International investments on a rise
Fifteen Japanese companies committed to invest in Gujarat. Some 55 others have shown interest to explore investment opportunities in the State, especially in the industrial park dedicatedly being planned for Japan-based companies at Khoraj near Sanand in Ahmedabad. A Suzuki car manufacturing plant worth Rs 3,000 crore has also been launched at Hansalpur, about 170 km from Ahmedabad.
PM inaugurates Mumbai-Ahmedabad bullet train
PM Modi laid the foundation stone of the much-awaited bullet train project between Mumbai and Ahmedabad. The 1.1 lakh crore high-speed rail project is anticipated to boost connectivity and urban development along the Delhi-Mumbai Industrial Corridor (DMIC). The project will reduce travel time between Mumbai and Ahmedabad by six hours.
Ahmedabad earns World Heritage City Certificate
UNESCO graced Ahmedabad with India’s first World Heritage City tag, rendering it a prestigious spot amongst the other 250 global cities. The honour has led Ahmedabad join the likes of Paris, Cairo and Edinburgh. The status will boost tourism and hence, retail establishments in the city.
Road infrastructure on government’s radar
Recognising the poor state of roads across Gujarat, the State government has allotted funds for an infrastructure overhaul. Out of the total State budget of Rs 158 crore, Rs 75 crore has been earmarked for Ahmedabad alone. The city roads are expected to witness a massive renovation drive between September and October 2017.
Ahmedabad at a Glance
The massive potential of affordable housing underlined Ahmedabad’s realty landscape this quarter as the segment continued to witness unrelenting focus from buyers as well as developers. Consequently, capital and rental appreciation remained concentrated in pocket-friendly locales of the city.
The ‘compact homes’ category, too, picked up momentum as developers recognised the concentration of demand in the smaller and economical housing segment. Enhanced focus on the category is expected to ensure heightened sales volume in the ensuing quarters.
Unlike many other States, Gujarat managed to set up the regulatory authority and the website, however, registrations in Ahmedabad moved at a snail’s pace due to short-staffing of the authority. This hurt property launches and sales in the current quarter. The uneasiness in the city’s realty market is expected to continue until the loopholes in the RERA infrastructure are sewed. The situation is tricky for the smaller players in the industry, who fear being pushed out of the market due to lack of competency in dealing with RERA and GST compliances.
Meanwhile, Ahmedabad is witnessing a gradual exodus of investors, particularly in the residential segment, due to inactivity and meagre appreciation. Instead, the focus appears to have shifted towards commercial locations and assets. Greater investor interest will further be fuelled by the international recognition of the region on the back of the bullet train project and World Heritage City status.
While RERA implementation improved market sentiment and enquiries in Jul-Sep 2017, it failed to bring the wary homebuyers back to the market, thus keeping sales volume low. Slow pace of project registration process and limited housing options emerged as the major bottlenecks for Ahmedabad’s realty landscape. The market was in a contemplative mode the entire quarter, with little appreciation in overall residential property prices.
- Average weighted capital prices in Ahmedabad remained under pressure, delineating a stagnant market this quarter. Marginal price rise was reported in the city’s eastern quadrant on account of its affordability quotient.
- One of the oldest residential hubs in Ahmedabad, Naranpura topped the capital growth charts this quarter, with a four percent rise in property values, QoQ. Navrangpura and Vasna followed closely with three percent capital growth each, QoQ, riding on the benefits of being centrally located.
- Strong demand for budget homes helped pocket-friendly locales witness healthy traction in Jul-Sep 2017. This led Vatva, Narol, Nikol, Naroda, and Vastral in East Ahmedabad to report a two to three percent surge in average residential prices, QoQ.
- Bopal and Chandkheda in West Ahmedabad also saw prices growing by one and two percent, respectively, due to the ample supply of units priced under Rs 40 lakh.
- Seamless connectivity brought residential pockets along the Sardar Patel Ring Road and New CG Road into limelight, helping these areas garner three percent growth, each, in capital ‘asks’, QoQ.
- Affordability played a pivotal role in the rental market of Ahmedabad, too, helping it register a two percent appreciation in average rentals over the last one year.
- Motera and Vaishnodevi Circle, with rental ‘asks’ prevailing around Rs 9 per sq ft, recorded the highest growth of 13 percent in rental values, YoY.
- Ghatlodia continued to feature amongst the top-grossers with a 10 percent uptick in rental values between Jul-Sep 2017 and the same quarter last year.
Battling to conform to RERA rules, developers in Ahmedabad put new launches at bay. Reduction in new inventory coupled with restricted sales in the affordable housing category led the city inch towards achieving a demand-supply equilibrium in the current quarter.
- A few registrations under RERA adversely impacted demand for apartments, pushing it down from 76 percent in Apr-Jun 2017 to 70 percent in Jul-Sep 2017. Nine out of 10 buyers preferred ready-to-move units over under-construction properties.
- More than half of the buyer demand in Ahmedabad remained concentrated in low and mid-income housing segments. Supply in the categories, however, was limited to approximately 40 percent, revealing a shortfall of 15 percent in budget housing stock. Lack of RERA expertise among smaller builders, who largely deal in affordable properties, appears to have hurt the supply of units priced under Rs 40 lakh.
- The demand-supply equilibrium in the high-income category remained unchanged from the previous quarter. This is likely to cloud the forthcoming quarters, as well.
- Meanwhile, the availability and preference for premium properties priced over Rs 60 lakh witnessed a marginal rise as experienced builders found it easier to get their projects registered with the regulator. Most of the RERA-approved luxury offerings were reported in West Ahmedabad.