BUBBLE BURST!

By Desaraju Surya
Hyderabad: The Andhra Pradesh government which reaped a rich harvest by selling land in and around Hyderabad, riding on the artifical boom in real-estate market, is now hit by the ebb. While the real-estate market in general is witnessing a slowdown due to lack of buyers, big-time realtors who purchased large extent of government land at fancy rates are showing no interest to pick up more land being offered by the government agencies. This is upsetting the government's plans of propping up much-needed revenues for infrastructure projects. The government is apparently losing its own game, thanks to the prevailing downward trend in the real-estate market. The Y S Rajasekhara Reddy government unabashedly pursued real-estate business through its agencies like Hyderabad Urban Development Authority, Andhra Pradesh Housing Board and AP Industrial Infrastructure Corporation and pushed the realty market in many a case contributing to the abnormal and even ridiculous spurt in land values in the last four years. In a way, the hike in values appeared to be in sync with the actual market scenario but, as widely feared, the market has gradually hit the slump. Both the Huda and the APHB -- the biggest sellers of land in recent times and, of course, the beneficiaries of the boom -- vouch that the slowdown in the real-estate market across the country is leaving its impact on Hyderabad as well. These two agencies of the state government that earned hefty profits by disposing of large extent of land in and around Hyderabad, mostly for housing projects, for exorbitant sums are now finding it difficult to sell even prime land. After the miserable Empire experience, the Huda in fact cut down the upset price by Rs 2 crore per acre but still found no takers and was left searching for other options like joint development ventures. Similarly, the APHB could not find takers for its Bay Ridge block in Raidurg. Major real-estate firms, particularly those from north India that made a beeline for Hyderabad and jacked up land prices, are now apparently backing off. Realtors are citing many reasons for this: the international scenario, the fallout of dollar crash, volatility in the stock market and a liquidity crunch. Another important reason is the big real-estate companies that put in huge money on land here are now tied up with project development works. The companies will now have to complete these projects, make money and put it back in fresh ventures. "This is a cycle. Unless we complete the projects, at least in phases, we can't obviously invest afresh," a major realtor pointed out. "The slowdown is not restricted just to Hyderabad but other parts of the country as well. This could be a temporary phenomenon," joint managing director of Omaxe Limited Sunil Goel observed. Omaxe was one company that purchased a 25-acre block in the Huda's Empire venture a few months ago. The major real-estate companies that generated billions of rupees from the stock market are now feeling the pinch with fluctuating fortunes at the bourses. This is also impeding investments on land, market sources say. The market forces, however, aren't willing to say the situation has worsened and will lead to a crash in prices. "Land is a constant, so is demand. Though not a fall, the rates may stabilise at best for a while," a top official of APHB observed. His observation leaves the impression that the government agencies haven't lost hope on the market as yet. The next round of land auction may well prove a point.