Affordable housing sales lift market sentiment
Adherence to RERA norms and a large number of affordable project registrations under the Act renewed homebuyer confidence. This pushed the city to become the second highest contributor in the affordable housing segment, at 24 percent of the total sales, only second to Mumbai.
Metro Phase II strengthens connectivity grid
The detailed project report (DPR) for the second phase of Ahmedabad metro has provided the much-needed impetus to the transport network across Motera, Gandhinagar, Vastral and Thaltej. This phase would add 34.6 km to the existing two lines that are under progress as part of Phase I.
Highway projects reinforce the infrastructure initiative
As part of the renovation drive across Gujarat, the foundation stone of national highways worth Rs 5,285 crore has been laid. The construction of Rs 962 crore Cable Stayed Signature Bridge between Beyt Dwarka and Okha on NH-51 will lead this infrastructure undertaking.
Ahmedabad utilises smart city project funds optimally
Efficient and judicious utilisation of smart city project funds demonstrated Ahmedabad’s focus on strengthening IT infrastructure, development of new areas and management of its heritage. Out of the total Rs 196 crore allocated, Rs 80.15 crore has already been expended in the direction.
Elimination of black money and implementation of new norms under RERA and GST were the highlights of H1 2017. In a crackdown against benami properties, it was revealed that out of 517 notices issued by the Income Tax department, 136 notices were from Ahmedabad region. RERA has helped bring transparency and accountability in the sector. About 1,000 realty agents and 800 projects have been registered under RERA so far.
Ready-to-move affordable inventory stole the show in the quarter, as increasing number of developers recorded transactions in the budget home category within Rs 40 lakh. Affordable localities such as Vastral, Chandkheda and South Bopal stood at the center of real estate activities during the quarter. The under-construction segment faced the perils of GST at 12 percent on works contract services. Prospective buyers turned fence-sitters; while others shifted their preference to possession-ready apartments. Luxury properties witnessed limited availability as cash-strapped stakeholders avoided venturing into this segment. Even reputed brands have now shifted focus on developing low budget homes.
The beginning of next fiscal 2018-19 should spell relief for the fence-sitters who are wary of the far-reaching impact of existing government policies. While 2017 was grappling with the path-breaking initiatives, the New Year will witness a revival in sales and new launches.
After recovering from the triple impact of demonetisation, the implementation of RERA and GST, the onset of festive season from October onwards marked a revival in end-user demand in the city. The average capital values recorded marginal increment in Oct-Dec 2017 as against Jul-Sep 2017, with suburban localities featuring at the top of the capital graph. Sales, absorption and new launches were restricted to the affordable housing category with inventory priced under Rs 40 lakh.
- Situated in North Ahmedabad, Chandkheda has developed into a residential hub as social and civic infrastructure is fast blooming in the vicinity. Working populace at ONGC office prefer this suburb to the city owing to its locational advantage and plethora of investment opportunities. Capital prices here have gone up by five percent, QoQ, owing to the rising demand for competitively priced housing units.
- Vastral posted a five percent increment in capital prices, QoQ. It stands to benefit from its strategic location along the east-west line of the ongoing metro phase-I.
- Another popular locale, Ghatlodia, is a top ranking neighbourhood in the city with renowned schools and prominent residential localities such as Pratap Chowk, KK Nagar, Sayona City and Chanakyapuri.
- Densely populated and self-sufficient Maninagar is the capital of East Ahmedabad and hosts a train station along the Ahmedabad-Mumbai line where major trains halt. Other preferred localities in Ahmedabad such as Bodakdev and Vastrapur have charmed homebuyers with their robust transportation network, well-planned interior roads, premium educational institutions, renowned hospitals and upmarket retail and commercial establishments.
- The rental segment continued to benefit from the lackluster capital market, recording a two percent rise in average prices, YoY. Separated by a railway line, Prahlad Nagar – an established locality and Makarba – a developing housing pocket - mutually benefitted each other on account of rental inventory in different budget segments. While the former offers rental stock with asks hovering around Rs 25,000 per month for a 3/4BHK, the latter offers relatively affordable units on lease.
- Vaishnodevi Circle and Maninagar followed suit, with a six and five percent increase in rental prices, YoY, respectively. Several reputed residential projects, proximity to corporates, presence of popular eateries, and retail brands are the major reasons behind the surge in demand from tenant community in these localities.
An effective 12 percent GST on under-construction units acted as a roadblock for the segment, which observed a two percent decline in availability in Oct-Dec 2017 against the previous quarter. Buyers continued with their ‘wait-and-watch’ approach with hopes pinned on a reduction in applicable GST, like a lot of other commodities. Availability of possession-ready stock saw a two percent jump, QoQ , with Bopal and Shilaj in West Ahmedabad and Maninagar in the East leading the supply.
- Demand distribution for under-construction and ready-to-move inventory remained stable in the quarter, with the latter dominating the demand graph, at 92 percent. Low and mid-income housing categories continue to lead the popularity chart, and supply in these segments, too, witnessed a marginal increase, QoQ.
- Demand-supply equilibrium in the low and mid-housing segment widened marginally in the last quarter of the year. This could be attributed to the increasing preference for budget homes in the city. End-users, who were previously seeking properties in the high-income housing category, have also shifted their focus to competitively priced compact homes.
- Demonetisation has hurt demand for premium properties as these cash-dependent segments have lost their sheen to affordable housing segment. This was reflected in a three percent fall in preference for Rs 1 crore and above homes. Availability, too, dropped marginally as developers and owners withdrew supply in the segment.
- Oversupply of units priced between Rs 60 lakh and Rs 1 crore is likely to continue into the New Year. Absorption is likely to remain meagre in the category owing to restrained appetite. Developers, too, have shelved their plans of new launches in the segment.