GUJARAT REAL ESTATE DEVELOPMENT MODEL AT CROSSROADS

Already one of India’s most industrialized and investor-friendly states, Gujarat’s Vision 2030 aims to upgrade its real estate sector to match the demands of fast-paced urbanization and rising economic aspirations. Jigar Mota, Director & Head of Transactions · Cushman & Wakefield shares some facts, “In the financial year 2022, Gujarat crossed the $259 billion mark, solidifying its position as a major economic force in India. Despite accounting for only 5% of the country’s population, the state contributes 8.3% to the national economy, holds an 18% share in industrial output, and boasts a per capita income nearly 1.7 times the national average.

According to experts, business -friendly environment is the foundation for driving development in the state. Elaborating on how Gujarat’s economic growth and policy reforms are shaping real estate, Mudit Shah, Partner, Khaitan & Co., articulated, “I look at Gujarat’s progress through two lenses – economic policy and real estate. The state has long led in manufacturing sectors like pharma, chemicals, and engineering, and is now aggressively expanding into new-age industries like semiconductors, data centers, and green hydrogen. Renewable energy is another high-impact sector where Gujarat ranks among the top states, supported by policy reforms and streamlined processes for land use. In real estate, the government has significantly improved digitization, making due diligence faster and more efficient, with most property records now accessible directly from a desktop.”

Further highlighting the role of infrastructure development in boosting urban real estate, Suresh Patel, President, NAREDCO Gujarat, said, “Gujarat’s urbanization has rapidly accelerated, from 39.5% to 51%, with projections showing over 4 crore people living in 26 major cities by the time the state’s population hits 8 crores. To support this growth, the government is heavily investing in urban infrastructure, including roads, drainage, lighting, parks, mass transit like BRTS, metro rail, and major projects like the Ahmedabad Mumbai bullet train. Beyond cities, large-scale infrastructure includes tourism circuits, airports (with 19 new ones in the pipeline), ports, railway stations, the Delhi-Mumbai Freight Corridor, and Asia’s largest cargo airport at Dholera. With over 7,400 infrastructure projects underway and Gujarat confirmed as the host of the 2036 Olympics, the deep link between infrastructure and real estate development is driving massive economic momentum across sectors from manufacturing and chemicals to tourism and education.”

When it comes to housing, while overall housing finance disbursed in Gujarat rose in FY25, the number of home loan borrowers decreased, indicating fewer people are buying homes, and its high-income borrowers that are borrowing larger amounts. Sharing his opinion Kamal Singal, MD & CEO, Arvind Smartspaces, said, “Housing in India is driven by multiple factors, but the most powerful is its young, rapidly growing workforce – an unmatched demographic advantage that will sustain housing demand for decades. Urbanization is another major force, with massive population shifts from rural to urban areas reshaping cities like never before; even a 2% shift means millions moving. Gujarat, one of the most urbanized states, reflects this trend and still has room to grow. Adding to this are consistent economic growth and political stability, both of which have created a strong, sustained momentum in the real estate sector. Luxury housing continues to show strong growth, with homes priced above ?4 crore experiencing a significant year-on-year increase in sales. While, there is a slight demand as well as supply dip in the affordable and mid-income segments.”

RISK VS RETURN IN GUJARAT PROPERTY

Gujarat’s real estate market presents a mixed bag of opportunities and challenges for developers & investors, from potential for high rental yields and investment ROI to risk of market volatility and high transaction costs. On what makes Gujarat attractive for domestic and foreign investors, Suresh Patel said, “Gujarat, with a GSDP of ?25.63 trillion and a 15% CAGR since 2002, outpaces states like Tamil Nadu and Karnataka in economic performance and contributes 16% to India’s industrial output. Faster project approvals, reflect improving regulatory efficiency, and with strong domestic and foreign investment, real estate will remain a key driver of state’s growth.”

There is no doubt, Gujarat is uniquely positioned to outpace the national growth average, not just because of its past performance, but because India needs to rely more on manufacturing and services to sustain its growth, and these are the sectors where Gujarat already leads. Kamal Singal added, “With nearly 18% of India’s industrial output coming from just 6% of its population, the state stands out as a leader in industrial potential. Services, including commercial real estate, are also poised to fill the employment and economic gap, with Gujarat offering one key advantage: predictable, stable government processes, which businesses value highly. From an innovation standpoint, Gujarat, especially Ahmedabad, is already setting benchmarks in architecture and urban development. The city’s design sensibility, inspired by legends like B.V. Doshi, is evident in its thoughtful layouts.

Developers here are pushing boundaries in horizontal development, successfully replicating large-scale residential models in bigger cities like Bangalore. Gujarat may not be the biggest, but it’s proving As per Sharvil Shridhar, MD, A Shridhar, the advantage lies in diversifying business into various segments including affordable, upper mid-segment, luxury homes, villas, weekend homes, plots, and commercial spaces. “Our approach has always been strategic, balancing demand, profitability, and cash flow, with plotting projects often helping us maintain quicker turnovers and healthier cash flow due to faster permissions and shorter execution cycles. While Gujarat is growing rapidly and there’s a clear government vision for global-scale development, local challenges remain, particularly around approval timelines, which still stretch up to 12–15 months. This delay affects the f inancial viability of new projects, especially when significant capital is tied up in land acquisition.”

THE COMMERCIAL SECTOR PERFORMANCE

Gujarat has been attracting industries due to its strategic location and supportive government policies. Recent changes in Gujarat’s land policies have further boosted industrial land purchases. Sharing his opinion on how he sees Gujarat’s edge in commercial real estate and emerging asset class, Jigar Mota stated, “Commercial real estate in Gujarat has seen its cycles, but with new industries emerging every few years, like automobiles, semiconductors, and solar, Gujarat continues to evolve into a major industrial hub. This growth has driven strong demand for office spaces, attracting companies back to the state, including legacy firms that once moved to Mumbai but now see Ahmedabad as the future. A recent example is a century-old law firm returning to Gujarat and purchasing 10,000 sq. ft. of office space, seeing long-term opportunity here.” Highlighting the changes, both in the past and potentially in the future, that, could reshape the commercial real estate landscape of the state, Mudit Shah said, “RERA has been a game changer for real estate, building investor confidence and bringing greater transparency to the sector. We’re now beginning to see the real impact of RERA, as it evolves with new policies around digitization and advertising standards. Gujarat has also introduced industrial and IT-ITeS policies that, while legal in nature, are actively driving demand for commercial real estate. Developments like GIFT City and the Ahmedabad-Gandhinagar twin city vision further support this growth. Notably, the focus on data centers under the IT policy is set to boost demand across the real estate spectrum by creating a need for full ecosystems, including housing, social infrastructure, and service providers.”

AN UNEVEN GROWTH

One of the major factors of disparity in the growth of cities in Gujarat is the uneven policies that have led to variable development. For instance, Ahmedabad and Surat have experienced significant growth, while Vadodara has lagged behind. There’s also a notable prevalence of mixed-use developments in Ahmedabad & Gandhinagar compared to others cities, while Surat stands out in terms of number of plotted projects.

What’s more, the recent jump in Jantri (Ready Reckoner) rates has taken some wind out of the market’s sails evident in only 144 new projects having been registered across the state in this financial year. Ahmedabad has the highest number of unsold homes: nearly 2,49,980 units. Real estate players fear that blanket implementation of higher rates across the state could hit sector hard— especially in areas where property prices have not kept pace with government valuations. And, when it comes to economic development of the state, the analysts are of the view that Gujarat development model entails high growth numbers through a close business-politics-bureaucratic alliance that has resulted in the non-delivery of many of the social provisions for the citizens. Gujarat’s rapid infrastructure development, while boosting the economy is also presenting significant environmental challenges, which if not managed carefully could become critical challenges in the coming future.