Amaravati, the ambitious greenfield capital city of Andhra Pradesh, is under a cloud with the YS Jagan Mohan Reddy government sending confusing signals on its fate, reiterating commitment to its development on the one hand and questioning its viability on the other.

Tuesday ’s remarks of Municipal Administration Minister Botcha Satyanarayana that Amaravati is not only costly but also vulnerable to floods, set the cat among the pigeons. No stakeholder is, perhaps, more unnerved than the real estate sector.

On a downward spiral ever since the change of guard in the state, it could now hit the panic button. At least 5,000 projects underway in the region, including Vijayawada, Guntur and Mangalagiri, are facing headwinds.

Around Rs 300 crore investment is locked with the projects stalled. Estimates vary but it appears that nearly 60 per cent inventory is lying unsold.

Though these figures clearly point at a crisis, most developers are waiting for the tide to turn. As of now, distress sales are few and far between but prices have come down by 30-35 per cent.

Even then, home buyers are reluctant to put their money. While both sides wait and watch, the shortage of sand has further compounded the situation. Construction workers laid off with most projects coming to a screeching halt, are migrating to Hyderabad.

According to one account, almost 50,000 have migrated to Hyderabad in the last one month alone in search of work.

In the first quarter of this fiscal, the number of registrations related to houses and house sites decreased when compared to the corresponding period in 2018-19.

The sub registrar's office in Mangalagiri, a beehive of activity with 10-15 registrations a day on an average till a month before elections, now wears a gloomy look.

Land prices in Amaravati wobble as AP govt sends mixed signals

The situation is no different in Tadikonda, Mandadam, Thullur and Ananthavaram sub-registrar offices.

“It is a fact that since the beginning of the new financial year, there has been a drop in the number of land and property registrations in the capital region. Somewhere between 30- 35% drop has been observed,” an official in the Thullur SRO. In the core capital area, the going rate is Rs 15,000 per sq yard — a far cry from `24,000-28,000 six months ago.

“Though land is on sale at 30-40% less price than it was during Jan-March, there are no takers.”

A builder in the Amaravati region, Krishna, attributes the reluctance to the state government’s ambiguous stand on the capital city. “As land prices in the core capital area soared, the land prices in Amaravati (old town) and other nearby areas also increased.

Today, people don’t want to invest as they fear, the returns might not be good,” he observes. CREDAI state president Ch Sudhakar concurs.

“The state government must clear its stand on the capital city, as the recent comments of the minister created apprehensions among people. Such statements discourage prospective investors from coming to the state,” he said.