Real estate Scenario in Hyderabad- Building Castles in the Air

The stock market is like a yo-yo going up and down, while Gold seems to be on a high, with no buyers in sight and oil has hit the barrel for a century. So what does this bode for Real Estate Scenario in Twin Cities and neighbouring areas. Like everything else that happens in Hyderabad, a lot is decided on hype and hoopla.

Mindless ways of working is killing a goose that lays the golden egg. Let us start with the basics. The twin cities of Hyderabad and Secunderabad are located on Deccan plateau. Unlike a Mumbai which is an island, or Delhi which is a landlocked state, the twin cities have no problem is growing horizontally. So, for a long while the land rates in Hyderabad and Secunderabad grew at a sensible, steady clip. But what we have seen in the last three years is nothing short of crazy logic being used to sell real estate. Things have reached such a bad state that one can buy a home in London or New York for the price they would buy in Hyderabad.

Who in their right mind would pay over a crore of rupees to buy a place which has beautiful roads, swimming pools, jogging track a club (of course, all the brochure). Yet there is no proper road to reach the place and it is all pure sales talk. I have been talking to many of my friends who are working abroad, and they tell me that the rates being quoted for real estate projects astounds them. The entire thing smacks of speculation and kite flying.

Look at what happened in the Bangalore real estate market. Despite all the hype about Bangalore’s real state being on a high, registrations have declined by 32 % in the calendar year 2007. That’s reality for you. Today, real state sales personnel for no fault of their are being bracketed with scamsters who sell the Taj Mahal or the Eiffel Tower to gullible buyers.

Most of the money that is going into the so called big projects are all hawala money which is coming back to be converted from black money into white. If a project by project analysis is made and the financial background of the NRI buyers is checked out, then the truth will be out. In most cases, the individual has only a dummy who has been used to launder money. The problem is that the Finance Ministry and SEBI do not want to do this, as the truth will be unpalatable to them.

The so called IT industry buyers are also a myth. Most of them buy the flat or land only to sell it after a few months to the next unsuspecting buyer. Like the stock market correction that happened today, real estate market will see a correction. The hype is driven by big companies who have bough huge chucks of land with money generated from Public issue, and not their own money. Now, they want to inflate the rate which they have bought and sell it at still a higher place. So, they indulge in what is called a ‘circular trading’. Ten friends get together and start selling to one another and yet no cash changes hand. The game of Chinese whispers is well and truly happening here.

Take an example, Shamshabad is being said to be the next best place to live. Worldwide, no sensible human being would like to stay anywhere near an international airport due to the noise pollution. Remember the famous Narita airport in Japan. Citizens of the area around the airport fought tooth and nail to prevent the construction of the airport. The shoe is now on the other foot in Hyderabad, as real estate companies are promoting dwelling units near the airport. There is a huge movement of huge aircrafts in an international airport and one cannot get a sound sleep and people have problems with hearing. So who in their right sense of mind will live near an international airport ?

Same goes for land being promoted near the biotech park in Shamirpet. No sensible person would stay in a human habitation 15 kms around an institution which generates bio-hazard. Infact bio-tech companies insist of a no human habitation around a 25kms radius. But who cares for the customer in India ? Look at what happened to hapless apartment and land buyers in Patancheru and Nacaharm. The ground water is polluted in Patancehru while in Nacharam the ground water seepage and radioactive material from the Nuclear Fuel Complex is taking a toll on the health of the residents.

What is needed is a sensible real estate policy that eliminates crooks and speculators who are in it to make a fast buck. With interest on housing loans become dearer, buyers are hard to come by. Real Estate companies have to cut out the hype and hoopla and get down to the basics. Deliver what you can, and not something copied from a foreign brochure.

The confirmation that the real estate bubble has burst comes with today’s news that the Registration department has advised government not to notify new rates for land beyond 10% in the twin cities. The reason – the market has crashed and registrations last calendar year are down by a whopping 40%.

What goes up has to come down, that is the law of nature. And same goes for speculation.