- Continuous auctioning of land parcels by the government
Advertising rises - Hyped-up publicity on the creation of infrastructural amenities
Artificial increase in land costs - How dangerous is it for the trend to continue further?
- Owning a house will remain a distant dream for the middle class.
Flats in standalone apartment complexes in the United AP were sold for between Rs 2,000 and Rs 3,000 per sq ft in the then-outskirts like Miyapur, LB Nagar, Kompally, Tellapur, and Shamshabad.
The middle classes, albeit with some difficulty, used to acquire them to definitely fulfill their own house dreams. However, in 2023, in the new state of Telangana, to acquire a flat in the above-mentioned areas, the per sq ft cost of the flats has skyrocketed to Rs 6,000–9,000, and the price is even higher in gated communities.
Why has the cost of flats gone through the roof—making flats costlier by at least two to three times over the past nine years?
Can the common man afford to buy flats at the revised prices?
To buy a 1250 sq ft sized flat in standalone apartments in the LB Nagar and Miyapur areas of Hyderabad, would cost at least Rs 1 crore.
One has to pay the margin money of Rs 20 lakh from one’s pocket, and one should go for a bank loan of Rs 80 lakh carrying 8.5% interest. The purchaser would have to pay a monthly EMI of Rs. 70,000. To afford the EMI, one should have a monthly salary of Rs 1.5 lakh.
Now, how many employees working in Hyderabad would be able to earn this much of a salary? It’s a major issue.
Even if one prefers to move to other and less expensive locations like Bachupally, Patancheru, Hayatnagar, and Kolluru, one should shell down Rs 5,500 per sq ft to buy a 2 BHK flat, costing Rs 80 lakh. Even if one were to bear the margin money of Rs 16 lakh from one’s pocket, one could go for a bank loan of Rs 64 lakh, requiring one to pay an EMI of Rs 52,000. To pay this much EMI, one should have a salary of Rs 1 lakh per month. At this rate, salaried classes earning much less, in the order of Rs 50,000 to Rs 60,000, are not able to buy a flat.
Why is it different now?
Under the regime of Dr. YS Rajasekhar Reddy as the CM in the United AP, Kokapet lands were brought under the auctioneer’s hammer, fetching a whopping Rs 13 crore per acre.
Following the boom in real estate, his regime floated Rajiv Swagruha Corporation with the objective that owning a house should not be a burden to the common man. Efforts were made to fulfill the dream of owning a house by the poor and middle classes.
The apartments built by the corporation in Nagole, Bandlaguda, and Pocharam stand as a testimony to this.
However, the BRS regime, during the past nine years, did not initiate such measures by and large. Moreover, it auctioned the HMDA lands wherever they were available and increased the land prices rather artificially.
Therefore, the common man and middle class are not able to buy flats.
Unwanted hype created
The Telangana government has given wide publicity that something great is going to unfold in Hyderabad. Such publicity blitzkrieg is essential to attract IT firms from home and abroad.
It went one step further to make the local people believe that this hype is a reality. The government developed some roads here and there, underpasses, fly-overs, and link roads in some places to make people believe something great is unfolding in front of their eyes. At the international forum, the government hyped up the development underway in Hyderabad.
On the other hand, the government hyped up the real estate prices in regions like Kokapet and Budwel and highlighted selling an acre in Kokapet at Rs 100 crore as a great achievement of the government.
As a result of the hype, the land prices in West Hyderabad moved up, selling flats for Rs 12,000 to Rs 13,000 per square foot.
Pre-launch sales promotions
Since very few people are able to afford to buy flats at such high prices, some realtors are selling flats at half the price in the Kokapet region under the 100% payment scheme.
Some real estate developers are selling flats at Rs 600 per square foot on sites acquired at Rs 75–100 crore per acre. In one way, the state government is apparently encouraging the pre-launch sales promotion of the flats. Otherwise, how can the developers sell flats so brazenly at pre-launch events?
Whatever the real estate trend, there is every danger of the poor and middle classes finding fulfilling the dream of owning a roof over their heads a distant dream.
