After three-year slump, real estate sector in Visakhapatnam shows recovery signs

The residential real estate market in Visakhapatnam is showing an upward movement with increasing demand from the salaried class, industry sources said on Monday. The sector had gone into a slump three years ago, becoming more pronounced after the demonetisation of high-value currency notes in November 2016 and the introduction of the Goods & Services Tax (GST) in July last year, says Are Siva Reddy, president of Andhra Pradesh chapter of Confederation of Real Estate Developers’ Association of India (Credai). “The demand is slowly picking up in the city, though it will be a while before new projects are announced in Vizag,” said Reddy. According to Credai sources, the sector had an unsold inventory of 80,000 flats in the state, which developers were trying to sell. Of this, an estimated 5,000 apartments are in inventory in Visakhapatnam. Real estate developers had invested Rs 40,000 crore in building the 80,000 flats, hoping for a quicker recovery, the sources said. Reddy said the market in Visakhapatnam would improve further if the state government gives incentives to home buyers like a concession on stamp duty and other charges. “Currently, taxes, including GST, stamp duty and other charges account for 20% of the cost of an apartment in Vizag and elsewhere in the state. If the government can offer a reduction in stamp duty, it will stimulate the residential real estate sector by bringing in new buyers and will also lead to higher tax revenues for the government,” he said. A Credai Visakhapatnam official said the setting up of an authority in the state under the Real Estate (Regulation & Development) Act of 2016 has not served its purpose. “There is more of regulation and less of development by the authority in Andhra Pradesh. Reddy said while Credai welcomed the authority, its orders were being followed only in about 20% of the municipal authorities. “It is business as usual for many municipal corporations, where they are not following the guidelines laid down by the real estate authority,” he pointed out. The Credai official in Visakhapatnam said the key markets for apartments in Vizag continue to be in Muralinagar and Madhurawada, where there is land still available for development. The average price per square foot in Muralinagar is Rs 4,500, while in Madhurawada it is between Rs 3,800 to Rs 4,000 per sq foot. Townyneighbourhoods like Siripuram, Pandurangapuram and Kirlampudi Layout have no land available for development, so the prices there are in the range of Rs 5,500 to Rs 6,500 per sq foot. “There are hardly any new projects in these areas because developers have to persuade home owners to give up their old homes to build apartments. Many home owners are demanding fat sums in cash apart from up to 40% of the total number of apartments in the building. This is not viable for developers,” said the owner of a real estate development firm in Siripuram.