Like several other cities in India, Ahmedabad is also witnessing a sluggish movement in the real estate industry. The demand for property in the city has been witnessing a downturn over the last few months, draining profit margins of builders and real estate developers. The continuous rise in key policy rates by the Reserve Bank of India (RBI) over the last 1 year has further put pressure on the city’s property market.
Even the Diwali week failed to add glitz to the city’s realty market. The number of enquiries during the festive season this year was low, as against that of the previous year, according to industry experts and analysts.
To increase sales volumes, city-based builders have started providing lucrative offers to buyers. “Builders in Ahmedabad are coming up with lucrative offers, which include modular kitchens, gold and silver products and varied electronic items such as refrigerators, air conditioners, LCD TV and others,” says Pravin Bavadiya, president of Ahmedabad Realtors’ Association.
In addition, the realtors are marketing plots promising various benefits of the proposed Special Investment Region (SIR) and the Delhi Mumbai Industrial Corridor (DMIC), along with the new international airport coming up near Dholera, added Mr Bavadiya. Hence, a cut throat competition has been observed between builders and real estate developers in the city over the last 3-4 quarters.
In an endeavour to boost construction, the State Urban Development Department has recently withdrawn the freeze on all permissions for construction within 150 metres on either side of the proposed Metro-link Express for Gandhinagar and Ahmedabad (MEGA). “Apart from builders, the step is likely to benefit residents having property in the way of MEGA as they will be paid in terms of comparable FSI[i],” informs Mr Bavadiya.
The state government had imposed a bar on construction along the metro corridor in December 2010, said Guruprasad Mohapatra, commissioner of Ahmedabad Municipal Corporation.
A sluggish economy, rising raw material costs and increasing interest rates have put pressure on property prices in the city in recent times. According to the Residex data, real estate rates fell in western and northern parts of the city in the last few months.
There has been a dip of around 14.08% in property prices in the western part of Ahmedabad in the first quarter (April-June) of 2011-12. From 213 points in January-March 2011, the index fell to 183 in April-June this year for the west zone. “Prices in the city’s west zone have been experiencing a spurt primarily due to the upcoming car plants of Maruti, Ford, Peugeot on the Sarkhej-Sanand stretch and the metro rail project,” indicated Resabh Patel, a realty analyst in Ahmedabad.
Residex reveals that property prices in the north zone — comprising areas such as Buddhnagar, Saijpur-Bhoga, Sardarnagar and Vishnunagar — have also dropped 14.7% in the first quarter of the current financial year, when compared with the previous quarter.
On the brighter side, the city is witnessing fair amount of enquiries from NRIs in the Middle East, the UK and the US. Overseas enquiries increased after automobile giants like Maruti and Ford announced projects in Ahmedabad.