Property prices set to soar in Vizag

VISAKHAPATNAM: There is some bad news for Vizagites who are planning to buy property this summer. At a time when the real estate market in Visakhapatnam is showing signs of recovery from a deep slump, the property prices are set to soar, thanks to a steep hike in construction material prices and the alleged unfriendly attitude of the civic authorities.

According to the builders, the Greater Visakhapatnam Municipal Corporation (GVMC) has decided to tax the under-construction buildings and the move is likely to escalate the cost factor. It is said that the authorities are demanding payment of vacant land tax or property tax apart from the impact tax for buildings under construction.

The GVMC has been collecting 0.5 per cent vacant land tax for three years, at the time of building approval. But now, it is insisting on payment of vacant land tax for the period of construction, which the builders have to pay when they apply for building occupancy certificate.

Unless the government intervenes to regulate the tax policy, a hike in property rates starting Rs 300 per sft seems inevitable, opined builders.

For the past three years, the real estate market in Visakhapatnam has been experiencing a deep slump due to the uncertainty around state bifurcation. Things started improving only after the new government assumed office in June 2014.

However, the hike in the cement price, which shot up to Rs 350 per bag and the increase in sand price have dented the growth in property sales considerably. The state government has increased sand price by Rs 600 per cubic metre, which the builders feel is unaffordable.

'In response to our appeal, the state government has asked the cement companies to reduce the price from Rs 350 to 230 per bag. But, the companies have not yet responded. We appreciate the government's efforts and urge a similar action in the case of the sand price also, which is under the direct control of the government,' said B Raja Srinivas, chairman of CREDAI Visakhapatnam unit.

Unless the government reacts quickly, we would be forced to pass on the overall burden of Rs 300 per sft to the consumers, he added.

In case the cement companies fail to respond to the government's appeal, the builders are planning to stop purchase of cement for a month to mark their protest akin to the week-long strike during July last year.

Meanwhile, the decision of GVMC to levy vacant land tax and house tax on buildings under construction apart from imposing the impact fee have come as a rude shock for the realtors.

'As per norms, the municipal corporation has to collect vacant land tax at the time of issuing building approval for one year prior to the construction. But, the GVMC officials are now demanding for payment of the vacant land tax/house tax for the construction period,' CREDAI Vizag president K Rama Krishna Rao told newsmen here Sunday.

The CREDAI members made a representation to the state government in this regard and are expecting a favourable decision. The realtors also want the government to extend the period of installments payment towards the impact fee from three years to five years.

'The impact fee is collected in case of multi-storied buildings in various installments over a three-year period. Though the government increased the construction period to five years, it did not increase the period for payment of installments for the said period.

We also urged the government to increase the installment payment period for shelter cess as well,' said P Koteswara Rao, honorary secretary of CREDAI Vizag chapter.