Ahmedabad real estate has seen an overall 46.01 per cent rise in realty prices between January-March 2010 and the same period in 2011, according to figures released by National Housing Bank (NHB), a wing of the Reserve Bank of India.

Ahmedabad beats falling prices
NHB has taken 2007 realty as a benchmark of the Residex pegged at 100. The figures show how Ahmedabad along with five others cities – Mumbai , Delhi, Chennai, Lucknow and Pune – have bucked the trend of falling prices.

Vastral-Vinzol road big impact
Residex (residential index) figures for city areas reveal that the road expansion of the Vastral-Vinzol road linking the expressway has caused a dramatic rise of 67.82 % in prices in areas like Gomtipurgam , Old Viratnagar and Jhulta Minara in the last one year. The eastern zone has recorded the highest rise in the city.

Gift and Nano boost prices in West
West zone areas like Bodakdev , Ambli, Bopal, Jodhpur , Thaltej, Shilaj and Ambawadi remain the most expensive. Prices have seen a rise of 53.24 per cent over in the last one year. This is partly because of the policy to encourage low-rise housing. The area is getting a massive push because of GIFT city, Nano plant, Metro rail etc. Plans to create two special investment regions in the Sanand-Viramgam-Changodar-Dholera belt have also fuelled prices.

Bhadra, Dudheshwar and-Gaikwad Haveli saw a 36.61 per cent rise in prices. Areas like Ahmedabad dairy, Gordhanvadi , Ramvadi, Vatva and Vishalnagar have benefitted from the SP ring road, BRTS and two new railway overbridges that have come up recently . Prices have registered a 32.94% rise here.

No price correction in Ahmedabad
Nirav Kothary, regional director (Gujarat), Jones Lang LaSalle India, says, “Price corrections have not happened here as property owners and investors in Ahmedabad have deep pockets and can hold on to the price lines.”

Godrej Group launches Garden City project in Ahmedabad India.

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Tata Housing and Arvind Ltd announced the formation of a 50:50 joint venture to develop an integrated township project near Ahmedabad.

Tata-Arvind township
The Tata-Arvind township project will have a built-up area of more than 90 lakh sq ft and is located on the western outskirts of Ahmedabad. The Ahmedabad property will include residential, commercial and retail spaces apart from a hospital, a school and other civic amenities.

It will be planned and designed to become a benchmark infrastructure project in Gujarat property.

Is Ahmedabad real estate market headed for correction in the near future? Property experts think a correction is waiting to happen in the Ahmedabad real estate market as well.

Sell Ahmedabad property
However, advertisements placed in newspapers indicate that investors are now in exit mode and appear keen to sell Ahmedabad property off at prices lower than the market rate. Ahmedabad property developers have also started offering freebies to lure new property investors.

Ahmedabad properties at discounted rates
The Ahmedabad real estate brokers have started receiving calls from investors keen to sell Ahmedabad property and they are offering them even lower rates. “Investors are offering Ahmedabad properties at discounted rates,” said one of the brokers, who did not wish to be named.

Property in South Bopal
He said that property rates in South Bopal for example, are quoted anywhere between Rs2,800 and Rs3,300 per square feet by developers depending on the location and amenities available. But investors are quoting Rs2,700 per square feet and are ready to come down to even at Rs2,500.“South Bopal is not the only area from where investors are exiting. They are selling off property in Prahladnagar and other developed areas as well,” said the consultant.

Property In Prahladnagar
Property In Prahladnagar and Satellite areas, developers are quoting around Rs4,000 and Rs5,100 per square feet respectively, but investors are ready to sell at around Rs3,500 and Rs4,500 per square feet, he said.

Property in Vasna
In Vasna area, the investors are ready to exit at Rs2,200 per square feet, while the realtors price is around Rs2,650 per square feet, sources added.

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The Ahmedabad highway is lined with container trucks that ferry Tata’s Rs 1-lakh car Nano to the rest of the country. With scores of 26-wheeler container trucks moving in and out of the plant, the sleepy township is waking up to a new dream.

Tata Motors
This Wednesday Tata Motors chairman Ratan Tata and Gujarat chief minister Narendra Modi inaugurate the Rs 2,000-crore Nano mother plant, they will be also unveiling a new Sanand. Gurgaon, then, is what Sanand wants to be, not just Rajkot or Ahmedabad.

The comparison, common these days among the new arrivals in town, is not far off the mark. The State Highway 17, a two-lane road, is being upgraded into a six-lane one connecting it with Kandla—the country’s no.1 port in terms of cargo handling—and the private port of Mundra. While the PPP project (along with L&T) was commissioned before Nano, the project has been on the fast-track with this project. And the Ahmedabad airport is only 40 km away.

Ahmedabad real estate prices have skyrocketed
Realty prices have skyrocketed by over 300% in the last two years in Sanand. Jaxay Shah, president of Confederation of Real Estate Developers Association of India (Gujarat), says that land prices were around
Rs 800-1,000 per square yard (about 9 square feet) two years ago. This has now hit Rs 3,500-4,000 per square yard.

Ahmedabad land prices up 25%
In fact, within the first few weeks of the announcement of relocation of the project, land prices had shot up by 25% and local and national real-estate developers expected a new ‘realty’ corridor to come up between Sanand and Ahmedabad, which will accommodate the employees who are expected to work in the industrial units to come up in this region. Today, advertisements abound in this township for small plots as well as for a township and a golf-home project being built by Hiranandani Group and Savvy Infrastructures, respectively.

In less than two years four national and international companies have established their headquarters in Ahmedabad as property market keeps growing at a fast pace.

With the Ahmedabad real estate market moving southwards (towards Gandhinagar) since 2007, many realty giants have started buying land in the city for residential and commercial schemes. The city’s growth has encouraged national and international property consultants to establish their offices here. The most recent name that is going to be added to the list of international realty consultants is Knight Frank.

In less than two years four national and international companies have established their headquarters in Ahmedabad for Gujarat region. They are Australia-based L J Hooker, Bangalore-based Real Estate Bank India (REBI), US-based Remax and global realty consultants, Jones Lang LaSalle Meghraj (JLLM).

Indian real estate experts are predicting these numbers will only go up since Ahmedabad and other cities in the state like Vadodara, Surat and to some extent Rajkot are growing in terms of GDP. This means demand for better social and urban infrastructure, which will include housing in huge numbers.

“The residential market in Ahmedabad is booming. Therefore, our 70 per cent focus is on residential and the rest is on commerical activities,” said COO of L J Hooker, Chaitanya Manohar. This is precisely the reason why many developers from outside Gujarat are entering Ahmedabad market, Manohar said. After establishing a strong footing in Ahmedabad, the company is planning to expand its operations to Gandhinagar and Vadodara with offices at both the places.

Commenting on it, Gujarat Institute of Housing and Estate Developers secretary Dipak Patel said, “With these consultants coming to city they will invite many IT companies as well. This means more jobs and so greater demand for homes in city.”

Real estate demand in Ahmedabad and Pune is moving higher according to a recent ICICI Indian real estate survey. The survey was conducted across eight Indian cities covering Mumbai real estate, Delhi/NCR real estate, Bengaluru real estate, Chennai real estate, Kolkata real estate, Ahmedabad real estate , Hyderabad real estate and Pune real estate.

As per the survey, Indian home buyers are cautiously optimistic about Indian real estate prices. “They are primarily interested in mid-income housing (Rs 20-50 lakh) and are conservative on ticket size. End-user demand is higher in Mumbai, Hyderabad and Bangalore, while investor demand is higher in Ahmedabad and Pune,” the survey stated. Also, the per month inventory is highest among Ahmedabad and Chennai, while it is lowest in cities like Mumbai and Bengaluru. “Finished inventory is higher in Ahmedabad, Hyderabad & Kolkata. Except in Pune, Bengaluru & Hyderabad, prices in other cities have reached earlier highs or beyond,” the survey further stated.

Moreover, 53 per cent brokers have seen increased queries in affordable housing and 44 per cent have seen drop in queries for the premium segment. The under-construction supply in eight major cities is around 378 million square feet, of which 64 million square feet is ready while current annual demand stands at around 372 million square feet, according to the survey. The I-Sec survey said that rental market is stable and trending upwards – 53 per cent of tenants have seen rentals increasing in the past 12 months The average increase in rentals has been 4.7 per cent. Indian household spends 12 per cent of its monthly income on rentals.

Ahmedabad’s commercial realty will experience a supply-surge of 3.6 mn sq ft in 2009-11 against the estimated demand of 2.5 mn sq ft; the oversupply will stabilise commercial realty’s outright values at current levels in 2010.

This is a key forecast of the 2010 realty report issued by the Credit Rating and Information Services of India Ltd (Crisil). Though a large number of Special Economic Zones (SEZs) have been planned in Ahmedabad and Gandhinagar, the report does not expect them to come up in the 2009-11 period. As for the oversupply in commercial realty, it has affected the retail lease rentals; that is the reason why the rates are expected to settle down at current levels.

Retail lease rentals have declined sharply on the SG Road, raising the vacancy levels. The average lease rentals on the SG Road declined by 20% during the March-November period in 2009. Crisil estimates that 1.9 mn sq ft of retail supply will be available in the market in 2009-11, but the planned supply is 3.4 mn sq ft. A majority of the upcoming malls are being developed in western Ahmedabad. At any rate, retail lease rentals are expected to stabilise at current levels with a gradual pick up in transactions being expected in 2010. Lakshmi Narayanan, the president and CEO of Real Estate Bank International Ltd, (REBI), a national realty consultancy, agreed that there was an oversupply in the city’s commercial space. He said, however, there were chances of growth in the coming period. “I believe that Gujarat has great potential for growth and therefore it will not face many problems in coping up with the situation,” Narayanan said.

Experts believe that the oversupply will unleash cutthroat competition and cause developers in areas that lie far from the central business district (CBD) to offer lower rates. In the circumstances, developers are also expected to work towards community-centric growth, focusing on value-for-money products. The report also states that commercial realty in Ahmedabad is being led primarily by sectors such as banking, financial services and insurance (BFSI); telecom; pharma; and textile. Commercial realty was buoyed by a gradual pick up in transactions involving small and medium enterprises; private and PSU banks; insurance firms; and FMCG companies. Development spurred by IT/ITeS companies is slowly picking up momentum in the Infocity region of Gandhinagar.

Be that as it may, not everyone in Gujarat agrees with the Crisil report. For instance, the president of Gujarat Institute of Housing and Estate Developers (GIHED), Suresh Patel, said that 2011 would be a better year for commercial segment’s development. “The year 2008 was not that good for the realty sector, but since then there has been an improvement in rental rates of commercial property,” Patel said. He said that as far as he was aware, no new commercial properties had been launched over the past one-and-a-half years. Further, he said that the players who featured in property shows would choose the mixed-development model (commercial development along with residential property).

Impressed by the infrastructure development and synergy between town planning and bylaws in Japan and South Korea, real estate players in the city now believe vertical growth is the solution to the crunch of land in Ahmedabad. Recently, a team of around 120 real estate developers of Gujarat had been on a 10-day tour to Japan and South Korea. The tour was organised by Gujarat chapter of Confederation of Real Estate Developers Association of India (Credai).

The developers were very much impressed by the city development projects undertaken by the governments of the two countries. Unlike the US, Japan and Korea feel severe crunch of land, so they prefer vertical development, said Dushyant Pandya of Vishwanath Group. He also said horizontal development would mean higher prices of land.

“At present, the land prices in the city are no longer affordable for citizens. Though, many say the prices here are still lower than that in Pune or Bangalore, one should not overlook the fact that even the average earning of people here is lower,” he said. Suresh Patel, vice president of Gujarat Institute of Housing and Estate Developers (Gihed), said though Japan is under higher risk of earthquake, the government allows 100-storey buildings. “It makes us wonder why we are not allowed to build 20-25 storey residential complexes in the city,” Patel said.