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The number of land purchase transactions have slowed down in the last three weeks in Aganampudi, Parawada and Achuthapuram areas of the Visakhapatnam district.
Land prices too have fallen in the last ten days. A few buyers are even thinking of cancelling deals and asking for a refund of the advance payment, a real estate broker in the Kondaiah Chodari told Business Standard.
In the last one year, land prices in the area had more than doubled in these areas with several new industrial proposals, including VW's, floating in the air. The prices of the surrounding agricultural lands too had increased abnormally.
There were other factors, too, fuelling the prices in and around Visakhapatnam. These included the prospects of separate statehood for Telangana, widening of the NH-5, acquisition of about 9,000 acre for a special economic zone in the Rambilli Achutapuram area, Beach road expansion plans, Apparel park, Pharma city, Gangavaram port, tourism projects, allotment of lands to a few IT firms like Satyam Computers, TCS and Wipro and construction of mega housing projects in collaboration with foreign companies by Visakhapatnam Urban Development Authority.
One and a half years back there was plenty of land available at Rs 4,000-5,000 per sq yard in the city. The prices rose to about Rs 10,000 per sq yard.
Commercial land prices in the Dwarakanagar area increased to Rs 40,000-50,000 per square yard from Rs 18,000-22,000 in the course of about 18 months. What's more, there was no land available on the Dwarakanagar main road.
Recently several jewellery shops, such as, Khazana Jewellery, CMR, Hira Panna, Vaibhav, etc, set up shops with an investment of about Rs 4-8 crores each.
Super markets like Spencers, Fresh Choise and Trinetra too opened franchises. The CMR group is planning to set up a multiplex in the city.
"Some Bangalore-based real estate firms and Hyderabad-based business houses are planning to invest huge amounts in Vizag real estate business," said K Subba Rao, chairman, Visakhapatnam Apartment Builders Association.
In Madhurawada, 12 km from the Vizag city, land prices increased to Rs 3,000-5,000 per sq yard from Rs 500-800 18 months ago.
In Parawada and Aganampudi areas, agricultural land prices increased from Rs 5-8 lakh to Rs 35-40 lakh and converted these lands into residential sites and lands costs rose to Rs 8-12 lakh from Rs 2-4 lakh over the last two years.
Between Madhurawada-Anandapuram, the national highway-facing land and Bhimili beach prices increased to Rs 80 lakh - Rs 1 crore per acre from Rs 15-20 lakh two years back.
Land facing the Anandapuram-Pendurthi road rose in value to Rs 20-40 lakh per acre from Rs 4-6 lakh two years ago.
However, despite this, the fall in prices in the wake of the VW controversy may see only limited impact. For, there are other factors at play.
The state has paid Rs 120-130 crore (Rs 1.2 to 1.3 billion) as compensation to those losing their land to the SEZ. These farmers are reinvesting their compensation amounts in purchasing agricultural lands in the rural areas, pushing up the prices.
After a memorandum of understanding between the Jindal group and the state government for an alumina plant in the Vizag district, the land prices in Chodavaram Narsipatnam and Madugula areas went up.
In the Aganampudi, Parawada and Achuthapuram areas, the land prices gallped over the last two years in anticipation of increased industrial activity. Projects proposed in this area include an SEZ, pharma city, Gangavaram port and Textile city.
Nevertheless, post-VW, the rapid rise of land prices is certain to hit a speedbreaker.
