The property boom in Hyderabad could be slowing down. There are indications since the government failed to find any takers for auction of 60 acres at the knowledge city.
The first phase of the Hyderabad knowledge city remains unsold. The Andhra Pradesh Infrastructure and Industries Corporation had put two-30 acre plots under the hammer at a reserve price of Rs16 cr per acre and it expected the winning bid to be twice as much given the booming property market. While one of the plots received no bids at all, the other plot received only one bid at Rs 16.1 crore.
The APIIC is now awaiting the advice from the state government as to whether the plot should be handed over to the sole bidder or whether the auction should be invalidated altogether.
Hyderabad's property consultants pin the blame on the new service tax on commercial rentals. This land was meant exclusively for an IT park and at Rs 16 crore an acre it would have to be leased out at Rs 55 per sq ft to break even—a rate even higher than some areas in Mumbai.
This coupled with a dampening of sentiment in the overheated property market would explain why the government's price was considered too high!