Realty Wrap 2016: Ahmedabad Defies Downward Trend, Manages To Stay Afloat
Located on the banks of the River Sabarmati, Ahmedabad, the sixth largest city of Gujarat, is an up-and-coming real estate market. Although the domino effect of the two-year slump in the property market hit this city, too, but still it managed to perform better than other metros in the country.
The proposed Dholera International Airport near Navgam in the city, the upcoming Metro network, and the Sabarmati Riverfront Development Project — an innovative project in urban regeneration, will further give a push to the city's real estate market. The upcoming Vibrant Gujarat Summit to be held on January 10, 2017 in the state will set the ground for new investments in the state.
- Post-demonetisation, property prices in Ahmedabad have spiralled southwards. However, the period prior to the move saw hectic business activity.
- The Gujarat government passed an ordinance to regularise nearly 75,000 residential encroachments on urban land vested with the state government in five cities, Ahmedabad, Surat, Vadodara, Rajkot and Jamnagar, under the provisions of the Urban Land Ceiling and Regulation Act, 1976.
- Chinese conglomerate Sany Group recently signed a memorandum of understanding with the Gujarat state government to invest $2 billion over the next five years. According to media reports, the deal is one of the biggest signed by any state government in India.
As far as sales go, on a year-on-year basis (Jan-Nov 2015 to Jan-Nov 2016), they decreased marginally by five per cent. Over the previous fiscal (Q4 2015) in the financial year 2016, in Q4 2016 the sales plummeted 22 per cent with more than 47 per cent of the sales taking place in the affordable category (below Rs 50 lakh). In the first quarter of 2017 fiscal, Ahmedabad recorded a quarter-on-quarter growth of 61 per cent. This was the highest home sales growth rate recorded by any city in Q1. In the subsequent quarter, homes sales, saw an increase of seven per cent over the previous quarter.
According to the PropTiger Datalabs report, the last quarter of 2016 fiscal i.e. Q4'16 saw the price increase from Rs 2,760 to Rs 2,925 – a change of six per cent. In the new fiscal, the price went a little up to Rs 2,699 per sq ft (Q1) and then increased by three per cent at Rs 2,912 per sq ft (y-o-y).
On the y-o-y (Jan-Nov 2015 to Jan-Nov 2016) basis, launches increased marginally by two per cent. In the fourth quarter of the 2015-2016 fiscal, launches across the spectrum saw a decline of 14 per cent, but, the demand for residential properties saw a surge, especially under Rs 50-lakh category. On a q-o-q basis, the Gujarat city saw a decline of 82 per cent in demand with new launches nosediving from 2,953 to 522 launches. In the new fiscal, Ahmedabad was also on the top of the heap in terms of new unit launches. It registered a massive 726 per cent increase in launches over the fourth quarter of the previous financial year. In the second quarter, new launches saw 57 per cent surge. Ahmedabad reported a whopping 413 per cent y-o-y growth in launch of new units — from 840 units in the first quarter of FY16 to 4,312 units in the first quarter of FY17.
On a m-o-m basis (Nov 2015 to Nov 2016), the inventory overhang soared 16 per cent. In the Q4, Ahmedabad (16.5 per cent) along with Chennai and Hyderabad accounted for 45 per cent of the unsold inventory with 39 per cent overhang in the below-Rs 25 lakh category. As on November 2016, the average inventory overhang was at 31 months.
Areas which saw maximum action
With the city getting a funding of Rs 194 crore from the Centre for the Smart Cities Mission, a majority of the launches throughout the year were concentrated in micro-markets such as Nava Naroda, Gota, Bopal, Chandkheda, Near Nirma University on SG Highway and Shilaj.
Developers who made an impact
Among the developers who launched their projects in Ahmedabad were Aryan Infrabuilt, Avirat Developers, Pavanj Developers and Sun Builders. Nebula, Adani, Savvy, Swagat and Sun sold the highest housing units between January and June this year.