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Being one of India's most industrially robust states, the demand for both residential and commercial properties in Gujarat has been steadily escalating over the past few years. In major cities such as Ahmedabad, Surat, Vadodara, and Rajkot, there has been a continuous influx of migrants, attracted by the burgeoning opportunities across sectors such as textiles, diamonds, petrochemicals, and manufacturing. This influx has had a direct impact on the real estate market, resulting in an increased need for housing and workspaces.
GUJARAT'S CONNECTIVITY BUZZ
The ongoing development of Gift City (Gujarat International Finance Tec-City) continues to attract global firms in search of office spaces. There has been a sustained rise in demand for Grade A office spaces from the IT and finance sectors. The Dholera Special Investment Region (SIR), part of the Delhi-Mumbai Industrial Corridor (DMIC), is also expected to bring a substantial increase in commercial activity in the state.
The expansion project of the Ahmedabad Metro Rail is enhancing city’s urban mobility. While, the develop- ment of the bullet train project between Ahmedabad and Mumbai is poised to reduce travel time between the major economic hubs dramatically.
In addition, major port upgrades, particularly at Kandla and Mundra, are improving logistics and facilitating trade. The inauguration of the Ro-Ro ferry service has reduced travel times between Ghogha and Dahej significantly.
Improvements to highway networks are ongoing, including the Delhi-Mumbai Expressway that traverses through Gujarat, aiming at augmenting road connectivity. And continuous enhancements are being made to the state road transport system with an emphasis on electric buses to promote sustainable transport.
PROPERTY MARKET ACTIVITY
Gujarat's real estate sector has been positively impacted by various state-driven infrastructure enhancements. Government reforms aimed at enhancing the ease of doing business have also been effectively fostering a supportive environment for the growth of the property market.
The demand for office real estate has seen revival across Gujarat. However, Ahmedabad’s gross leasing volume (witnessed a 60% drop from the same period last year due to limited office supply, mostly driven by the IT-BPM segment, contributing a 70% share. GIFT city submarket received good market traction, recording the highest share of 68% in the quarterly demand. As per developers, oversupply in commercial real estate segment has led to unsold inventory. Though they re- main optimistic of activity picking up on the back of infrastructure development.
The retail leasing in past few years had seen a drop on account of surge in online shopping. Currently, the retail leasing is concentrated in prominent hubs of the cities. And overall mall vacancy has dropped with main street rentals witnessing a 10-15% growth on a y-o-y basis. Warehouse leasing volume recorded 40% growth over H2 2022 but a 20% drop compared to H1 2023. Rental values across all submarkets witnessed an av- erage of 3-7% rise while land values have appreciated almost by 20-40% y-o-y.
HOUSING MARKET UPS & DOWNS
Redevelopment in the main city areas is catching up with many redevelopment projects launched by the developers as existing old societies are going for redevelopment of their dilapidated buildings and prefer amenities within premises. Moreover, with government granting permissions for a higher floor space index (FSI), the number of residential and commercial buildings has also gone up.
However, housing prices have increased by 8-10% due to stark hike in land prices to more than 20% de- pending on the location and the significant increase in the construction and labour costs. The developers state that with building sale prices not keeping up with the cost of development, the profit margins for them have reduced. Land availability is another deterrent. For in- stance, in Vadodara, many town planning schemes are awaiting permission that has created land availability crunch leading to fewer launches.
Latest Highlights
Gujarat government earlier this year hiked the jantri rate leading to a frenzy to buy properties before applicable date of April Jantri is the minimum rate fixed by state governments for registration of any real estate property that undergoes a change in ownership.
The state saw property transactions worth Rs 8.45 lakh crore during the fiscal, compared to Rs 4.59 lakh crore in FY 2022, according to stamp duty data.
As per GujRERA, Gujarat saw registrations of 443 affordable housing projects in 2023-24, which was 578 in the previous year, a drop of 23%.
The Gujarat government’s shift in liquor policy for Gift City led to an impressive surge in itsl properties reaching up to 1500-2000/ square feet.
