Nagpur realty hits the roof

Realty prices in Nagpur are going through the roof on speculative buying as high networth individuals including non-resident Indians are believed to be fueling the rise.

Brokers say that huge tracts of agricultural land around the city have been purchased by parties who haven't even seen the property.

"Such deals are being done on the Internet and registered through a power of attorney arrangement with the broker. The scale is unprecedented," said noted builder Shabbir Vali.

The stamp duty collected on registration of land sales in rural areas of the district has also shown a steep rise. The duty collected from the Nagpur rural area from April 1, 2005, to March 31, 2006, was Rs 24.9 crore as against Rs 18.6 crore collected in the previous fiscal.

The state government has already collected a whopping Rs 16.6 crore in the first five months of the current financial year from April 1, to August 31, 2006.

Real estate agents say this clearly demonstrates that vast tracts of agriculture land has changed hands.

According to them, most of the money is coming from outside Nagpur.

"There are some big developers who are planning new townships such as the Satyam Group. Local builders too have purchased large areas of land for constructing housing complexes outside the city," said Rakesh Reddy of Roshni Developers.

According to Reddy, huge amounts are also being pumped in by NRIs who don't necessarily have their roots in Nagpur. "In dollar terms, the amount isn't much and investors see a lot of potential in tier II cities such as Nagpur," he said.

Just a year ago nobody here advertised rates in local newspapers. Realty agents felt that the rates were embarrassingly high and that not many would be interested in the property with such price tags.

However, newspapers have now launched weekly and fortnightly supplements on real estate and give their own locality-wise rates based on market data and the price on the last registered sale deed.

This has encouraged real estate agents to release advertisements announcing shocking realty prices.

Haji Bashir Estate, a real estate broker, offers "land only 7 km from 0 mile opposite Safari Park, Gorewada, at Rs 25 lakh an acre".

So what if the Safari Park is merely on paper and the government is yet fund the proposed park. The broker is also offering land at other places around the city at rates ranging from Rs 4 lakh per acre to Rs 20 lakh per acre.

Most of the speculative buying has been attributed to the development yarn spun around the proposed air cargo hub and SEZ project being developed by the Maharashtra Airport Development Company (MADC).

There is no farm land around the project demarcated area which is available for sale. Some real estate funds from India and abroad are also said to have made inquiries about land prices here and this too has added fuel to the fire. Builders, hoteliers and corporate houses too have made surveys.

It has also been learnt that a Malaysian real estate fund is negotiating with a few local firms to buy land here.

Developers such as Ashutosh Shewalkar, whose firm has a number of projects its name, caution investors against making purchases for speculative reasons.

"They are carving out plots from farmland purchased in acres. The square feet price of such land seems less but it adds up to a substantial amount for promoters. But the place is still in relative wilderness and out of the city. Only people who intend living in those conditions should buy," said Shewalkar.

Brokers admit that the realty bubble could pop anytime but till then everybody seems to be making money.