Andhra Pradesh Real Estate: Skyrocketing Land Prices

Once again, land prices are skyrocketing around Hyderabad, as the Hyderabad Urban Development Authority (HUDA) in a bid to hit the jackpot, auctioned off 69-acres of suburban land for a mind-blowing Rs. 703-crore (Rs. 7.03-billion).

The Golden Mile layout at Kokapet village in Rajendranagar Mandal of Rangareddy district, with its three-categorised plots of Site I, II and III proved to be a veritable gold mine for HUDA. Differently sized, the plots start off from little over an acre, going all the way up to six-acres, including some plots that have been sized between three to six-acres.

While, HUDA proposed to auction off 100-acres, 31-acres could not be included due to various reasons. From 18-plots out of the 3-sites, only 15 covering 69-acres went on the block. And, the remaining 3-plots spread over 31-acres are scheduled to be auctioned end-July 2006.

Abutting the Rs. 4,000-crore (Rs. 40-billion) outer Ring Road project near Gachi Bowli, the knowledge corridor and Financial District of Hyderabad, the Golden Mile layout is located in the fast developing western part of Hyderabad. Some of the world's leading institutions, such as, the Indian School of Business and International Institute of Information Technology and IT majors i.e. Microsoft, Infosys, Wipro and Polaris are all within a 3-km radius of it.

Not to be left behind, the financial district boasts of Kanbay, UBS, Franklin Templeton and other MNC majors. As well, the proposed 60-storeyed twin towers at Manchirevulu are expected to come up in the vicinity of the Golden Mile, while the new international airport at Shamshabad won't be more than a 15-minute drive from Golden Mile. In addition, a super deluxe 7-star resort-cum-spa is also scheduled to come up close by!

From hoteliers, real estate giants, top-notch IT-firms and developers / builders from Mumbai, Delhi, Bangalore, Hyderabad, and other parts of Andhra Pradesh, 47-bidders from across the country participated in the auction.

Even as, HUDA set the minimum price was set at Rs. 4.5-crore (Rs. 45-million) per acre, Hyderabad-based Kailash Ganga Constructions made the record bid of Rs. 65.02-crore (Rs. 650-million) for 4.49 acres, or Rs. 14.45-crore (Rs. 144-million) per acre. The lowest bid for a plot came in at Rs. 6.1-crore (Rs. 61-million), the average price per acre working out to Rs. 10-crore (Rs. 100-million).

In order to prevent real estate firms from raising prices without paying the money, HUDA asked for a Rs. 2-crore (Rs. 20-million) earnest money deposit (EMD) for the Golden Mile auction. It has asked successful bidders to pay one-third of the bid amount as initial deposit by 26th July 2006, with the remaining amounts to be paid in two equal instalments on 9th and 24th August 2006, failing which they will forfeit their EMD.

Delhi-based Today's Group Hotels (Andhra) was the second highest bidder, offering Rs. 62.25-crore (Rs. 622-million) for 4.61-acres, or Rs. 13.51-crore (Rs. 135-million) per acre. The very first plot auctioned went in favour of the sealed tender submitted by Pioneer Talafone Limited of Viceroy Group, who quoted Rs. 10.01-crore (Rs. 100-million) per acre, while the highest open bid for the same plot was Rs. 8.15-crore (Rs. 81.5-million) per acre.

Prestige Gardens Estates (Bangalore) bid successfully for three plots, Kailash Ganga Constructions, Lake Point Builders (Mumbai) and My Home Constructions (Hyderabad) bid for two plots each. Other successful bidders for one plot each were IBC Knowledge Park (Bangalore), Water Marke Estates (Hyderabad), Madhucon Properties (Hyderabad), Pioneer Talafone (Hyderabad) Today's Group Hotels (Delhi) and Soma Enterprises (Hyderabad).

Marketed as an exclusive development zone for major corporate projects, all clearances had been taken for the Golden Mile layout according to P. Venkatram Reddy, HUDA secretary and auction officer for Golden Mile.

"We expected Rs. 10-crore (Rs. 100-million) per acre in Golden Mile auctions and are happy that it crossed Rs. 14-crore (Rs. 140-million) mark," he added.

With a total outlay of Rs. 2,000-crore (Rs. 20-billion), construction activity will start in two years time, generating employment for thousands of people. And, Golden Mile's world class facilities will soon see it over-taking overtaking Jubilee Hills, Banjara Hills, Madhapur and Gachi Bowli in the next 3 to 5-years.

Already, tenders have been floated for development of the layout, and in the next 4 to 6-months, roads and drainage network are to be laid out. Whatever, realty analysts say about the real estate bubble being ready to burst; Indian real estate always springs a few surprises, which shows it is not going to give up its meteoric price rise in a hurry!