Amaravati: Invest Now Or Never?

Amaravati, the capital city of Andhra Pradesh, is currently a hot topic for investors. The city is being built on 217 square kilometres of land in the Guntur district and is designed to be a smart city with 51% green spaces and 10% water bodies. The potential for growth in Amaravati is immense, and it has attracted attention from global investors. The city has inherent geographical advantages, a business-friendly environment, and is being planned by world-class consultants and architects. However, there have been some setbacks and criticisms along the way, and the project has slowed down since 2019. So, is it the right time to invest in Amaravati?

Amaravati's real estate market

Land rates have increased by 60% to 100% in recent days, with the number of sellers decreasing sharply. The idea of Amaravati as the capital of Andhra Pradesh was initially proposed by Naidu during his chief ministerial term between 2014-2019. However, the project is said to have witnessed a setback under the leadership of Y S Jagan Mohan Reddy.

According to local brokers, land prices per sq yard in Amaravati were at their highest in 2019, ranging from ₹25,000 to ₹60,000. During Reddy's rule, these prices decreased to almost ₹9,000 to ₹18,000 per sq yard. As of 2024, prices have rebounded to the 2019 range of ₹30,000 to 60,000 per sq yard.

The rebound in prices following Naidu's return to power has led to speculation and heightened expectations for a revival in Amaravati's progress. Senior Vice President of Square Yards, Nomaan Ellahi, stated that investors would be reassured about the city's growth due to its capital city status and anticipated financial support from the NDA coalition.

Real estate experts have termed the recent boom in prices as a one-off phenomenon triggered by political developments, and the pace of growth is expected to moderate to a more stable rate moving forward. While property prices are projected to continue rising, the sharp price increase observed post-election may not be sustained for land assets.

In the near term, the new political dispensation is expected to focus on enhancing the ease of doing business within the state, which will benefit the commercial real estate sector in Amaravati. In the residential segment, demand is expected to primarily come from the affordable housing category, as there is currently no well-established model for the premium bracket. However, experts suggest that the mid-end and luxury housing segments may also benefit from the city's capital status.

Overall, Amaravati's real estate market has seen significant volatility, and investors should be cautious of artificial price increases driven by speculation. However, the city's potential for growth and development, coupled with its business-friendly environment and geographical advantages, make it an attractive investment prospect.

Amaravati's business-friendly environment

Amaravati, the new administrative capital of the Indian state of Andhra Pradesh, is being built with a business-friendly environment in mind. The region has long been established as a prime centre for export activities, commerce, trade, industry and agriculture in India. It is also part of the Vishakhapatnam-Guntur Industrial Region, a significant industrial corridor in the country.

Andhra Pradesh and the neighbouring state of Telangana have topped the Ease of Doing Business rankings by the World Bank, thanks to their business-friendly policies. This has paved the way for a new era of development in India.

The authorities in Amaravati are committed to attracting investments from national and international industries such as retail, energy, education and healthcare. They aim to create a positive impact on the real estate sector and are continuously upgrading connectivity to facilitate the region's growing economy.

The city's geographical location between Vijayawada and Guntur makes it a viable investment centre. Vijayawada's popularity as an entrepreneurial hub and Guntur's well-established educational and commercial zones will benefit Amaravati. Additionally, the region has an ample water supply, which will be further improved as the capital's infrastructure develops.

Experts from various fields have been invited to oversee all aspects of the city's social and physical infrastructure, including urban management, core capital areas, sewer networks, and water supply. The Swiss Challenge procurement method is being adopted to ensure quality, where contractors publish unsolicited bids online for others to match or exceed.

With its business-friendly policies, strategic location, and well-planned infrastructure, Amaravati is poised to become a thriving hub for businesses and investments, creating a positive impact on the region's economy and attracting global investors.

Amaravati's geographical advantages

Amaravati, the capital city of the Indian state of Andhra Pradesh, boasts several geographical advantages that make it an attractive investment destination. Here are some key geographical advantages of Amaravati:

Strategic Location: Amaravati is strategically located between Vijayawada and Guntur, two important cities in Andhra Pradesh. Vijayawada is known for its entrepreneurial spirit, while Guntur offers established educational and commercial zones. This location provides Amaravati with the benefits of proximity to these hubs of economic and educational activity.

Water Supply: The region of Amaravati is blessed with an ample water supply. As the city is situated on the right bank of the Krishna River, it has access to a steady water source. Moreover, as the city's infrastructure continues to develop, the water supply is expected to improve further.

Climate: Amaravati enjoys a favourable climate. During the winter months, the temperature ranges from 12°C to 30°C, while in the summer, it varies from 17°C to 45°C. While the summer climate is very humid, with humidity levels reaching 68%, the overall climate conditions are conducive to economic activity and development.

Inclusion in a Major Industrial Corridor: Amaravati is part of the Vishakhapatnam-Guntur Industrial Region, a significant industrial corridor in India. This inclusion positions Amaravati as a prime location for export activities and provides it with access to essential infrastructure and resources for industrial development.

Proximity to Neighbouring Cities: Amaravati is located in close proximity to neighbouring cities such as Guntur and Vijayawada, which are part of the Andhra Pradesh Capital Region. This proximity facilitates easy access to resources, infrastructure, and economic opportunities in these cities, enhancing Amaravati's attractiveness for investment.

Amaravati's world-class masterplan

The new administrative capital of the Indian state of Andhra Pradesh, Amaravati, is being built on 217 square kilometres of open fields in Guntur district. The masterplan for the new government complex, which will form the central focus of the city, has been designed by Foster + Partners. The project includes the design of two key buildings: the legislature assembly and the high court complex, along with several secretariat buildings.

The city has been strategically positioned on the banks of the River Krishna to benefit from an abundant supply of fresh water. Measuring 5.5 kilometres by 1 kilometre, the governmental complex occupies the heart of the city and is defined by a strong urban grid. Inspired by Lutyens’ New Delhi and New York’s Central Park, a clearly defined green spine runs through its length, providing the foundation of the masterplan’s environmental strategy. At least 60% of the area will be occupied by greenery or water, with the city designed to be one of the most sustainable in the world.

The transportation strategy includes electric vehicles, water taxis, and dedicated cycle routes, along with shaded streets and squares that will encourage people to walk through the city. The city is being modelled on Singapore, with the masterplan being prepared by two Singapore government-appointed consultants. Chinese and Japanese firms will ensure that Amaravati reaches all design, efficiency, and sustainability benchmarks.

According to the timeline of the Rs 58,000 crore project, the city will be populated and functional by the end of its second phase in 2024, with the third and final phase scheduled to be completed by 2029. The city is expected to be home to 13.5 million people by 2050 and will be six times larger than Chennai.

Amaravati's potential for growth

Amaravati, the capital city of Andhra Pradesh, has immense potential for growth and development. The city is being constructed on 217 square kilometres of land in the Guntur district, with the vision to become a unique and modern city in India. One of Amaravati's key advantages is its strategic location between Vijayawada and Guntur, which are well-known for their entrepreneurial and educational hubs, respectively. This proximity will positively impact Amaravati's growth and make it an attractive investment destination.

The city has been meticulously planned by world-renowned consultants and architects, modelled after Singapore. The master plan includes a focus on green spaces and water bodies, aiming for 51% and 10% of the total area, respectively. This emphasis on sustainability and livability is expected to draw investors from around the globe. The city's construction also has a substantial budget, estimated at ₹ 553.43 billion, with contributions from various sources, including bonds, land sales, and local taxes.

The city's infrastructure development is well underway, with projects like the Seed Access Road, a 21-km stretch connecting Amaravati to Vijayawada, nearing completion. Additionally, construction on iconic buildings, such as the Secretariat Tower and the High Court, is in progress. Amaravati is also expected to benefit from its historical significance, dating back to the Satavahana kingdom, and its ample water supply.

With a projected population of 13.5 million by 2050, Amaravati is poised to become a significant urban centre in India. The city's careful planning, strategic location, and business-friendly environment make it an attractive prospect for investors. As the city continues to develop and infrastructure projects are completed, Amaravati's potential for growth and investment opportunities will become even more evident.

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