Hyderabad Real boom: Acre @ Rs 100.25 cr maybe unsustainable


Rama Krishna Sangem

A whopping record price of Rs 100.25 crore per acre of land at Kokapet in Hyderabad in an auction on August 3, Thursday, is a feel good story. But, either financially or environmentally, it maybe unsustainable and too speculative. The auctions conducted by HMDA (Hyderabad Metropolitan Development Authority) for about 45.33 acres of land in this prime area of west Hyderabad fetched a total Rs 3,319 crore.

This phenomenal rates indicate growing stature of Hyderabad as a metropolis that rivals Mumbai, Delhi and Bangalore in the country. The prices also reflect the growing confidence of real estate tycoons in the future potential of this city, that now spans over an area of 850 sq km and is set to expand by another 400-500 sq km in next five to 10 years. Soon coming Regional Ring Road will further enhance its growth.

This is not the first time the lands on the west side of Hyderabad seeing skyrocketing prices. The real boom here has been seeing northward ever since 2006-07. But, this is the first time, the price of an acre land touched, officially, Rs 100.25 crore. As this rate is quoted in an e-auction conducted by the HMDA, a government entity, so there is no scope for any tax evasion. Everything will be in white.


Is Rs 100cr  per acre viable? If so, how?

The whopping price of Rs 100.25 crore per acre in e-auction of HMDA at Neopolis, Kokapet not just set the tongues wagging in Hyderabad reality sector, but that of all over the country. Even real estate monitoring agencies from abroad too have made enquiries about the e-auction. At the same time, questions also raised about economic viability and environmental sustainability of the deals.

We all know, productivity of urban lands is decided by their sale or rental value. Neopolis at Kokapet is a fast growing residential cum commercial area. After a Government Order (GO No 168) in 2011, there is no upper limit on the number of floors, if the stipulated set back is provided. So, the builders will have to use this land for construction of towers – say up to 55 floors, which can fetch them 10 lakh sq ft.


What could be Rajapushpa& Happy Heights  plan?

The Plot No 10 which was sold at Rs 100.25 crore is bagged by two big realty firms – Rajapushpa Properties and Happy Heights Neopolis. Rajapushpa is linked to BRS MLC and former bureaucrat Venkatram Reddy. Now officially he may not be with the firm.  All eyes on them on how they are going to profit from the deal. As Neopolis, Kokapet is a multipurpose zone, they can use for any purpose.

Currently, premium residential area in Hyderabad is sold at around Rs 18,000 sq ft to Rs 21,000 sq ft, with super luxury amenities. This on part with the prices of Navi Mumbai. But, after the scrapping of Go 111 that restricts high rises in twin water bodies – Osman Sagar and Himayat Sagar last year, the land prices in this part of the city -west of Hyderabad – may taper down to around Rs 10,000 sq ft to Rs 15,000 sq ft.

As per an estimate by a top infrastructure company MD and a former HMDA official, Rajapushpa will have to develop around 10 lakh sq ft on 55 floors and sell it at above Rs 10,000 sq ft. If it can, we can expect a population of around 3,000 – 5,000 people in a tower (at the rate of 3-5 persons in a space of 1,000 sq ft). Imagine, the environmental impact of such a large number of people staying in a tower. That may make the project environmentally unsustainable.

There will be traffic jams and pressure on logistics. A higher price per unit – above Rs 15,000 sq ft needs flats with super luxury amenities. That may reduce the number of units – or flats. Lesser number of units may not be viable to the developers. Still those who bagged these lands must be having enough reserves or with raising soft loans – less interest rates.  A builder from Financial District said, these prices may realize by 2028, five years from now.

What we hear is that one of the auction winners has collected funds from prospective customers – Rs 2 crore from each. The deal may be viable to the developer, if there is no time lag in executing the plans. Otherwise, someone at somewhere will have to bear the costs. CM KCR is right in being happy over the record prices of the city reality. But, he should also keep an eye on how those who won the bids would further implement their projects.

Rama Krishna Sangem

Ramakrishna chief editor of excel India online magazine and website

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