier, rather than get stuck for a long time. This could negatively impact land and plot rates. HOWEVER, do note that this withdrawal will only be sentimental and for few months, after which things will stabilize and start looking up.
4.0 Division. Why is it necessary?
Everyone would agree that if YSR was alive, the present situation would not have arose at all. His absence has turned the political dynamics, head over heals. AP ended up with a CM who himself declared that he is directionless and clueless. The CM was unable to judge the actual inner mood of people and elected reps, before "leaving everything to Center". Great leaders should be able to know the underlying sentiments. But that was not to be.
After having opened the bottle, it would be foolish to withhold division, anymore. In the interest of all Telugu people and to ensure that enmity do not arise between people, the state has to be split with suitable negotiated arrangement between the different regions. Both states could and WILL work towards overall development of individual states.
The primary concern of Andhraites is loss of Hyderabad and they worry that their investment in Hyderabad will lose considerable value. However, sentiment is clouding the FACT that for Telangana State, Hyderabad will be a gem which they will protect and polish. So after the initial hiccup we will see Hyderabad developing possibly faster than what we have seen in last 2 to 3 years.
5.0 Possible Division Scenarios
(Whatever be the decision, do note that there are extremely complicated issues to be resolved which could take years. Sharing of Water, Power and Cost ofand access to existing infrastructure which currently the whole of AP enjoys like dams, mines, ports, airports, highways etc )
OPTION 1. Two States with Hyderabad as Telengana Capital. Vizag or Vijayawada as Andhra/Rayalaseema Capital. There will be issue of Compensation.
OPTION 2.Two States with Hyderabad as combined Capital for 10 Years while TWO brand new capital cities are built in two states. During this period, the States will resolve critical issues like sharing of water, power etc
After 10 years, Hyderabad could become a State or a UT. Look at how even with Delhi there, Noida and Gurgaon has developed on either side. Noida and Gurgoan have grown into gigantic cities.
We could do much better by custom designing cities with huge roads and other infrastructure like the Chinese have done. Instead of ONE Hyderabad, people of Andhra and Telengana could have THREE World Class Cities.
Looking at the current situation in which the people of the state are in, it will be wise to go for the Second Option. All free thinking people whether from Andhra or Telangana will agree to this position.
Its heard that the Second Option is being discussed in Delhi. If all Parties sit down and start discussing, an agreed position will emerge.
Instead of taking to streets and damaging private properties across the State, lets hope the leaders will call off all agitations and start serious discussions to decide on the modalities of division.