Lower land prices attract Chinese investors to Telangana

Lower land prices attract Chinese investors to Telangana

By S. RAMA KRISHNA | HYDERABAD | 19 September, 2015

The real estate prices in and around Hyderabad have dipped substantially since the bifurcation of Andhra Pradesh 16 months ago. This has proved to be a blessing in disguise for Telangana as Chief Minister K. Chandrasekhar Rao (KCR) made concerted attempts to woo Chinese investors to set up their units in the State. Chinese investors are very impressed with the low land values in the city.

KCR, who returned from his nine day China visit on 16 September, is ecstatic that around 50 major companies in China have heeded his call to come and invest in Telangana, according to five senior functionaries in the government who accompanied him during the trip. They spoke to The Sunday Guardian about the outcome of the visit.

"Chinese investors and bankers dismayed over the devalued yuan and saturated physical infrastructure are looking for foreign destinations to put their money. For them, Hyderabad and Telangana have become an attractive destination as subdued prices in real estate here are an added advantage to them," said Power Minister G. Jagadeswar Reddy.

Reddy was part of the discussions KCR held with several Chinese industrialists who wanted to set up solar and wind power units and equipment manufacturing projects in Telangana. If Chinese components for renewable energy were priced competitively, the availability of land at affordable prices would make their products unbeatable.

Another senior delegate and Telangana government's special representative in Delhi, S. Venugopal Chary, said that after the recent economic slowdown in China, investors of the country found Telangana as their next destination for obvious reasons. "Reasonably priced lands, proactive government and ideal location are our plus points," he told this paper.

The keenness shown by Chinese investors to start their factories in Hyderabad and surrounding areas has come as a surprise to Telangana's real estate business as well because they were alarmed over the sharp decline in prices (by 30-40%) since 2014. Now, they are expecting at least 20% revival in the next one year.

"What we thought of as a negative — fall in land prices — is going to be our positive. Compared to the land prices in Mumbai, Delhi, Chennai and Bengaluru, those of Hyderabad are quite low and reasonable. The Chinese are shrewd business people who prefer everything cheap whether it is labour, equipment or land," said an officer who was part of KCR's delegation.

What caught the imagination of Chinese investors is KCR's offer of a land bank with around 1.6 lakh acres in Telangana. This fully acquired and developed land bank would be handed over to industrialists within three weeks once their applications were cleared by a single window clearances cell in the industries department.

Apart from this, the government would help Chinese investors purchase lands anywhere at market prices. KCR told his cabinet colleagues and senior officials that a delegation of Chinese businessmen would soon visit Hyderabad as a follow up of his visit. He put a team of ministers and officials to help the Chinese team.

KCR, who signed three MoUs and agreed to a dozen investment proposals with a total 200 million US dollars during his visit, is optimistic of another $500 million worth inflows from China in the coming weeks. He set a target of wooing at least Rs 50,000 crore and has succeeded in it, said sources close to him.

KCR has ordered his senior officials to draft a policy to set up special industrial parks on the line of the special economic zones so that Chinese firms can set up their units over there. The Telangana Industrial Infrastructure Corporation would be a partner and promoter, while around half of the equity would be held by the Chinese.

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