Gujarat realty potential yet to unlock
Ganesh Housing Corporation Limited (GHCL) has a strong presence in and around Ahmedabad and specializes in the residential sector, with a focus on the mid and higher income segment of the market. Aneri D Patel –Director, GHCL gave a lowdown on the Gujarat real-estate.
Gujarat is the hub of economic development with major industries such as textiles, chemicals, diamonds and automobiles. Surge of these industries has brought in significant end-user demand for the realty sector. Demonetization as well as the expectation of major reforms in the Union Budget 2017 had put consumers in a wait and watch mode however, the market is now in steady recovery phase. While the Gujarat market is showing signs of stability, realty markets of other major cities are stagnant and there is also some level of price correction in those markets. Nevertheless, affordable housing development is taking place on a promising note even in other major cities.
The biggest challenge specific to Gujarat real estate is unaccounted transaction on properties. Players have largely been unorganized and therefore gearing up for compliance towards RERA and GST will be a big challengefor such organizations. There is no proven track record of acceptance of premium and luxury properties and a defined trend for the demand of such developments has not yet been observed.
The potential of Smart city development across Gujarat is undeniable. The realty market is likely to see a major boost as a result of this development and the future for consumers as a result of such developments looks promising.
The potential of Gujarat realty market
The Gujarat realty market is stable at the moment and even though there is an overflow of inventory, prices are stable and major infrastructure developments such as GIFT CITY and the Mumbai Delhi Industrial Corridor are likely to bring about the much-needed boost to the market in terms of end user demand. Moreover, developers are enthused after the promising Union Budget was declared. The vision of developers not only in Gujarat but nationally is aligned with that of the government to provide Housing for all by 2020. The Confederation of Real Estate Developers of India recently signed 347 Memorandum of Associations for the development of Affordable Housing projects all over the country, out of which 127 are to be developed in Gujarat.
The effects of announcements like RERA and revised affordable housing definition on Gujarat realty
The real estate industry is currently in the process of absorbing reforms that are likely to leave a long-lasting effect on the industry. RERA is a much-needed regulation that will bring about system and process compliance to the industry at large. Larger players will be able to embrace it and comply without much difficulty however smaller players might not be able to cope with the cost of compliance and the market, especially in Gujarat which is likely to see a consolidation.
The revised affordable housing definition and parameters put the affordable housing segment back on the map in Gujarat. For a long time now, this segment witnessed low inventory levels as a result of low interest levels from developers. The incentives both for developers as well as consumers make this most attractive segment for developers, especially in Gujarat. Large-scale industrial developments are taking place across Gujarat and hence the flow of working class consumers will boost demand for this segment.
The Credit-Linked Subsidy Scheme is a demand side intervention to fulfill housing needs of the urban affordable segment. At the same time service tax and income tax exemption are supply side interventions to incentivize developers.
Moreover the infrastructure status will allow banks to lend a larger tenure at a lower rate of interest. There has been a shortfall of affordable housing inventory in the market across the country and this move is likely to bring about a major adjustment.
If the upcoming GST will be lesser than the VAT and Service Tax rate it will be beneficial to the sector however if it is higher, it will be a major challenge.
The impact & consequences of FDI, REIT, PE investment avenues in Gujarat real-estate
Currently Gujarat is not a very attractive market for such investments. The lease rental market is not flourishing here and hence it has limitations. Mall development has not reached its full potential either. The retail market is at a very nascent stage.The scale of operations in the Gujarat real estate market would not justify such investment avenues and therefore these have been limited to larger cities. Having said that, the opportunity definitely exists and whoever capitalizes on it first is likely to emerge as a national player.
Some of Company’s major projects in the state
The Indian consumer today is more educated and discerning, Digital platforms play a large role in the property buying behavior today. Credibility, trust and transparency are also vital aspects that customers look for. Securing the best deal is no longer just about the best price point but is about securing the best lifestyle for the family.
One of the biggest projects of Ganesh Housing in the State is Maple Tree Garden Homes. Maple Tree is a 512 unit premium project that is situated at one of the most premier localities of Ahmedabad. The USP of the project is a vertical garden space along with each home, the first of its kind in Gujarat.
Another major project is Magnet Corporate Park, a 23 individual corporate house project that is located on S.G. Highway in Ahmedabad. We have major developments coming up in the affordablehousing, mall as well as integrated township segments.