Credai National Secretary Gummi Ram Reddy stated that the real estate sector should come to a state of greatness and respect. They should be able to boast that they are builders. He clarified that the real estate sector will be respected only when those who cheat the buyers are severely punished. What will be the impact of the NDA government at the centre and the formation of the coalition government in AP on the real sector? He spoke exclusively to Real Estate Guru on many issues, such as what the government should do about affordable houses. Excerpts from the interview:
Elections are over in our country. The NDA government came to power. How do you think the real estate sector will be?
Gummi Ram Reddy: The NDA will not make a big difference. Since there was NDA in the past, the same will continue. So, there will be no major impact on real estate. The positive atmosphere will continue. There is no downside. But Sensex fell due to a majority decline. But all this is temporary.
There is talk that investors will leave due to the formation of the TDP government in AP. How true is this?
The real estate sector in AP has not been good for the last five years. It was done for political reasons. The capital was thought to be one. But it did not happen. After declaring Amaravati as the capital, many people moved there from Hyderabad and invested there. Land prices have gone up a lot. Some projects have been completed. Some have been launched. Some stopped in the middle. As prices fell, land buyers faced a lot of difficulties. Now, with the return of Chandrababu as CM, there will be development. Amaravati will definitely be the capital. Planning has already started on this, so it will continue. Investors will look the other way again. New investors are also likely to go there.
When it comes to Hyderabad, it is a city with an ancient history. It has advantages like climate and infrastructure, so no one leaves Hyderabad. Investor sentiment is also one of the reasons. If an acre in Amaravati is bought for Rs. 2 crore, it becomes Rs. 3 crore or Rs. 4 crore in a year. Because it is in the growth part. So, a few investors will definitely go that way. However, that doesn’t mean anything will happen here. Otherwise, there will be little impact on investor sentiment for some time. People like to live in Hyderabad because of the infrastructure and other factors here. However, investors in Amaravati will not stay there. But there will be growth in AP too, due to investors investing there.
Hyderabad means an affordable city; that’s why many IT companies have come here. Has it become a costly city after Mumbai? And, if real estate is not affordable, why do global IT firms look to Hyderabad?
It would have been better in three or four years. But now it cannot be said that it is so affordable. Because our prices have also increased. Affordability is decreasing due to the skyrocketing cost of land and construction. Once, the rental value was the cheapest in Hyderabad. But now it has grown a lot. However, what makes Hyderabad special is its multilingualism. Any person from the country can come and settle here. The weather here is good. There are facilities. Hence, people look towards Hyderabad. Even if affordability is reduced, it is likely to change soon.
Why are there skyscrapers in Hyderabad that do not have any geographical barriers? We don’t have any obstacles like rivers or mountains; you say that the rates of flats have gone up because of these skyscrapers?
It’s not Mumbai. We don’t even have a sea. However, some specific areas have seen development. The government has focused on areas like Hi-Tech City, Kokapet, the Financial District, etc. Consequently, land prices in these areas have increased inversely. Land prices have soared from Rs. 70 crore per acre. Can we afford construction in such areas? If we construct buildings of ten stories or more, we must pay from Rs. 20 lakhs to Rs. 30 lakhs per square foot. Therefore, 30- and 40-story buildings have become common. As a result, land companies, construction costs, and square foot prices have risen to Rs. 9000 and Rs. 10000, respectively. There is a growth corridor around Ring Road. Grid roads are every 500 meters. Developing these grid roads leads to development. There is barren land in areas like Kongarakalan, Medchal, and others. But there are no roads. If the government focuses on grid roads, travel time will decrease significantly. Therefore, the government should focus on the development and basic amenities around Ring Road. By doing so, the burden of living here will decrease. Currently, when 40- and 50-story buildings come up, population density increases, posing many challenges. Therefore, the government should focus on the balanced development of the city.
You are working as Secretary of Credai National. Tell us about your role and responsibilities.
Credai has 240 chapters in 21 states across the country. There are 15 chapters in Telangana and 20 chapters in Andhra Pradesh. As the National Secretary, it is my responsibility to coordinate all of these. Various events, meetings, and postings have to be taken care of. Support the president on various issues. Office bearers should be supported and also motivate the secretariat team.
Are you playing an active role in the expansion of Credai? Are there any subjects that you particularly focus on as a secretary?
There should be a liaison between the Credai National and City Chapters. This is very important. Make sure there are no gaps anywhere. If all these are in order, everyone will work very happily.
Finally, what kind of decisions should the central government take if the Indian real estate sector is to develop even faster? What kind of support would you like from the centre?
The government should definitely help in the development of real estate. Because affordability is going away. Interest rates have increased. This has become a burden for common people. A limit of Rs. 45 lakh has been imposed for affordable houses. How can you get a house for Rs 45 lakh now? Is that possible in a city like Mumbai? So we want to increase it a bit. Also, incentives should be given. An earlier credit-linked subsidy was given. Under this, up to Rs. 2.5 lakh can be saved. It was stopped.
There is a bit of negativity in real estate. Even if Rs. 100 crore are invested here, it is not called an industry. If a person invests Rs. 10 crore and sets up an industry, he becomes an industrialist and gets a red-carpet welcome. There are many incentives, including tax concessions. But there is no such situation in the real estate sector. Here is our role, to some extent. The industry is getting a bad name due to some developers not being 100 percent reliable and some builders getting arrested. Organisations like RERA still need to crack the whip. A change is bound to happen if those who cheat the buyers are severely punished. There should be a situation where one can boast that they are a builder. Real estate is the second-most important sector of employment after agriculture. GDP growth is driven by the real sector. Around 250 industries are dependent on it. Such a real estate sector should be respected and valued.
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