Real estate prices in Hyderabad cooling off

IT'S VERY TRUE THAT PRICE IS NOT GOING UP
300% HIKE WAS NOT NATURAL SO THERE SHOULD BE SOME PRICE CORRECTION

PEOPLE CAN'T AFFORD A FLAT AT 1 CRORE. THEY WILL TRY TO LOOK FOR HOUSE
IN OTHER CITIES

IT'S NOT LIKE THIS THAT YOU NEED TO LIVE IN HYD. YOU CAN LIVE IN OTHER
CITIES ALSO.

Now Read the article ....

Real estate prices in Hyderabad cooling off

Higher interest rates, input costs slow growth

Growing demand

Sector shows promise to grow as players get funds for bigger projects

Demand for villas, townships, gated communities expected to grow

Shortage of skilled plumbers, masons, electricians a big challenge

K.V. Kurmanath

Hyderabad, March 5 After a dream run of three years, it is time for
the real estate prices in Hyderabad to mellow down. Prices, which shot
up by up to 300 per cent in most areas, have started cooling off,
witnessing very low growth rates or stagnation.

Several factors have contributed to this. While higher interest rates
discouraged individual buyers as cost of flats went up by 50 per cent
just on this count, steep rise in input costs and stricter rules
shooed away the mid-level builders from the scene. This has led to a
freeze on construction activity for some time.

Despite these negative factors, the sector shows promise to grow as
players with muscle get funds for bigger projects like townships and
gated communities. Rajiv Gandhi International Airport, which is going
to be commissioned on March 16, and over 40 SEZs coming up in and
around the twin cities too would act as trigger for real-estate growth
in the next few years.

"Despite the hiccups in the short-term, there is going to be a time
both for the development and construction segments," Mr Y. Kiron,
Chief Executive Officer of Suchir India real-estate developers, told
Business Line.
Niche products

He felt that demand for niche products such as villas, townships and
gated communities would grow.

"At Rs 3,500-4,000 per square feet, a comfortable flat would cost
about Rs 90 lakh, excluding taxes and budget for extra fittings. This
could prompt people to go in for a villa, which gives them the feeling
of owning a home," he reasons.

Mr Sudhir Reddy, Chairman and Managing Director of infrastructure
major IVRCL, said there would always be demand for certain locations.

The biggest challenge, however, is providing an enabling environment
to support the new projects that plan to develop millions of square
feet, including in some high-rise buildings. "Do we have enough number
of skilled plumbers, masons, electricians," Mr Kiron asked.

"While interest rates on housing loans have eased a bit, large
builders from Hyderabad and across India are launching mega projects
across Hyderabad. However, prices are not likely to go up
significantly as supply is more," Mr Marutish Varanasi, Director of
VRNET Consulting, said.

Mr S.N. Reddy, President of Builders Association of Andhra Pradesh,
said there was lull as transactions came to a standstill in several
areas.
Property lock-ups

Stating that the boom was artificial and that the prices skyrocketed
unreasonably, he said the irrational rise in prices resulted in
default of land deals. "Notional hikes in prices have resulted in
lock-up of properties, with people deciding to keep their properties
in hope of better realisations," he said.

Mr G. Yoganand, Managing Director of Manjeera Constructions, pointed
out that it had become prohibitive for buyers.

"EMI per lakh has gone up to Rs 1,100 from Rs 700-725 a few years ago.
As a result, the repayment burden has gone up by 50 per cent upfront.
Besides, costs of cement and steel have gone up significantly, making
it impossible for buyers," he said.

Extraneous factors such as NRIs losing confidence in investments in
the US and continued encouragement to IT and other sunrise sectors
would drive growth, he added.

From http://www.thehindubusinessline.com/