Sports club buys 60,000 sq yard land
The Sports Club of Gujarat purchased a 60,000 sq yard land worth Rs 50 crore from Shantipura Estates. The land parcel in Vansajada near Chekhla will be used for the construction of another major sports club in Ahmedabad. The move is speculated to benefit the demand for land parcels in Chekhla, Vansajada, Unali, and Rancharda.
Cement prices go up
Prominent cement manufacturers, occupying almost 40 percent of the supply in Gujarat, increased the cost by Rs 10 per 50 kg bag. The players included Saurashtra Cement, Sidhee Cement, JK Cement, and Ultratech Cement. The move is expected to impact the market in the long run.
Infrastructure gets a boost
The State government allocated a corpus of around Rs 2,000 crore for infrastructure upgrades including the construction of bridges and flyovers in the city. The development of over 2,600 affordable housing units in the State is also underway.
Ahmedabad-Gandhinagar Metro Rail Project hits a hiatus
Amid the COVID-19 crisis, the Gujarat High Court ordered the Gujarat Metro Rail Corporation not to undertake the demolition of houses in Shahpur for construction of the metro track. Additionally, only 47 percent of the land has so far been acquired for the ambitious bullet train project between Ahmedabad and Mumbai.
COMMERCIAL REAL ESTATE OUTLOOK
- Ahmedabad reported an oversupply of commercial units in Jan-Mar 2020 against the demand. Despite this, there were a few new launches, around SG Highway, Ring Road, Keshavbaug, and Sindhu Bhavan Road. No new players entered the market in the studied quarter.
- In the wake of the substantial supply and a plethora of available options, the vacancy rate of commercial spaces across the city is reported to be as high as 30-35 percent. Nearly 10 lakh sq ft of ready commercial space is lying unsold in Ahmedabad.
- IT-BPM and BFSI segments continued driving leasing activity in the city.
- The co-working sector is also simultaneously gaining popularity in the city. The segment accounted for nearly five percent of the total demand last year.
While average weighted property prices remained largely stable in Jan-Mar 2020 over Oct-Dec 2019, Ahmedabad witnessed an increase in the number of new launches, QoQ. The developers, in order to gain the benefit of vertical development post the announcement of an increase in the Floor Space Index, resubmitted their plans for approval and consequently, rescheduled their launches to a date post-December 2019. As a result, the city witnessed the launch of 57 new projects in Jan-Mar 2020, as against 41 in the previous quarter. Nevertheless, homebuyers adopted a cautious approach until the announcement of the Union Budget 2020-21 in February.
The outbreak of COVID-19 in March further marred home buying sentiment. Weak market conditions took a toll on the sales volume and property prices in the city. While site visits reduced drastically over the quarter, sales dipped by around 15 percent, QoQ. The unsold inventory in the city stands largely unchanged at 8,000 units. Interestingly, a large chunk of the unsold stock lies in East Ahmedabad, within the price bracket of Rs 12-25 lakh. Nikol, Vastral, Vatva, and Aslali, comprise the most unsold units due to oversupply. The quarter was also testimony to the developers reducing the ‘ask’ prices of the newly-launched units to revive demand and improve turnover. Taking cognisance of the meek market scenario, the city is likely to witness a further dip in the buying behaviour, along with price correction in multiple micro-markets in the ensuing months.
Continuing the trend, properties priced below Rs 50 lakh ruled the roost in terms of both demand and supply. Ahmedabad recorded nearly 70 percent of the demand for ready affordable units in 2 BHK and 3 BHK configurations. Properties priced above Rs 1 crore continued vying for buyer attention.
In sync with the demand, new launches also remained restricted to the affordable segment. Localities such as Shela, Shilaj, Ranip, South Bopal, Vaishnodevi and Chandkheda remained popular among buyers and developers alike. Along with affordability, proximity to SG Highway drove healthy traction to the localities.
Over 60 percent of the tracked housing localities saw property prices going up by 1-4 percent, each, QoQ. Vatva in the East and Bodakdev in West Ahmedabad emerged as the bellwethers with a four percent hike in the average weighted capital values, each, QoQ.
On the rental front, the city reported a two percent hike in the average rental ‘asks’, YoY. Due to the lack of hostels and PG facilities around educational institutes, the concept of co-living has gained prominence over the last few quarters in the city. Areas such as Navrangpura, Ashram Road, University area, and the ones near Vaishnodevi Circle are gaining popularity on this front. Bopal and Kudasan saw the maximum hike of nine percent, each, in average rental values, YoY. These were followed by Ghatlodia, which recorded a surge of eight percent in rentals, YoY. Some other localities that garnered healthy traction from the tenant community, include Jagatpur, Sargasan, and Thaltej - all with a seven percent increase in the average rental ‘asks’, each, YoY.
Ahmedabad witnessed subdued housing demand in Jan-Mar 2020. Even Gujarat’s biggest property show, GIHED, and the end of inauspicious Kamurta period in January could do little to revive the buyer sentiment. To top it up, the outbreak of COVID-19 stalled construction activities across the State and the subsequent lockdown impacted overall sales in the studied quarter. Experts believe that the sales are likely to be deferred to the ongoing quarters. Additionally, while the country awaits the outbreak to end, fiscal measures by the Government will play a key role in deciding the industry’s revival journey.