Gujarat Realty on the Surge
Gujarat comprises all the necessary drivers to enhance the growth of its real-estate. Realty Plus explores the opportunities and challenges of the realty sector of the state.
From being a state of rich culture and population mix of professional and business class, the state has transformed into an urban landscape of one of the most investor friendly states. The first notable feature of the real-estate market of Gujarat is that the capital value of residential property is more affordable compared to other similar tier-II cities. The the FDI policies have also proved beneficial for the real-estate projects in the states and the elaborate transit system providing connectivity internally and externally adds value to its commercial realty segment. Various key projects like SEZs, hotels and IT Parks are foraying in the state. Moreover, Ahmedabad, Surat, Vadodara, Rajkot, Bhavnagar, Junagadh and Dholera region will be developed as Smart cities under Special Investment Region (SIR)
Gujarat has topped the list of 21 states with most investment potential that was drawn up by economic think-tank NCAER last year.
The Growth Axis
Ahmedabad has always been the frontrunner in terms of growth due its proximity to Mumbai. Ahmedabad has not only been able to attract the investors from within the country but also from the NRI Gujaratis. Ahmedabad is Gujarat’s largest business and trading hub driven by the textile, engineering, chemical and automobile industries. The employment opportunities available make the city residential an end user-driven market. Infrastructure projects like the BRTS and Outer Ring Road have opened up the peripheral locations but, there is an oversupply of residential units. From an investment perspective, not a significant price appreciation is expected in the coming few years.
The growth drivers for the city include The Gujarat International Finance Tec-City or GIFT, an under-construction central business district between Ahmedabad and Gandhinagar, Sardar Patel Outer Ring Road that is already operational connecting the peripheral locations and Metro rail project, the first phase of which, will connect affordable residential locations like Vastral to the city centre and densely populated areas.
Gandhinagar, the capital city of Gujarat has seen some remarkable transformation in recent years. The Sarkhej-Gandhinagar Highway, commonly known as S.G Road, connecting Ahmedabad with Gandhinagar is witnessing the highest construction activity. Previously an administrative city, Gandhinagar is becoming the IT hub and trade center of the state. However, in contrast to the big cities, which have reached their saturation, the residential too is still affordable and in high on demand among the investors who are looking for assured high returns. Sabarmati Riverfront development, Ahmedabad-Gandhinagar Metro Rail project with a route length of 76 km and the launch Phase-II of the GIFT city project are set to attract developers, investors and end-users alike to this city.
The Imminent Cities
Surat, the port city too shows a promising real-estate development. The city’s diamond & textile industry and its inclusion in Government’s Smart Cities initiative will propel its growth opportunities. The Hazira industrial area and the Kandla port and the BFSI setups are expanding the commercial presence in this corridor. In addition, The DREAM city (Diamond Research and Mercantile city) at Khajod Road, mega tourism project Tapi Riverfront near Suvali and Surat Diamond Bourse accommodating over 4000 diamond traders, aspiring to become the centre of the international diamond trade are some of the projects set to fuel the residential and commercial real-estate. The established residential micro-markets of the city are Adajan, Ghod Dod Road, Dumas Road, Varacha and Udhna Road and the emerging residential areas in the city are Vesu, Puna-Kumbharia, Ved Gam and Bhathar.
Vadodra, the third largest city and cultural capital of Gujarat is another ripe avenue for developers as well as buyers. The city enjoys the strategic location in terms of connectivity with Ahmedabad as well as Mumbai and is geographically at the centre of the state. The provision of NISG (Nodes to Induce Specific Growth) in the city development plan, BRTS (Bus Rapid Transit System) and industrial development on NH8 can be considered as future growth propellers of the city. Realty market in Vadodara is yet to mature. This is the reason the effect of overall real-estate market slowdown has not affected Vadodara as much as other markets, as property prices are yet to reach their peak levels. However, being part of the Golden Quadrilateral project; Vadodara is definitely going to see a lot of infrastructure development and residential & commercial real-estate activity in the next 5-6 years.
Rajkot too is gearing up as the next potential destination for service sectors like IT/ ITes and its strategic location and connectivity to other significant cities is attracting investments. The residential property prices of the city are seeing a consistent hike of almost eight percent. There is also an improving emand for top-end projects at the Kalavad Road, Jamnagar Road and new area being developed along the 150ft Ring Road known as New Rajkot.
EY’s India Attractiveness Survey 2015 found that 12% investors thought that Vadodara was an important emerging city for investment, which was the third highest.
Some Upcoming Avenues
When we talk about the emerging destinations for the real estate investments in Gujarat, SG (Sarkhej Gandhinagar) highway linking Ahmedabad to Gandhinagar is one of the longest paths connecting two major cities and is the much in demand destination for new residential living, IT companies and commercial businesses.
Strategically located off SG Highway and in the southwest corner of Ahmedabad, Prahladnagar has gined real estate activity momentum with big corporate brands and organizations setting their offices in the region. After Ashram road, now it is Prahladnagar which is fast developing as a commercial hub of the city. Prahladnagar is a well-planned city with extensive road network and well laid out streets. The area only 19 Kms away from the airport and 2 Kms away from the Vastrapur Railway station has many
Another emerging avenue is Sama that enjoys the immediate proximity to Ahmedabad-Vadodara Expressway, Mumbai Highway and the industrial corridor. Savli, Aasoj, Manjusar GIDC are slowly becoming the extension of Sama-Savli Road.
Located at a distance of around 15 km from Ahmedabad airport Thaltej emerges as the promising locality for residential and commercial properties The new metro proves to be another driving force behind its growth. The areas closer to the metro line will see a surge in demand from the middle class buyers. Integrated township projects for both, mid segment and luxury are being launched here..
Known for its industrial township called GIDC (Gujarat Industrial Development Corporation), Ankleshwar is an educated city of literacy rate of 76%, higher than the national average of 59.5%. City is witnessing huge scope in commercial development along with new large residential zone near Valia Road. High literacy rate, decent per capita income, vibrant multi culture are driving force behind fast development of this location.
Despite all the positives in the state, real-estate market has some challenge to face. The Gujarat Government has yet not framed the rules for amended land acquisition act of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Gujarat Amendment) Act, 2016. The amended Act by Gujarat government has relaxed some of the stringent provisions of the Central LARR Act like mandatory consent of the farmers and conducting social impact assessment of the land to be acquired to ease land acquisition for various projects. The outcome will decide the real-estate future growth trajectory.
Although Gujarat has attracted the third highest share of investments in real estate across India, investments dipped by 22 per cent in the last four years according to the sector-specific survey conducted by The Associated Chambers of Commerce and Industry of India (Assocham).
A majority of projects with about 72 per cent investments in real estate sector attracted by Gujarat have remained non-starter as of 2014-15 and share of such projects has increased significantly. One of the main reasons for this is the lack of integrity in the completion of projects among developers. Other reasons include lack of discipline, transparency in the market and concrete governance body.
Infrastructure – The major public interest projects in the state are, upcoming cargo airport, Delhi – Mumbai Industrial Corridor (DMIC), Dholera Special Investment Region, Dahej Petrochemical & Petroleum Investment Region (PCPIR), Metro rail system for Gandhinagar – Ahmedabad, Ahmedabad Bus Rapid Transit System (BRTS) and Canal based transit corridor.
GIFT City – Designed as a global financial and IT services hub, it offers a world-class infrastructure and facilities and aims to attract the top national and international corporate. It is India’s first IFSC that offers the facility of acting like a ‘foreign operations office and facilitates easy movement of capital. The development is at par with globally benchmarked financial centers such as Shinjuku, Tokyo, Lujiazui, Shanghai, La Defense, Paris, London Dockyards etc. An eco-city, it is a greenfield development with state-of-the-art connectivity, infrastructure and transportation access integrated into the design of the city. The master plan of the city contains mixed use districts of residential, commercial and open spaces that optimize land and real estate values.
Sabarmati Riverfront -Sabarmati Riverfront was originally conceptualized by first town planner of Gujarat – Jamnadas Patel and French architect Bernard Cohen, on the lines of Seine River – a commercial waterway within the Paris basin. The project aims to provide Ahmedabad with a meaningful waterfront environment and positively transform the neglected aspects of the riverfront. The objectives of this multidimensional project are environmental improvement, social infrastructure and sustainable development.
DREAM City -On the lines of GIFT city, the Government of Gujarat proposed a Diamond Research and Mercantile (DREAM) City, in Surat. Spread over 2,000 acres, the city will comprise Surat Diamond Bourse, residential and office spaces, training schools and public and private sector banks. A slew of civic amenities such as “ultra-modern” hospitals, sports complexes, five star hotels, convention centers, and education institutions will also be included.
Surat Diamond Bourse – Likely to be functional in next two years, the project is designed by Delhi architectural firm Morphogenesis. The bourse of over 65 lakh square feet of built up area will accommodate over 4,000 offices of the diamond traders. It will also include safe deposit vaults, Customs clearance house, world standard convention centre, exhibition centres, training centres, entertainment areas, restaurants and a club.