Five things investors should know about the Amaravati real estate market

By Bricksnwall | 2024-06-13

Amaravati's real estate sector has been in the spotlight due to a dramatic increase in realty prices following the victory of Chandrababu Naidu's Telugu Desam Party.

Real estate prices in Andhra Pradesh's Amaravati rose by up to 100% in the days following June 4, when the Telugu Desam Party, led by Chandrababu Naidu, won a landslide victory in the state assembly elections. Furthermore, the party won 16 of the state's 25 Lok Sabha seats, cementing its place in the NDA alliance at the centre.

"The prices of real estate in Amaravati have recorded a V-Shaped recovery since the declaration of the election results with the mandate of a stable government," said Anarock's Prashant Thakur, adding that land rates have increased by nearly 60% to 100% in the past few days, while the number of sellers has dropped sharply.

The proposal of Amaravati as Andhra Pradesh's capital was Naidu's brainchild, floated during his chief ministerial term between 2014-19. However, the strategically located city in the heart of Guntur district is alleged to have suffered a setback under successor Y S Jagan Mohan Reddy's administration.

Local brokers said that land prices in Amaravati ranged from 25,000 to 60,000 per square yard in 2019. Prices decreased from 9,000 to 18,000 per sq yard during YSRCP and now range from 30,000 to 60,000.

Naidu's return as Andhra Pradesh Chief Minister has sparked considerable speculation and raised expectations of a resurgence in Amaravati's progress.

"With Amaravati receiving capital city status and the political and financial support expected from the NDA alliance at the Centre, investors would be comfortable about the city's growth and progress,” said Nomaan Ellahi, Senior Vice President of proptech company Square Yards.

Here are five crucial things investors should know about Amaravati's real estate market.

1 Is the price boom a one-time phenomenon?

Real estate specialists who spoke with HT Digital described last week's surge in real estate prices as a one-time occurrence caused by political developments. While property prices are projected to rise in the future, the rate of increase may slow to a more steady level, according to the experts.

"As the plans for development formalise in the coming days and years with the masterplan getting implemented to build the greenfield capital city, it is estimated that prices will rise further," Thakur said, adding that because a sharp price rise has already occurred, further appreciation for land assets may be moderated.

2. Could help the commercial real estate sector in Amaravati.

In the first few months, the new political administration is likely to prioritise improving the ease of doing business in the state, which will benefit the commercial real estate sector.

According to real estate specialists, new launches may not occur for at least a quarter. 

3. Affordable housing may experience increase in Amaravati.

In the residential segment, near-term demand is projected to be mostly driven by inexpensive housing, as there is no well-established model for the premium bracket. More than 60% of Andhra Pradesh is classified as rural India.

However, some, like as Thakur, believe that the city's capital designation may boost the mid- and luxury housing categories.

4. Housing launches could pick up after a quarter.

Real estate specialists predict that the Amaravati real estate market will become more stable in the next 3-6 months as the new government's policy agenda takes shape. While land parcels offer an opportunity for an early mover advantage, project debuts in the residential category are expected to increase in future months.

It will be at least a quarter before we see fresh launches in the city from developers. Experts say there aren't many viable residential investment possibilities accessible right now.

5. Can investors expect bigger profits in the Amaravati real estate market?

A expanding market typically generates higher returns due to low entry barriers and modest ticket sizes. According to real estate analysts, capital appreciation and rental yields in Amaravati will continue to be important indicators for potential investors in the next quarters.

Source: Hindustan Times