GUJARAT REALTY WELL POISED TO SUSTAIN THE GROWTH

BY Realty Plus

The realty market of Gujarat’s major cities remained stable even during and after the pandemic. The premium and luxury residential are now becoming the preferred home option for the buyers. The office spaces and retail establishments are witnessing increased attendance of employees and visitors footfalls which will further enhance the investor’s sentiments in these segments. The investors are highly bullish on Gujarat’s potential for industrial parks, warehousing and data centres.

COMMERCIAL REAL ESTATE GAINING MOMENTUM

Gujarat has been gaining momentum slowly but steadily since the past decade. There has been a consistent development of infrastructure, facilities and industrialisation as well. Aayush Undhad, Director, Avadh Group elaborated, “Gujarat enjoys the advantage of being well connected within the state as well as externally with the rest of India. It has had affordable real estate as compared to other major states like Maharashtra, New Delhi to name a few. Gujarat offers all avenues of commercial development, tourism, education, and transportation. Additionally, Gujarat has always had an environment that is supportive of new businesses and entrepreneurship. Gujarat has been in top 10 ranks of cities in the Ease of Doing Business (EDB) Index since 2015.All this has been significantly contributing towards commercial real estate gaining momentum In Gujarat.

Sharvil Shridhar, Promoter, A.Shridhar Group concurred, “Due to the overall growth in all Industries, there has been a steady demand of new commercial spaces from past 1 Quarter. Due to the New IT policy declared by Gujarat government, there has been a boost in demand. Also Retail sector is steadily picking up and demand for new stores have gradually picked up. In past 2-3 years, there have been very few new commercial project launches, and hence there is limited inventory available and with demand picking up the coming future looks very bright for ongoing and ready to use commercial inventory.”

Kamal Singal, MD & CEO, Arvind SmartSpaces shared that the government in Gujarat has rolled out several industry friendly policies aimed at attracting investments into the state. Ahmedabad has seen a growth in commercial transaction volumes at 165% YoY aided by, amongst other things, the Gujarat Government’s IT/ITes Policy 2022-27 that will provide a major fillip in attracting investments in the IT/ITes space. There have also been several initiatives to support MSME’s impacted due to the pandemic by offering rental subsidies toencourage companies to further lease, and retain their commercial spaces.”

Parth Patel, Managing Director, Kavisha Group stated, “One of the major reasons for commercial real estate gaining momentum is the union budget in which a lot on incentives have been provided for real estate for the year 2022 -23. Another major reason investing in commercial real estate is lucrative is the option against the volatility of the stock market that has been high since the pandemic. It also has very attractive leasing rates much greater as compared to the residential properties. According to GRERA, with the growth in start-up culture and rapid expansion of the cities the, the need for commercial spaces is increasing exponentially.”

Prashant Paradava – Founder & Principal Architect, PDC Architects added, “As industries and corporates are bullish on expansion plans, the need for commercial  property has gone up. This includes office space as well as retail and showroom spaces. The only way retail growth is underlined is to expand the geographical footprint of the brand. Moreover, as metro cities expand with new town planning schemes in place, the need for residential and commercial real estate in new areas goes hand in hand.”

Sharing his perspective Avaneeshnath Sharma, President, Alembic Real Estate said, “Businesses like knowledge process outsourcing, back-end operations non-banking financial companies, and industrial administrative offices are moving to Tier-II cities like Vadodara. This shift is primarily due to the availability of skilled workforces at competitive salaries and attractive rents for commercial spaces. Over the past few years, there has been a significant increase in infrastructure development in Vadodara, making it an attractive destination for the workforce. It is also strategically located within easy access to essential business hubs, like Mumbai, Delhi, Ahmedabad, Surat, and Indore, through superbly maintained highways and railways and the upcoming bullet train. It is also a crucial point on The Delhi Mumbai Industrial Corridor (DMIC). Post-pandemic, an interesting new trend is towards more flexible workspaces.”

“One of the major reasons for a boom in commercial sector is the fact that companies are going bullish on expansion, there is higher need for office spaces since hiring has gone up post the pandemic. Co-working spaces have also gained momentum. We have also witnessed a boom in IT and ITES which is leading to increased need for office spaces,” expressed Yash Brahmbhatt, Founder & CEO, Shilp Group.

HIKE IN PROPERTY PRICES & SALES VOLUMES

According to GIHED, most of the developers will increase the prices in a staggered manner as the market has slowed down due to the Covid-19 pandemic. Any sudden rise in prices will shoo away the buyers from the market, where the demand is already less. But eventually, the prices will increase as the rise in prices of construction materials like cement and steel have thinned our margins.

Sharvil Shridhar shared his perspective, “Due to the sudden rise in prices of all construction materials, a forced hike in property prices is evident. India is a going through a sudden inflation due to external factors. However, overall buying sentiments seem positive. The first quarter from April to June may take a hit, but the future still looks very positive as the Inquiries and site visits are still steady, which reflects that the demand is still there and it is a matter of time that prices will sink in. To add to that, RBI has kept the Home loan rates unchanged and this is a very encouraging factor for home buyers.”

Yash Brahmbhatt concurred, “The hike hasn’t dampened the spirits of the buyer community. The impact of this hike has been borne both by the developers as well as the homeowners. Pandemic has made people aware of the importance of having a comfortable home.”

Aayush Undhad stated, “With COVID finally behind us, people are beginning to look at real estate buying and investments again. Though the increased rates of commodities are resulting in the property rate hike, the flipside is that after COVID, only a handful of real estate players have managed to survive the economic hit. This has given customers a sense of assurance towards the brands that survived and are thriving.”

Avaneeshnath Sharma added, “The recent property price increase has come after a long period of stability. We believe that customers will consider this and accept the increased rates with equanimity. Moreover, developers are not passing on their total cost increase to the consumer but are conservatively increasing property prices to offset their increased costs. Therefore, this relatively small increase of 3-5% is not significantly dampening the homebuyer’s sentiment.”

Kamal Singal summarized the impact, “The hike in property prices are a consequence of a significant rise in input costs to developers over the last 6 months. While input costs have been increasing above average over the last two years, the last six months have seen an unprecedented rise with several major raw materials like steel, PVC, aluminium and glass rising over 30%. Developers had initially absorbed these increases but have now begun to pass these on through increased prices. That being said, the affordability index for real estate continues to be at record lows and the present is still the best time to buy a home. Demand for good quality residential real estate continues to be high with demand rising 4.6 per cent quarter-on-quarter (QoQ) across 13 Indian cities. I expect this buoyancy to remain in the market.”

THE NEW REAL ESTATE GROWTH HUB

Yash Brahmbhatt said, “GIFT City is the first smart city of India which has picked up well. It has a lot to offer to both businesses as well as residents. It has its own perks which include a comfortable green living, technologically advanced systems, recreational facilities along with the benefit of a good ROI. It would be right to say that GIFT City is the new finance and tech hub that the country has never seen.”

According to Parth Patel due to multiple national level events in the GIFT city and increasing investment from national and international companies, the commercial and residential projects are seeing a high. “The development of metro, lucrative government policies are attracting a lot of business into the city. Gandhinagar is becoming a place where everyone is looking forward to owning a property in,” he said.

Kamal Singal added, “GIFT City has already attracted various international and domestic businesses, with more on the way. The high quality of planning and development coupled with the tax incentives to businesses make GIFT City and Gandhinagar a very promising investment  destination. As the generation of employment in GIFT City accelerates, this will lead to an increase in demand for good quality living spaces. We are already seeing several large brands make their entry into the real estate market in and around GIFT City and as the attractiveness of the micromarket grows this trend is only likely to accelerate.

Sharvil Shridhar expressed similar sentiments, “All major Indian corporations are targeting to have their presence in GIFT city, especially the IT and Finance sector companies. GIFT city took time to get noticed, but now it is easily the best developed smart town in terms of ready infrastructure. These has attracted top developers from all parts of the country.”

Prashant Paradava agrees, “After commercial, even residential real estate investments have picked up pace in GIFT City – India’s first international financial services centre (IFSC) in Gandhinagar. According to GIFT City officials, some 55 lakh square feet residential real estate space is coming up in the campus with an investment of Rs 2,700 crore over the next five years. One of the positive advantages of investing in Gandhinagar is the fact that the area offers a very high percentage of good civic infrastructures with well laid out roads, markets and commercial establishments. The Metro Link Express from Gandhinagar and Ahmedabad (MEGA) once operational is sure to unlock the real estate potential of the region.”

EMERGING TRENDS IN GUJARAT REALTY MARKET

As per Sharvil Shridhar, “Weekend housing and land plotting have been trending in the Gujarat realty market post the pandemic with people investing heavily in land plots.”

Prashant Paradava adds, “The cities are served through their main streets and commercial clusters. This phenomenon is anticipated to undergo a vast transformation in the coming future with rapid urbanisation and industrial developments. The healthy per capita income and the projections of increased employment shall be instrumental in setting up the pace for the growth of the retail assets.”

Yash Brahmbhatt feels, “One of the biggest emerging trends in the real estate sector is the integration of technology in the form of online traffic on portals, virtual walkthroughs and much more. There has also been an increased demand of data centres.”

Kamal Singal said, “Firstly Gujarat being one of the most industrialized states in the country has put a lot of focus on the development of infrastructure while making policies industry friendly. Secondly, The real estate market in the city has a seen a strong rebound from pre-pandemic levels with housing sales growing by 37% in the last calendar year and launches of residential units almost doubling over the previous year. Ahmedabad especially, will continue to be the most attractive market in the state from a residential real estate perspective.”

Sharing the emerging trends in Vadodara, Avaneeshnath Sharma stated, “Vadodara is now a fast emerging industrial city with a growing demand for residential real estate that is transforming the traditional market. The low-rise landscape of the city is fast changing. There is an increasing preference for high-rise living with its associated conveniences and amenities. There is also a growing awareness that living in an environment designed to integrate the natural world into daily life plays a crucial part in human well-being and productivity. Where grey urban sprawls are replaced with green settings, and numerous parks and gardens give residents space to unwind and recharge. Secure gated communities are gaining popularity, where residents can live among like-minded people with similar values and lifestyles, making socialising and networking easier. The peace of mind that these gated communities offer is becoming increasingly important to homeowners today. The growing trend in the residential real estate market is for integrated living, where the needs of daily life are met without having to commute long distances. The future communities are sustainable and inherently energy-efficient, spaces of hyperlocal living.”

“The trend observed in Surat is that people are looking to upgrade their existing residential properties in terms of space, amenities and better location. Bigger spaces are in demand right now and amenities are playing a very important part of projects now. Importance of community living has increased more than ever. We are experiencing a huge demand from Micro-markets who are purchasing residential and commercial inventories in tier III like Vapi and II cities like Surat,” said Aayush Undhad.

MAJOR CHALLENGES FOR THE REALTY SECTOR OF THE STATE

Parth Patel expressed, “Any construction project necessitates multiple clearances from various designated authorities. Clearances are required in a variety of fields, including electricity, pollution control, environmental preservation, land, services, and use, among others. Even if the builders complete the building work on time, delays in acquiring clearances may cause the projects to be handed over to the buyers to be delayed. Other than that, government and we as a society need to work towards developing skilled manpower in the construction industry. The lack of training provided to construction personnel impedes the timeliness and quality of the projects.”

Sharvil Shridhar added, “The current hike in material prices is the biggest challenge to be encountered. Government should intervene and handle the situation to get in a balance. Besides that 12% GST for commercial projects has been a burning issue since its inception. Government had changed the GST slab to 5% for residential projects however, commercial projects still attract 12%. To give boost to the commercial offices and realty markets relaxation in gst would help greatly. Decrease in Stamp duty for affordable housing has been a demand from a long time to make homes more affordable. A single window clearance for all projects is another need of the hour..”

Kamal Singal agreed that the biggest challenge currently facing the reality sector is the unprecedented rise in input costs. “While part of this may be transitionary and based geopolitical factors, a large part of this increase is bound to stay over the medium to long term. These increases will ultimately impact the consumers through a rise in real estate prices. Several states have taken steps to mitigate the impact on the customers by temporarily reducing stamp duty charges etc. Any such incentive on the part of the government will ensure that the increased momentum we have seen over the last one year is sustained this year as well.”

“The State Government should ideally work with the Centre to roll out a plan to support real estate developers with GST input credits. Currently, developers are bound to pass the GST expense on to the end consumers," expressed Avaneeshnath Sharma.

FUTURE OUTLOOK OF THE GUJARAT REAL ESTATE

Gujarat has been a role model state for the country. Real estate investment in Gujarat is on the rise and the industry is witnessing good demand in both the residential and commercial space. Well planned cities coupled with greater investment by corporates will make Gujarat a land of innumerable opportunities.

Yash Brahmbhatt said, “Where on one hand, affordable segment is picking up, on the other hand luxury segment is also in demand. Along with this, there are plotting schemes, weekend homes that are on the rise. All this goes on to say that real estate continues to be an avenue of investment as consumption and good homes and smart offices continue to attract people. Things surely look quite favourable in the coming time.”

Parth Patel shared his outlook, “Peaceful living, safety as a community, greens spaces & great connectivity is the new norm. The times up ahead are definitely good and we have many exciting large-scale projects lined up that are poised to redefine community living.”

Kamal Singal added, “The Gujarat planning model is one of the most progressive in the country. With increased investment by companies coupled with a strong infrastructure push, will come a greater propensity for consumers to invest in the real estate. Ahmedabad for example is one of the most systematically planned cities in the country today. I expect Ahmedabad to be amongst the better performing real estate markets in the country.”

Sharing his outlook on the city of Surat Aayush Undhad said, “With the boost from the government and the ever-evolving infrastructure in Gujarat, lot of business and individuals are shifting their base to Gujarat. Surat, as a city, is on the rise. With the bullet train project resumed, The Diamond Bourse shifting to Surat from Mumbai, Airport expansion in process – a step towards International connectivity and strengthening of transport network, Surat is gaining momentum like never before. Surat is a smart city and has been ranking well on the list of cleanest cities of India, Real Estate is sure to boom here as well.

Prashant Paradava was of the view, “The major factors which have added to the development of the real estate market in Gujarat are the expansion of the limits of the Gujarat Municipal Corporation, robust development of different basic infrastructural utilities, increased connectivity and the growth of this state as a renowned industrial and commercial hub.”

“Gujarat is hub to a lot of industries and hence attract a lot of traction from neighbouring states. To add to these, there is rapid urbanization post Covid pandemic, and hence the future urban markets outlook looks extremely positive. The Industry friendly government policies have been continuously attracting several sectors to the state which in turn is creating a very good demand in all sectors of real estate industry,” stated Sharvil Shridhar.

“The prospects of the real estate market seem to be challenging, in the short term, due to the consistent increase in essential construction costs. However, the mid to long term looks more promising. With India moving towards a more significant middle-class segment and the orresponding increase in individual income potential, we expect the growth in demand in the real estate segment to continue,” concluded Avaneeshnath Sharma.

AS PER INDUSTRY REPORTS, COMMERCIAL REAL ESTATE IS GAINING MOMENTUM IN GUJARAT. DURING THE PANDEMIC, WORK FROM HOME CONCEPT HAD GAINED MOMENTUM AND INITIALLY FOR A YEAR IN SPITE OF IMPROVEMENT IN COVID SCENARIO SEVERAL CORPORATES PREFERRED TO CONTINUE WORKING FROM HOME. HOWEVER, FROM PAST FEW MONTHS, OFFICES HAVE STARTED FILLING UP AGAIN AND THINGS ARE COMPLETELY BACK TO NORMAL.

A LARGE SECTION OF DEVELOPERS HAVE SAID THEY WILL BE FORCED TO INCREASE PRICES BY 10-15% AS RISING COMMODITY PRICES OF STEEL AND CEMENT HAVE LED TO A NEAR 30% INCREASE IN CONSTRUCTION COSTS. THE IMPACT OF PRICE RISE IS EXPECTED TO BE IN RESIDENTIAL PROJECTS THAT ARE AT LAUNCH PHASE OR AT INITIAL STAGES OF CONSTRUCTION.

OTHER THAN AHMEDABAD, GANDHINAGAR IS ALSO GROWING AS A MAJOR REAL ESTATE HUB. IN FACT, GANDHINAGAR HAS NUDGED PAST MAJOR CITIES LIKE SURAT AND RAJKOT WHICH ARE 10X ITS SIZE, CLOCKING THE SECOND HIGHEST MOP-UP AFTER AHMEDABAD, SOME CREDIT SURE GOES TO GIFT CITY.

FOLLOWING THE COVID-19 PANDEMIC, GUJARAT REAL ESTATE SECTOR WITNESSED SLOW RECOVERY, THE DEMAND FOR LARGE HOMES HAS INCREASED AS PEOPLE HAVE STARTED LOOKING FOR SPACIOUS PROJECTS THAT ACCOMMODATE THEIR MULTI-FUNCTIONAL NEEDS. WEEKEND VILLAS ARE ALSO GETTING DEVELOPED IN A GOOD RANGE.

THE STATE GOVERNMENT HAS BEEN SUPPORTIVE TO THE REAL ESTATE SECTOR OVER THE YEARS AND COULD WORK TOWARDS MAKING THE PROCESS SIMPLER AND QUICKER TO HELP THE CUSTOMERS AND THE BUILDERS BOTH. FOR EXAMPLE, IT TAKES ABOUT 8-9 MONTHS FOR ALL APPROVALS, IF THE PROCESS BECOMES SPEEDIER, IT WILL HELP THE VIABILITY OF THE PROJECTS AND WILL BRING POSITIVITY IN THE MARKET.

Tags : Aayush Undhad Director Avadh Group Avaneeshnath Sharma President Alembic Real Estate Kamal Singal MD & CEO Arvind SmartSpaces Sharvil Shridhar Promoter A.Shridhar Group Parth Patel Managing Director Kavisha Group Prashant Paradava – Founder & Principal Architect PDC Architects GUJARAT REALTY GROWTH industrial parks warehousing data centres GIFT city Gandhinagar surat Ahemdabad .