Vizag Real Estate – Heading for tough times !! Things are not falling in place !!

An under construction apartment complex in Vizag

An under construction apartment complex in Vizag

Vishnu Shankar

A lot was expected from Vizag ever since it was known that the combined AP was heading for a bifurcation. Vizag was considered a natural beneficiary due to its pre-eminence in the residual Andhra Pradesh. After all, it is the biggest city in the residual state. It is also the only place to have the look and feel of an emerging city as others like Vijayawada, Guntur, Tirupati, Kurnool etc could never go beyond the look of inflated towns.

The choice of Amaravati as the new capital disappointed Vizagites no end. But they quickly reconciled to it, comfortable in the assessment that despite Amaravati’s emergence, Vizag would still be able to leverage on its natural advantages of being a good developed city with an impressive industrial base, a good airport and two sea ports. There was also a glimmer of hope on the emergence of IT sector with Wipro and Tech Mahindra assuring the CM in the first few days of his term that they would ramp up their existing facilities. Chandrababu made a few quick trips around the same time last year, even held an IT sector conclave and announced the setting up of an iconic towers at Madhurawada (named it Signature Towers). All this happened in quick succession prompting one to believe that Vizag may, after all, attract some IT companies. There was always the nagging doubt at the back of one’s mind that since globally IT was not doing very well due to multiple factors, global tech slowdown and increasing automation of processes being among the chief reasons, Vizag’s efforts in attracting new IT campuses may not fructify very smoothly. But since the CM is none other than Chandrababu who had an enviable record of making Hyderabad an impressive IT destination during his earlier tenure, people were generally smug in their assessment of a brighter future for Vizag in the IT space. 14 months down the line, now we know that Vizag making any impressive progress in this regard is not going to be a cakewalk. The CM too seems to have understood this and all the powerful, high-on-hope rhetoric he mouthed in the early days of the state’s bifurcation has now come to a trickle, if not entirely abandoned.

Vizag real estate is not happeningIndustrially too, things are not falling in place for Vizag. There is powerful competition coming here from the Nellore – Chittoor belt. Sri City SEZ and Krishnapatnam port have made terrific progress in the last few years. Sri City in particular, has many things going for it. It would not be surprising if this Nellore – Chittoor belt emerges as one the biggest industrial clusters in the country in a few years time. Sri City’s location, in close proximity to Tamil Nadu and Karnataka, makes it a probable hub from where any manufacturer can not just distribute his goods economically but also export through the super-efficient Krishnapatnam port. Here again, Vizag’s location to the northern corner of Andhra Pradesh seems to have hit it hard. Unlike Nellore – Chittoor belt which can count on the developed markets of AP, TN and Karnataka as its hinterland, Vizag only has the most underdeveloped Orissa, Chattisgarh etc to derive its demand from. Not surprising to see that even in the last 14 months of the new AP, Nellore – Chittoor belt far outstripped Vizag in terms of new investments attracted.

This is likely to continue even in future and the gap can only become wider. In fact, Asian Paints is the only new worthy investment Vizag has attracted of late, and unfortunately the national slow down in construction and real estate, may prompt Asian Paints to go slow on setting up this plant. Even other entertainment/ tourism projects like the Eros film city which were announced last year with much fanfare seem to be non-starters. Availability of land is the villain of the piece here. True, IIM and the new airport dreams are being realised in Vizag. But between them, they are hardly expected to make any significant difference.

And most importantly, besides the absence of positives for Vizag real estate, there is one big negative lurking in the background. That is the emergence of Amaravati.  Amaravati will take shape much faster than any one ever imagined. (READ our earlier article HERE) Do not forget that this is one big greenfield city that is being built after half a century in India, after Chandigarh, and is sure to attract investments in droves once private investment opportunities open up in Amaravati in 12-18 months time. That will certainly divert some investors from Vizag in future.

Any city’s realty thrives on the new job additions to the city and the consequent population addition. In the absence of any industrial / IT upswing, Vizag is not expected to add significantly to its per capita incomes. While there may always be some natural growth that a city of Vizag’s size and appeal usually witnesses, it may not be enough to take the real estate in Vizag on to a whole new pedestal. And that makes me wonder if the already inflated Vizag property prices are about to see a mini-crash.  

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