Telangana government claims that the record prices in land auction resulted to a boom in realty market; builders and global property consultants dispute such claim and have issues a warning that "towering costs could actually deter the entry of national and international players."
They said, according to Economic Times India, realistic land prices would actually attract big players in the market as well as entice debt and private equity firms to invest in Hyderabad properties.
Last Wednesday, Telangana chief minister's office made the claim that the price in the land auctions by Telangana Industrial Infrastructure Corporation (TSIIC) at Raidurg, Kokapet and Manikonda in Hyderabad reflected the boom in capital city's real estate market.
However, the report continues, not a single national level property developer was part of the auction and pointing this out, property consultancy firm Cushman & Wakefield's head of Telangana and Andhra Pradesh Veera Babu said, "Commercial re al estate developers are key drivers for revival in residential and commercial realty markets and the latest high land auction costs will deter national and international players from entering Hyderabad."
He added, "Many local and national property developers backed out of the latest land auctions by the Telangana government after the TSIIC authorities declared that the auctions were subject to legal disputes pertaining to land titles."
The investments done by private equity players in the Hydrebad property market in 2007-2008 has not paid of and most of them have written off the debts or continuously bleeding.
Similar concerns have been raised that the latest auction prices do not show the real picture of Hyderabad' realty market.
Sandip Patnaik, managing director of global real estate services firm Jones Lang Lasalle's (JLL) Hyderabad says, "High prices will not determine a revival - what determines revival is what's being done with the land bought. High prices may in fact have a negative impact since all the landlords in the region will now start quoting these rates as benchmark."
It seems there is really a disconnect between what the government claims and what the builders and consultants are and the stakeholders hope to receive much better and straightforward responses on the next round of land auctions.