Hpcl Inferno Singes Realtors
Builders and real estate agents in this port town, christened the city of destiny, have their fingers crossed over the future prospects in the wake of the disastrous fire at a local refinery and predictions that Visakhapatnam could turn into another Bhopal before long.
Although they are putting up a brave front, they admit all is not well with the real estate business and could worsen in the coming years. In fact, it is only in the past six months that the real estate business had picked up marginally after the market crash in the late 80s. However, even this increase was largely confined to the city area with good rental value and not in the outlying areas where civic infrastructure is almost non-existent. Environmentalists fear the city is sitting on a powder keg.
Demand has picked up by 50 per cent in the past five months compared with the same period last year, said V Krishna Prasad, managing director, Kiran Krishna Real Estates. The view is also echoed by K S Chandran, chairman of the Apartment Builders Association.
Prasad, however, hopes the doomsday predictions will not have its fall-out in the outlying areas where most new colonies are coming up.
With a massive corporate investment of Rs 10,000 crore in the pipeline, demand for good residential accommodation is bound to go up in the coming years. We are planning on that basis, he said.
The boom in real estate started in the early nineties with the government projecting fresh induction of corporate investment of over Rs 25,000 crore, mostly in refineries, thermal power, urea and steel mills. Until then there had been an acute shortage of houses.
A study by the Visakhapatnam Urban Development Authority (VUDA) said the steel plants, which generated considerable indirect employment, especially in the construction sector, had not made any effort to bear part of the burden for providing shelter.
The study wanted the steel plants to share development responsibilities such as housing with other agencies since it formed an integral part of the Visakhapatnam metropolitan region.
Resource constraints limited the efforts of the governmental agencies like VUDA and the housing board. It was largely the private sector that entered this business.
However, with most of the projected industries either backing out or opting out of Visakhapatnam, demand started sliding. Today there are not many takers for luxury apartments costing Rs 8 lakh and more.
Earlier this year, investment decisions were taken with respect to the Rs 3,600-crore Simhadri power station of NTPC and the Rs 1,200-crore PTA project of Indo-Rama. With prospects of the Malaysian Proton car project and the new tractor unit of Mahindra & Mahindra brightening, investment in real estate is once again booming.
The refinery blast has, however, once again put a question mark on the future of the citys real estate market.