For 48-725: Real Estate Design and Development
By Afshan Rehman
During India’s post independence stage from the British during 1947-1950, India was divided into several states based on linguistic preferences. In 2014, after several years of protests a southern state in India called Andhra Pradesh was split into states – Telangana and Andhra. The demand for a new state known as the ‘Telangana Movement’ arose due to the fact that people from Telangana felt that there was uneven distribution of wealth. Hyderabad, the capital city of Andhra Pradesh was being developed while the villages in the Telangana region were financially ignored. The southern regions of the state in Andhra benefitted from revenue generated by the capital. Though the coastal regions of Andhra were also being ignored, the people from the state of Telangana were under the impression that they were being exploited by the people from Andhra. The increased unrest in the public and poor governance let to the state being split in 2.
After the separation was announced in 2014, Hyderabad was declared as a shared capital for both the states for a period of 10 years. There was a need for a new capital to slowly transition all legislative buildings to a new capital such as high court, parliament and other government offices. The then chief minister of Andhra Pradesh, N. Chandrababu Naidu laid the stone at ‘Amravati’ in 2015 and declared it to be the future capital of Andhra. Amravati was chosen to be the capital because it was geographically located in the centre of Andhra at the banks of the Krishna river and had a rich history. Mr.Naidu who had previously developed Hyderabad and made it one of the Information Technology capitals of India 17 years back had big dreams for Amravati too. He envisioned Amravati to be India’s first pioneer smart city with sustainable features. He wanted the city to be modelled around the master plan of Singapore and several Singapore based consultants were hired for the project. Foster + Partners , an extremely reputed Britain based international architectural firm was hired to develop the master plan of Amravati.
Stretched over 217 square kilometres, the master plan included design of the legislative assembly, the high court complex, along with 5 secretariat buildings. Inspired by New York’s central park, the legislative assembly was proposed in the heart of the city forming a green spine surrounded with water recycled from the Krishna river. The urban design included developing 13 public plazas around the spine and was planned for the best public transportation that included buses, metro, water taxis and cycles. The new development was promised to be green rating certified and the legislative buildings were proposed to use 100% renewable energy where 30% of the energy was to be generated offsite and 70% was to be generated from rooftop solar panels alone .
These big dreams had a big budget. Aimed to be complete by 2025, the construction of the new city required a budget of approximately $4500 million (₹ 33,000 crore) . Given the track record of Mr.Naidu who successfully developed Cyberabad in Hyderabad by bringing Microsoft, Google and several other IT companies to Hyderabad, his dream project received a lot of funding. The World Bank was funding $500 million, Asian Infrastructure Bank was also funding $500 million, $1000 million was coming from Housing and Urban Development Corporation Limited (HUDCO) and $350 million from the Indian Government out of which $200 million was already granted2. Singapore based firm Ascendas-Singbridge and Sembcorp Development was hired to look after the construction.
In July 2019, after 4 years of construction, when the state wise elections were held, Mr.Naidu was voted out of power and a new party ruled over Andhra with Y.S. Jagan Mohan Reddy as the chief minister. The new political party had doubts in the previous rulers dream and were reconsidering Amravati as the ideal location as the new capital of Andhra. Mr.Jagan wanted to shift the capital to Vishakapatnam, an already developed metropolitan city in Andhra with an Indian Navy base. They proclaimed that the location of Amravati was highly prone to floods and had doubts in setting up the capital here. Due to this uncertainty, construction was stalled. In July 2019, the World Bank and AIIB withdrew funding from the project and in September 2019 Sembcorp Development also stepped down as the constructors. The Amravati project slowly started losing credibility and with only the local government funding available, the deadlines got stretched with no new concrete timeline announced.
As brakes were applied to the construction of Amravati, almost 20,000 migrant construction workers and engineers moved out of the city. Houses rented by them became vacant and grocery stores catering to these workers went out of business. Several industrialists from Hyderabad and Vijaywada had set up hotels and showrooms in Amravati that were out of business making Amravati a ghost town. Farmers had pooled in 35,000 acres of cultivated land to give to the building of a new capital . The government in return had promised yearly rent, jobs for family members in legislative assemblies and education for children. The stalling of this project kept farmers in a state of confusion and 200 farmers lost their lives due to this uncertainty. The construction of the off site renewable energy industries also stopped. Several Indian investors started protesting as they had lost a lot of money. They proposed a new bill where Andhra would have 3 capitals - with the High Court in Kurnool, Secretariat in Vishakapatnam and State Assembly in Amravati. This was also proposed to facilitate shared and fair growth of revenue throughout the state and avoid the same mistake that happened when Telangana and Andhra were one state. However, this bill was initially rejected by the State Legislative Council.
The political jargon left a lot of the common citizens felt cheated. Several farmers sold their land to local buyers who then marketed these properties as hot pieces that would reap great benefits from 2025 when the capital is constructed and sold them to non-resident Indians who bought large number of plots at 3-4 times the original price. Several doctors, businessmen and IT professionals purchased land for $1,00,000 to 2,50,000 per acre and their money is stuck as there is no demand for these lands now. Builders started investing in developing residential real estate projects anticipating huge rise in demand. A luxurious multi-storied housing complex called the Happy Nest was announced in 2018 and all of the 1200 units got sold within 5 hours. Several buyers had to take loans to purchase an apartment in Happy Nest whose construction has not even started yet. As the development of Amravati slowed down, the land acquisition process also slowed down due to which the construction of roadways was halted. If the 3-capital city idea gets implemented, Amravati will reap a portion of the benefits promised. Till then the real estate price remains uncertain.
Curtailed anxiety around the status of Amravati as a capital caused several investors to speak out. In 2020 officials of the Anti-Corruption Bureau(ACB) filed a case for land scam regarding the irregularities in the purchase of land after receiving complains. In 2014, Andhra Pradesh Capital Region Development Authority used barter system to acquire land for building the capital city. Pathan Ghouse Khan received plots of 1450 sq. yards from the government for giving up 1 acre of land in Amravati . It was brought to light that the single acre land given to the government was submerged under Krishna river and several such discrepancies in land pooling from unsuitable buyers came to light. In September 2020, Mr.Aswini Dutt asked the government to compensate him for the 39 acres land worth $27 million he gave on a barter system to develop an airport for Amravati .
Currently there are petitions in the High Court proposing a shared 3 capital set up in Andhra Pradesh with Amravati being one of the capitals. Even if this does not pan out, I think that for the common man distress sales at this point is a bad idea and given the growth of population in India, every city will tend to grow and the early investors in Amravati will reap benefits in 20-30 years even if it is a joint capital city of Andhra or not a capital at all. The government should always buy land at a market value price as barter system leads to corruption.
 Retrieved 9 October 2020 – Foster + Partners - https://www.fosterandpartners.com/projects/amaravati-masterplan/
 Retrieved 9 October 2020 - Business Line - G Naga Sridhar (13 May 2017). "Amaravati masterplan: AP to ink MoU with Singapore govt today".
 Retrieved 9 October 2020 – Business Standard – BS Reporter (12 September 2019) https://www.business-standard.com/article/economy-policy/andhra-pradesh-stares-at-slowdown-after-govt-applies-brakes-on-amaravati-119091201288_1.html
 Retrieved 9 October 2020 – Economic Times – PT (7 February 2018 ) https://realty.economictimes.indiatimes.com/news/regulatory/land-scam-hits-amaravati-chandrababu-naidu-seeks-report/62817980
 Retrieved 9 October 2020 – The Hindu – Rajulapudi Srinivas (15 September 2020) https://www.thehindu.com/news/national/andhra-pradesh/acb-files-case-on-amaravati-land-scam/article32611217.ece