Exclusive Ventures 13.01.

2007
Beyond Boundaries

SHAMSHABAD

January 2007

HOT AND COLD ZONES FOR

INVESTMENT

By

PRAMOD KIRON
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• Introduction

As you are very much aware, the Semiconductor Policy was cleared by the Cabinet on
11.01.07. The fiscal and tax concession package (expected to be around 25%) is expected
to be firmed up soon. Its now clear that the Union Budget would take into consideration,
the impact of the concessions. On 13.01.07, Semindia announced appointment of former
STPI director Mr. BV Naidu as the MD of Fabcity Project. Obviously things have strted
rolling. And this is the time to make careful evaluation for investment.

This Report looks generally at where we should look for investment and where we
should not. Within the next few days, a follow up Report is expected to be released
which would compare projects and prices and narrow down investment options,
near Fabcity.

The clearance of the Semi Conductor Policy had become top priority issue for the
Govt. due to the rapidly expanding electronic industry, in the form of Mobile
Phones, MP3 Players, and a host of other devices. While India is the fastest growing
market for these devices, the country is either forced to import finished goods or
components like chips, for manufacturing.

According to a recent study by Frost and Sullivan reported in the Media, India is
the fastest growing market for electronic products in the world, with consumption
expected to grow to $363 billion by 2015, from $28 billion in 2005 .

The projected employment generation by 2016, is a staggering 40 Lakh jobs, by the

industry, in India. No Govt. could have overlooked the semi conductor industry !

The Proposed Projects along Srisailam Highway, are projected to create large
number of new jobs over the next 10 to 15 years. Even if 25% of it materializes, it
would give phenomenal boost to economic development. Obviously, the Indian Real
Estate, Construction and Hospitality Industries have been keenly watching the
unfolding action.

The Fabcity will have several large Fabrication Units with Semindia being the Anchor
Customer. The Project is situated 4KM from the International Airport entrance, on
Srisailam Highway. Several companies including Intel, TI, Qualcom, Flextronics etc
have been waiting for the Fab Policy to be cleared for considering investments. In
addition to Fabcity, the 10Km stretch from Airport along the highway is seeing large
scale investments in Hardware, IT/Software Development, which will, in the coming few
years, fructify into gigantic construction activities which the city of Hyderabad has not
otherwise seen.

Several Special Economic Zones, Star Hotels, IT Parks, Integrated Residential

Townships etc are waiting to take off. All these would follow Fabcity grounding which
should now happen immediately after the Budget Session.

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The upcoming developments would make the recent rapid construction growth, which
was seen in the IT corridor of Madhapur / Hitec City / Guchibowli, pale in comparison.

• Comparison with Hitec City

Though Hitec City has been in construction since the year 1999, price of land only in
areas close-by had increased rapidly from the year 2003. It took four to five years from
the commencement of construction activities, for price to increase reasonably, even in
localities pretty close to Hitec.

This price increase near Hitec was contributed by very low availability of land for
development. In fact, after the year 2000, only handful of Plot Layouts has come-up,
within 10Km from Hitec City. Obviously, this shortage had caused price increase
near Hitec City.

Unlike Hitec City area, the total land available for development around Shamshabad
is staggering!. This has resulted in unrestricted conversion of land into Plot Layouts by
Real Estate Developers. Developers are selling Layouts even up to 25Km away along
Bangalore Highway, claiming that the price would go up, due to Fabcity /Hardware Park.

In addition to layouts along Highway, the developers had turned into interior areas, like
Mansnapalli, Pulimamidi and beyond, churning out thousands of layouts many of
them inaccessible. Most of the inner areas do not have proper access. The proposed roads
may take 5 years or more to get built. Till then the prices would remain in slumps. No
Govt. is foolish to build the shining, wide drive-ways seen in Brochures published
by Developers, which drive into eternity! Roads gets built when there is actual
economic development happening. Unfortunately in AP, roads follow economic
development and not precede it! Off course they would be built over the time but if
buyers had invested with the aim of making profit early, by selling, they may have to
wait for 10 to 15 years or more, in inner areas.

• Demand for Properties during First 5 Years in Shamshabad

In the first five years, from the grounding of Fabcity, the demand and hence price-rise
will be restricted to about 10 to 12 Km from Airport Entrance at Srisailam Highway and
2 to 3 Km on either side of the Highway and also up to Shamshabad town, on Bangalore
Highway.

The first 3 to 4 years, could definitely not see more than 25,000 people coming into
Srisailam Highway area. They would be faced with layouts spread over 25 KMs with
innumerable options! Obviously, residential demand WILL BE RESTRICTED to
localities close to place of work (Fabcity/Harware Park/SEZ), with fine access.
Since buyers would have hundreds of options nearby, very few would look to
interior areas.

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• Will there be Demand for Plots After 5 Years?

The huge availability of plots require at least 1Lakh new migrants into Srisailam
Highway to make some impact up to 5KM on either side. The employment
generation would be gradual. Initially demand for plots would be limited to areas closer
to place of work. Hence only investments nearer to Localities where there would be
large amount of jobs would see good early appreciation.

The situation can NOT be compared to price increase of HUDA plots at Nallagadla,
Tellappur, which is 7KM from Guchibowli, where prices have increased even before
substantial jobs were created. The price rise in that area had happened, due to almost no
availability of plots, closer to Guchibowli. Obviously price had to go up in
Nallagadla/ Tellappur since demand was not met by availability.

However the Shamshabad story, is quite different!! Already there is a large over supply
of plots. The developers would continue to deliver layouts, most of which are booked to
the extent of only, 20 to 30%. And new projects would continue to be made, till the
initial sales falls to around 10% to 15% . Once developers are sure that they can’t sell
more than 15%, they would stop.

With such huge oversupply, it might take another 10 to 15 years, to make demand
meet availability. Till then, re-sales will be very low, except in areas close to
Srisailam Highway and possibly a little longer distance, along Srisailam Highway.

• THE POSITIVE SIDE

When the expectation is of one Lakh people to move–in gradually over, 5 to 7 years,
there is big opportunity, for the smart ones! This could be by way of offering residential
and commercial developments, in carefully chosen areas. So unless we buy with
extreme clarity of purpose and thorough understanding of ground realities, we may
spoil the soup! That is for sure! And many would have already unknowingly
contributed, to spoiled soup.

The founding of Fabcity in March /April would fire the prime locations while the
outlying areas would continue to flounder. Buyers should take care to consider the
above and check the location of the project with respect to Fabcity/Hardware
Park/SEZ before booking properties.

• HOT AND COLD ZONES:

There is no denying the fact that both premium and middle income housing is required
gradually from 2009 March (2 years from the Policy Release). There will be
requirement for Leased accommodation to house expatriates and Senior
Management team who come for setting up of the Project. Its time that Villa
Projects start along Srisailam Highway so that about 5000 homes (Villas and

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Apartments) are delivered gradually from 2009 March to 2012. Definitely we can
expect bulk bookings of available houses/flats for lease, by large firms.

So look around for good Residential Projects or Plot Layouts within the Identified
Zones. (View Map With Identified Zones Below)

The Problem that could crop up in future, is in availability of prime land for
Construction of Gated Layouts or Integrated Apartment Complexes. Instead of
keeping land for planned development for the needy, the Real Estate Developers have
made plot layouts and sold them partly, all over the place, in their hurry to make quick
money!. They have ensured that availability of clean, new land, close to highway for
Building Residential Projects is not much. But this would ensure increased demand for
integrated housing projects near the highway.

All Approved Layouts along Srisailam Highway and up to Express Highway

Junction (EHJ) on Bangalore Highway would see very good demand and price rise.
Beyond the EHJ, on Bangalore Highway, almost 10KM distance is Conservation
Zone where no residential or commercial activity is allowed.

The residential demand of workers at Airport and Ancillaries, can easily be met by
availability of Plots and Residential Properties between EHJ and Aramgar. The
Areas like Nagaram/Nandupalli etc (on the way to Fabcity along ORR) though
behind Airport, are much more nearer than Thimmappur-Kottur.

These areas will offer lower prices than EHJ-Aramgar belt. And hence should see
some demand. PLEASE VIEW: MAP showing these Identified Zones Below.

However, the scope for demand after the 10KM Conservation Zone in Thimmappur,
Kottur areas would be minimal. Off course there will be some demand, if the prices there
are very low, compared to that between EHJ and Aramgar. The whole purpose of having
invested with eye on large gain from this locality, would be defeated! As you would
have noticed, so far there has not been announcement of any employment
generating Projects, beyond Shamshabad, along Bangalore Highway. In addition to
this, more than 10Km distance on either side of Bangalore Highway, falls under Bio Zone
where Residential and Commercial activity is prohibited.

HADA area covers over 458 Square KM. Unlike HUDA Area around Hyderabad, HADA
areas are scarcely populated. Since population is thin, HADA is in a position to
enforce rules. There is a definite HIGHER risk in buying in Panchayat and
unauthorized Layouts in HADA area, compared to buying in areas like Nizampet
Road, near Kukatpalli. Since vast amount of lands are unoccupied by actual
construction or dwellings, HADA may notify areas for take over, or make situation
difficult for unauthorized layouts (including Panchayat layouts) to get building
permission.

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Along Srisailam Highway, all Residential Projects up to Lemur which is outside

HADA should see EARLY Demand. In the next Phase, buyers could go up to
Kandakur along Srisailam Highway, if the expected huge employment generation, takes
place.

Check these areas in MAP below!

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IDENTIFIED ZONES THAT WOULD SEE EARLY DEMAND

You can view a larger picture of the above Mark up at:

www.exclventures.com/shamshabad-zones.htm (Please type in browser)

HOT ZONES: (Marked in Pink Boxes in Map Below)

-Either side of NH7 (Bangalore Highway) from EHJ (Express Highway Jn) to Aramgar
-Lakshmiguda to Airport through Jallapalli , along the Upcoming 120 Feet road.
-Along the Peripheral Road on North, East and South East of Airport.
-Along Srisailam Highway from Airport Gate towards Kandakur. Kandakur as such, is a bit far. This
may change later due to large employment at Fabcity.
-Area around Raviriyal/Adibhatla due to SEZs

COLD ZONES:
- BioZones which covers almost 60% Area near Airport (See Bio Zones Marked in Map Below)
- Area beyond EHJ along NH7. That includes Thimmpur /Kottur.
-Area behind Airport around Mansanapalli and towards Bangalore Highway, marked in RED Boxes.

• COMMERCIAL SPACE:

Having seen the history of Madhapur and now Guchibowli, its high time that buyers pick
up prime plots or Commercial space in buildings at Shamshabad Town and Thukkuguda.
(OFFCOURSE NEED TO BE VERY CLEAR ABOUT FUTURE ROAD
WIDENING) It’s a good idea to buy existing old shops which can be demolished later
to build swanky commercial space. Just look at Madhapur.

All old shops are demolished and converted to Banks, Fast Food Outlets and Life Style
Stores. The aim should be to buy these old shops out, at throwaway prices and not
buy when the boom starts, after 3 to 4 years!

The Airport and related commercial activity would make the existing Shamshabad
Town to modernize. This locality would be the prime area for shopping, for all those
who stay in the EHJ-Aramgar Belt.

Thukkuguda would definitely go for a major plastic Surgery. Initially, we will find
large number of Hardware and Building Material shops cropping up which would
later give way to Life Style Stores and Restaurants.

Look for commercial space now and Plan to build Super Markets, Restaurants etc
with a 4 to 5 year outlook. Initially these shops / buildings can be leased out.

• INVESTMENT ALONG THE NEW LAKHSMIGUDA –JALLAPALLI

ROAD

Its known fact, that the traffic from Srisailam Highway can not be evacuated through
Pahadi Shariff –Chandrayangutta Route. Hence the Govt. has finalized 150 feet road
from Lakhsmiguda (this place is couple of KM after Aramgar and before
Chandrayangutta.) to Airport through Jallapalli, Mamidipalli. There is a narrow existing

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road which is being widened . This would become a major drive way allowing Traffic
from both East and West entrances to go towards inner ring road.

If you could buy beside this new road, it would surely turn winner!

In addition to this, the Elevated Express Corridor from Mehdipatnam will Cross
Aramgar Junction and terminate beyond the Railway line, in HADA area (Landing
Point is Marked up as EC)

This enables development of land on the inner side of Bangalore Railway line and
Airport. Without this, the access to area between Railway Line and Airport would have
been limited.

Please see Mark -up Plan below:

View HADA Map (next Page)

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Checkout the Large Conservation area along Bangalore Highway in HADA Map below. With so much
land available along Srisailam Highway, would anyone have to cross the Green Zone and buy plots for
living purposes? However, developers have sold thousands of acres beyond the Green Zone by showing
Fabcity/Hardware park next door, in colorful Brochures!,

-Have you bought in Bio Zone? Check Bio-Zone Villages at:

View Report: www.exclventures.com/reports/ GOMS111.pdf

-Construction in Bio Zone?

Check Q&A at: www.exclventures.com

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