Tag Archives: Ahmedabad

Smart DNA across cities of Gujarat

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Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: At a time when the buzz word across the country has been the inevitable reality of urbanisation and the need to create smart cities the urban planners are wondering which are the Indian cities that can claim to be close to the desired smart index. More importantly, which are the cities that have managed urban development along with the pace of business and economy to emerge as the truly developed cities with self sustaining physical and social infrastructure that could be a magnet for big ticket investment?

The answer to many such urban aspirations is the State of Gujarat which has been among the first to focus on the urbanisation and the need to adopt the technology for managing the urban living. As a matter of fact, it is not one or two cities but multiple cities of Gujarat like Ahmedabad, Vadodara, Surat among others that have the smart quotient in its DNA itself. And that has made the State of Gujarat as a symbol of development model worth emulating.

It was hence not surprising when Legatum Institute’s Global Prosperity Index 2012 recognised Gujarat as the highest-scoring among all States of India on matters of social capital. The State ranked 15th in a list of 142 nations worldwide and actually ranked higher than several developed nations.

Recently during his visit to the State, Indonesian acting Consulate General Hariyanta Soetarto found Gujarat such a magnet that he expressed interest to sign Sister City Agreement. A proposal for the same is being made and seventeen clusters have been identified which are common between Gujarat and Indonesia. The real estate is hence sensing a big time bonanza ahead.

In the economic growth story of Gujarat figure describe the facts and those facts speak for themselves. Over the past decade Gujarat has seen rapid economic growth and has often been described as the red hot economy. Driven by massive industrialisation and urbanisation, the State’s economy has sustained a growth momentum of double digit per year – above the Indian average of about 8.25 per cent.

Gujarat is one among the six Indian states to have maintained a 10 per cent plus growth rate in the period from 2004-12. On top of that list is Uttarakhand at 13.2 per cent, followed by Bihar at 10.9 per cent, Maharashtra at 10.7 per cent, Tamil Nadu at 10.4 per cent, Haryana at 10.1 per cent and Gujarat at 10.08 per cent.

As a matter of fact, Gujarat became a revenue-surplus state in FY 12 and the State has made remarkable progress from revenue deficit of Rs 6,732 crore in year 2001-02 to revenue surplus of Rs 4,602 crore. This has been achieved by relying on more efficient tax collection, which in turn relies on increased use of technology without raising tax rates. Most of the government expenditure has been on capacity building programmes and with a superior credit profile the yields on Gujarat State Bonds are one of the lowest among the states in India. CARE ratings endorses these statistics saying Gujarat has successfully implemented the recommendations of the Sixth Pay Commission, while adhering to the Thirteenth Finance Commission and the Gujarat Fiscal Responsibility Act.

Vivek Sahasrabudhe, Analyst – Research & Real Estate Intelligence Service with JLL India makes it a point when he says that with improved infrastructural facilities, many new manufacturers of automobiles, engineering and instruments have established themselves in the city and existing industries have been expanding their plants, especially on the outskirts of Ahmedabad in Sanand and Changodar. To support the manufacturing hubs, logistics activity has also been growing fast.

“Newly generated employment has looked at organised real estate to fulfil its housing needs as prominent developers have been offering small ticket size affordable dwellings in the outskirts of the city. Another growth driver relates to the fact that Gujarat is part of the Delhi Mumbai Industrial Corridor (DMIC), which is an ambitious project aimed at developing industrial zones. Ahmedabad is anticipated to be an important link in this corridor. The city is expected to create more jobs, attract investment and ultimately generate greater housing needs. There will be no surprise if other cities in Gujarat follow Ahmedabad’s example in the coming years,” says Sahasrabudhe.

The market watchers maintain that the evolution of Gujarat as a vibrant economy has its genesis to the growth of the industrial sector in the State. Gujarat is the second-most industry-friendly state, according to a Planning Commission sponsored study. Gujarat’s land acquisition model ranked top in a commerce ministry-sponsored study.

The State provides good infrastructure with regular power and excellent road and port networks. Gujarat enacted a separate legal framework – the Special Investment Regions (SIR) Act in 2009 to develop specialized industrial zones in the state (an SIR is much bigger than an SEZ and is not just export-focussed). The first SIR is being set up at Dholera, near Ahmedabad. Gujarat is also a major stakeholder state in the DMIC project and the work in Gujarat is running ahead of schedule.

The share of the manufacturing sector in Gujarat’s economy rose from 22 per cent in 1993 to 28 per cent in 2013. During the same period, the share of the manufacturing sector at an all-India level rose from 15 per cent to 16 per cent. Gujarat has put an emphasis on developing small and medium-sized enterprises (SMEs) through policy initiatives that offer interest subsidies, venture capital assistance and quality certification. The Government has also focused on emerging sectors (nano-technology, biotechnology, non-conventional energy sources) and focused on a cluster development method.

Despite this success of industrialisation, the economy of Gujarat has significant agricultural contribution as well. Agriculture production, which was at Rs 9,000 crore in year 2001-02, has been gone up to Rs 1,12,000 crore in the last fiscal. Despite its semi-arid climate, Gujarat has been able to achieve average agricultural growth of over 9 per cent in the last 10 years compared to all-India average of 4 per cent. Gujarat also invested heavily in the construction of major and medium-sized canal irrigation projects (such as the Sardar Sarovar project), encouraged water harvesting and micro-irrigation (created a special purpose vehicle to promote micro-irrigation, which has covered over 700,000 hectares of land).

The urban planners are hence endorsing the Gujarat model of urban development to understand how the proposed new smart cities should be conceptualised. After all, Gujarat is poised to take over as India’s IT/ITeS destination pretty soon and the real estate that till very recently was weighing options with the cost-benefit analysis of developing IT/ITeS spaces has suddenly gone over-board in terms of shifting focus on the technology spaces.

For instance, a few months back Tata Consultancy Services (TCS) launched a software development facility in Gujarat’s capital, Gandhinagar.  A Special Economic Zone (SEZ), the campus will serve global customers across industry segments. TCS Garima Park will have a 10,000-seat campus, spread over 25.5 acres.

Similarly, Gujarat International Finance Tec-City, better known as GIFT that is under construction is being built on 986 acres with the purpose of providing high quality physical infrastructure (electricity, water, gas, district cooling, roads, telecoms and broadband) so that finance and tech firms can relocate their operations over there from IT hubs like Mumbai, Bangalore, Gurgaon.

In terms of policies, Gujarat has been front runner in facilitating the rise and growth of technology. As a matter of fact, Gujarat emerges as a state that consciously aspires to be a high tech zone. The State Government is taking special interest in shaping Gujarat as the IT destination.

“There was a perception that there cannot be enough growth in IT without adequate knowledge of English language and Gujarat is behind other states because of this.  But this perception is changing with the state leading in IT applications especially e-governance,” Narendra Modi recently said at the launch of TCS SEZ. The urban management, governance and vibrant economy of Gujarat with seamless integration of technology is definitely giving a tough competition to the traditional IT/ITeS destinations like Bangalore, Hyderabad, Chennai, Gurgaon and Pune.

100 hopes ahead in Gujarat realty

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By: Ravi Sinha

Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: 100 days of governance may be too short a time to evaluate or judge the performance of a government or its impact on any given business. But the Gujarat real estate is so euphoric with the new government at the Centre that it seems they have not only regained some of the lost ground but also carry 100 new hopes ahead.

This optimism is not based on sheer sentiments but the fact of the matter is that slowly but surely the economy seems to be on road to recovery. Moreover, real estate is one sector that has more or less got its due attention by the government in the short period of time, be it the fast track implementation of the Real Estate Investment Trust (REIT) or the prospects of creating smart cities ahead.

Most of the analysts in the Gujarat market believe that real estate is not isolated with the overall economy and hence it has to be seen in the context of the larger recovery. Today there is optimism within the built environment of the sector and that is a positive sign on the eve of the long festive season ahead.

At a time when the global economy is recovering and the investors world over are getting active once again, all eyes are once again on the Indian market where Gujarat is seen as a market that has the proven track record of the ROI (Return on Investments) in the housing investment. This is indeed encouraging for a sector which has shown the best resilience in the wake of overall turmoil in the economy and its after-effects in the real estate.

Of course, the state of Gujarat has not been unaffected by the global recession, and the transactions nosedived drastically. Yet, the property market across the state performed better than the national average. Now when the sentiments are changing with the change of government it is not only on course of a turnaround recovery but also poised to take off for a high flying economy. Historically, the state has been among the first to see boom in the housing sector and overall Bull Run in the business.

Vivek Sahasrabudhe, Analyst – Research & Real Estate Intelligence Service, JLL India believes the fundamentals are heavily loaded in favour of a turnaround in the Ahmedabad city. According to him, to attract the participation of the organised real estate sector, affordable and well-connected real estate developments were on the checklist of the Ahmedabad Urban Development Authority. The planning resulted in well-rounded growth as Ahmedabad, unlike other cities, did not have any geographical constraints on expansion. Also, the committee refrained from giving any specific city node an undue advantage, due to which capital value appreciation was held in check for many years

“In recent quarters, noteworthy growth was registered in residential real estate prices. Residex, the index published by the National Housing Bank covering price movements in urban and semi-urban areas, showed that Ahmedabad residential real estate prices have grown faster than other major Indian cities over the past four quarters. It is true that current market sentiment has turned positive following the country’s recent general election but physical indicators have played a vital role too. The employment opportunities generated by the industrial/manufacturing segment have contributed most to the evolvement of real estate activity in recent times,” says Sahasrabudhe.

Analysts point out that with improved infrastructural facilities, many new manufacturers of automobiles, engineering and instruments have established themselves in the city and existing industries have been expanding their plants, especially on the outskirts of Ahmedabad in Sanand and Changodar. To support the manufacturing hubs, logistics activity has also been growing fast.

Newly generated employment has looked at organised real estate to fulfil its housing needs as prominent developers have been offering small ticket size affordable dwellings in the outskirts of the city.

Another growth driver relates to the fact that Gujarat is part of the Delhi Mumbai Industrial Corridor (DMIC), which is an ambitious project aimed at developing industrial zones. Ahmedabad is anticipated to be an important link in this corridor. The city is expected to create more jobs, attract investment and ultimately generate greater housing needs. There will be no surprise if other cities in Gujarat follow Ahmedabad’s example in the coming years.

Requesting anonymity, another developer points out that it is not just the Ahmedabad market but many other market in the state like Vadodara, Surat etc are also poised for big time growth. The market sentiments have completely changed in the last 100 days and it seems the festival sentiments ahead will be the beginning of a real estate turnaround along with the economy getting into a bullish era.

“All the macro-economic indicators suggest there is a visible sign of revival, inflation is in control if not completely down, and most importantly, the twin deficits are also in control. With a growth-inflation balance, the all important market sentiment has also revived considerably and the business confidence index suggests growing optimism is there in the market. Statistics also point to some tangible positive outcome in the last few years post the formation of a new Government at the Centre,” says the developer.

However, it is equally essential to understand the mindset of an average home buyer. Are they willing to invest in the Gujarat property market? Whether they also feel turnaround in the economy in the last one quarter? What has changed their outlook, if at all it has been? There are many questions that need to be addressed, failing which all positive direction of the economy will be mere statistics.

Gulshan Patil, an IT professional from Mumbai is planning to buy a house in the Ahemdabad city. He waited for long due to weak market sentiments but is now ready to book an apartment during the Navratri. According to him, there is a visible change in the outlook of the home buyers in the last 100 days and there is hope that the economy will only go up from here onwards. The phase of gloom and doom is over and that is what is essential for salaried home buyers before committing for a long term property investment.

“There are three things that are critical to an average home buyer like me. First is the job security as it normally is a 20 year long payment; second is inflation in check and third is interest rate. I feel the job security is back in the market; inflation will not shoot up further, even if it does not go down; and finally interest rates are going to be lower as the RBI Governor also recently said. So, in totality this makes the right time to buy as further economic recovery may see the property prices appreciate as well, says Patil.

In a nutshell, the sentiments have no doubt changed for better across the state of Gujarat. The financial analysts also maintain that Gujarat is one critical state in terms of retail investment that is taking the Sensex higher and higher. So, the hopes of better market conditions ahead is not sheer optimism but based on sound fundamentals; something that is definitely a magnet for the investors as big ticket funds, both domestic and foreign, bet high on the Gujarat market which is once again back as one of the most lucrative investment magnet.

Gujarat property index—not really a rental market

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Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: It may sound like a paradox but the rental market of Gujarat city is showing bias in two directions when it comes to the property acquisition on rent. While the housing market is showing rental bias in the negative direction, the same property index is going northwards in the commercial vertical of property.

Even among the different segments of commercial property the trend is not uniform as demand for retail space is not as high as the demand for office space. It seems the rental index of the major markets like Ahmedabad, Vadodara and Surat is quite confusing and there is no emerging trend to show a direction. However, a closer look at the property market movement on ground in the state shows some method in the madness.

It is not that the rental index of Gujarat property market across the state is directionless; it is rather reflecting the growth pattern of the overall economy and societal mindset with the acquisition of property in the state. Since the economy itself is affecting various segments in different ways, hence this mismatch in the growth pattern of rental market across various verticals.

After all, Gujarat has historically never been known as the market for rental housing. As a matter of fact, while most of the urban business centres across the country were getting hotter on the rental value of the housing due to increasing economic activity during the peak cycle of economy, the same trend was never noticed in any of the property markets across the state at any given point of time.

Gujaratis traditionally believed in owning a house and even the migrant professionals in the state have the same kind of urge. Thus, despite of vibrant economic activities, Gujarat could never become an attractive rental housing market on the property barometer. The absence of institutional support to the developers for getting into rental housing, archaic rental laws and the low rate of return were among the other major reasons for the property market in this part of the world to not evolve as the major rental market for housing segment.

The growth of the economic activity during the peak cycle of 2005-07 gave some momentary fillip to the rental market in the city. Still, in a booming economy where the demand and supply cycle never had the major mismatch most of the occupants preferred to buy an apartment than take it on rent. The market slowdown post 2008 further hampered whatever growth the rental market of Gujarat had achieved due to the increasing presence of expat professionals. And hence, rental housing market of Gujarat remained among the lowest on the index of property market across the country.

Analysts believe the rentals have largely remained stable with downside bias in the last year. There is a general feeling within the built environment of Gujarat real estate that for the current year it looks good with economic conditions improving, with investment scenario expected to improve and thereby creating jobs.

Amit Oberoi, National Director-Valuation & Advisory Services and Research with Colliers International categorically says that there is no market for rental housing in Gujarat. According to him, people prefer to own houses and the government housing board caters to a very small quantum of development. Government prefers to work in PPP (Public Private partnership) model, wherein they provide land and at times increased FSI for developer to construct affordable housing.

“Residential sales volumes have been slow in Ahmedabad and Surat recently. However the perception is that the market will pick up from September onwards (from Ganesh Utsav festival, as is typical in past years when sales pick up from September till January),” says Oberoi.

However, requesting anonymity, a developer active in the couple of leading markets of the state says that the rental market in Gujarat has actually grown substantially in last two years. He recommends measures like easy registration of rent agreements, giving loan for properties on rent at home loan rates for multiple homes, amending society laws so that tenant gets say in society committee as well as landlord, making tenant registration in police station online and giving loans to tenants to furnish apartments at home loan rates to help the rental housing grow in the state.

However, the story of rental values has not been the same with the commercial property and interestingly the demand for rental commercial properties has shown an upward trend. Analysts point out that it is also indicative of the fact that even the capital value of the commercial property in the major markets has shown better appreciation than the housing segment in the last few quarters. That nevertheless has been only one of the indicators to reflect why and how commercial rentals have shown better appreciation than the residential property.

The fact of the matter is that even in the commercial segment there is no uniform pattern in the two key verticals of office space and retail space and that shows how the property market is indicating the larger outlook of the overall economy. The demand in the two verticals may not be going in two different directions altogether, yet there is absence of any uniform pattern to be vouchsafed as the trend.

The retail segment of the commercial property that looked bullish during the peak cycle of property rally has though shown upward movement, it is nowhere near the growth rate of the peak level. Reasons are very simple—the fact that the lifestyle driven consumption level of the state at large has gone down drastically in the current turbulent economic phase has its effect on the demand for acquisition of the space as well. It is all the more evident in the sense that while the retail per se has seen some growth in the rental values, it has been stagnant with the hotels and the multiplexes; thus reflecting that people are only spending on the need based commodities and luxury spending has completely been curbed in the major cities of Gujarat.

The commercial property owners are actually being forced to renegotiate with the hotel and multiplex chains to avoid getting their space get vacant. Some of them have even gone into revenue sharing model to avoid complete price crash. Most of such developers who are operating on the lease model have been hit badly. The sales model has also brought the inventory hangover high for the developer.

However, what is all the more interesting in the city property market, at least in the last six months, is the fact that the office space is showing an increase in both the capital as well as rental values. Not only that, the city based brokers even suggest that there has been more enquiries in this segment; thus office occupiers lookout helping the rental value movement to the northward direction.

It is true that the rental market in the Gujarat real estate is expecting growth this year. However, it will take time to revive and bring in a splurge of funds that could change the dynamics of demand and supply in the major cities of the state. Factors such as location, cost and quality will play a decisive role in increasing the demand for rental this year. Property markets across the state are today witness to a gradual movement but revival is very much anticipated as a real estate rental market.

The obvious fact is that the whole market value has risen is pushing the rental rates up. But with consistent control on rental brackets the situation can be curbed also. Gujarat can very much be made a model market for rental housing as well with some policy incentives. It can become a model market in future but presently it has to focus on making the real estate market resilient and steady which can make it an attractive option for corporate sector as well as individual customers too.

The growth pattern and the overall trends may be going into different direction at this point of time, but the property market across the country is witness to the fact that the rental markets in various segments has a symbiotic relation and the growth in one of the verticals has a chain effect on the growth of other verticals. It may not have been overtly seen in Gujarat in the last few quarters but then these quarters have been confusing in many of the property markets due to recent economic downturn and political instability prior to the General Elections.

Analysts are hence looking curiously at the rise in the rental values of the office segment of real estate as it also reflects increasing businesses which could further lead to more disposable income and job opportunities for the both the local population as well as the expats. This is what is actually needed for the growth of the retail and housing segment in general and in effect in its rental demand in particular. Hence, any upward movement of rental values in any of the segment of real estate is quite encouraging for the Gujarat property market.

A stable market for NRIs beyond rupee depreciation

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Bopal, Ahmedabad, Gujarat, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Track2Media, Track2RealtyTrack2Realty Exclusive: When Prahlad Patel went on a property hunt in the city of Vadodara, the broker had a curious look at his face. Under the impression that Patel is one among the many NRIs looking to invest in the city property with the fall in the Indian currency he thought it is his duty to narrate how the property market is just ripe to enter for sizeable return.

However, the agent was taken aback when this UK-based NRI from Ahmedabad told him that he already has couple of properties in the city and he understands the local market much better. Prahlad Patel is not the only Gujarati NRI active in the property market in this part of the world. Rather he represents the pockets of affluence in the city where the expats interest in the property market here has been beyond the rupee depreciation.

While the NRI money has been much talked about and hyped about subject in the property markets across the country this year, for some of the cities of Gujarat, like Ahmedabad and Vadodara it has been old news.

Much before the depreciation of the rupee generating interest among the NRIs with the lucrative options in the Indian property market, Gujarat has being witness to the NRI investment in general and particularly in the property market. The expats from the state across the world find the market of Gujarat more stable than other speculative markets in the metro cities like Mumbai or Delhi.

Dhaval Ajmera, Director, Ajmera Realty & Infra who has seen the interest level of the NRIs in the city property agrees that NRIs consider Ahmedabad as a more stable market compared to other Indian cities. Over the decade, Ahmedabad has witnessed tremendous investment boost from the NRI market. Many developers hence are coming up with ultra luxurious projects to woo the NRI/ HNI segment.

“With the recent rupee fluctuation, Ahmedabad realty has fuelled a lot of interest and anticipation amongst the NRI’s to invest in this area. The scenario is a win-win situation and it is believed that the investment will fetch better returns, as the rupee is expected to appreciate in a couple of years’ time. Also specific locations like Vastrapur, old city of Shahibaug has seen a drastic transformation. The infrastructure has developed remarkably in these areas with supreme Commercial and residential properties making it a hotspot location for the NRI market,” says Ajmera.

The city of Ahmedabad and Vadodara is the home town to many expat Gujarati’s and with the recent wavering in the denomination of the rupee, they have additional interest in the property market. NRI Gujaratis with surplus wealth are yearning to buy good property in their hometowns. Analysts believe the rupee depreciation has made the homes cheaper for NRIs, compared to local buyers hence there is increase in the NRI transactions now.

Some believe with the current prediction of stability factor in the value of rupee will further lead to infusion of funds from NRIs. Ahmedabad is one of the fastest emerging and budding cities in India. The city is well-known for its vibrancy and its assertiveness towards the spirit of entrepreneurship. Due to the rapid infrastructure development like flyovers, commercial as well as residential boom in the real estate is inevitable. The market has continually been enduring with multiple dramatic changes and thereby facilitating new potential business opportunities for NRI population.

Sam Chopra, Chairman, RE/MAX India says it is seen that about 20 to 30% of all investments in real estate are funded directly or indirectly through NRIs in these markets of Gujarat. According to him, not only the primary market but secondary and rental markets are also influenced by NRIs.

“Yes depreciating rupee has had a positive influence on NRI looking to invest. However, for the NRIs looking to exit their investment and take money back, it has a huge negative influence. They have lost a lot of money due to slow market and rupee depreciation. Still, there are a lot of NRG (Non-Resident Gujaratis) who are from small towns and villages of Gujarat who are settled outside India since a long time. The most conducive city to live in for them is Ahmedabad,” says Chopra.

So, the expats from the rural pockets of Gujarat are also fuelling investment in the markets of Ahmedabad and Vadodara. They have a good reason to focus their investment in Ahmedabad so that they can conduct their business smoothly. Access to quality talent, excellent public infrastructure, low crime rate, high quality power, good governance are a few reasons why Ahmedabad could emerge as a business destination.

Therefore, analysts maintain that NRI investment in the markets of Ahmedabad and Vadodara are beyond the depreciating rupee against the dollar. It may have a catalyst effect in the short term, but NRI investment has always had the maximum share in the markets of Gujarat. What is all the more important form investment point of view is the fact that property markets across Ahmedabad and Vadodara are seen as the safe bets in terms of being stable.

Even during the worst of crisis and correction in many other property markets of India, there has been no visible sign of unrest in these markets. This is something that acts as a traction point for the NRIs who want a safer haven to park the investment and do business in the long term.

The seasoned property agents in these markets understand the buyers like Prahlad Patel who have tasted the market and can not be mislead either. Hence, across the micro markets of major cities of Gujarat, be it Ahmedabad or Vadodara, there is a realistic property listing with not enough room for speculation. Now that is something which acts like a magnet with the power to stand always on the top of the wish list of the NRIs.

Evolution of best practices in Gujarat real estate

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Bopal, Ahmedabad, Gujarat, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Track2Media, Track2RealtyTrack2Realty Exclusive: It has often been argued that Indian realty needs to adopt best practices and improve brand image as the sector defends its rough ride on the learning curves. If adopting Corporate Social Responsibility (CSR), retaining employees, inculcating brand loyalty and earning buyers’ trust are some of the best practices that can address the perception issues of Indian real estate, then the sector has to walk a long road ahead.

Historically with a legacy of poor perception and projection the sector though has been going through the learning curves and some of the companies have initiated the best practices in their own way, like using the buyers as the brand ambassadors or rewarding the buyers who register properties in the name of the wife, as an industry practice.

The trend has mostly been adopted and applied in the major metro cities where the consumer awareness is pretty high and the developers are professionals. However, in Gujarat which has traditionally been known as the market for home grown developers where the business is mostly family run, the concept of best practices is increasingly gaining ground. It may be in the evolution stage but at least there have been some efforts to be seen as more professional.

The Gujarat real estate is also trying to send across the message that it is in no way behind the benchmark best practices. The entry of large developers from other markets like Mumbai seems to be raising the bar of professionalism within the sector.  

Deepak Prajapati, Deputy General Manager of Care Ratings maintains that the real estate sector across the country has evolved over the years and Gujarat real estate market is no exception to this process of evolution. Over the past 10 years Gujarat has been the fastest growing state with an average real growth rate of 10.42% and has witnessed the highest industrial growth rate of 12.65%. Also, Gujarat witnessed higher urbanisation rate of around 36% and has a higher urban population having more than 42.58% people residing in urban areas as per 2011 census.

The standard of living and consumer awareness amongst the people of Gujarat is high. This has lead to the need of adoption of best practices by the real estate developers as the realty market is highly competitive. Also, with substantial growth in the real estate sector in Gujarat over the past few years and cities like Ahmedabad being declared as mega city, reputed developers from across the country have entered the Gujarat real estate market. This has further lead to adoption of best practices by real estate developers to compete with the high standards of the reputed real estate developers,” says Prajapati.

Sachin Nigam, President, CRISIL Real Estate Ratings also agrees to the fact that the real estate market in India has seen major changes for the good over the past decade in many critical aspects. He cites some of the positive changes sweeping across the sector as incorporation of technology, heightened professionalism, corporatisation, greater focus on quality, and becoming customer-centric. The major cities of Gujarat have not bucked this trend and adopted these best practices.

“The state has used technology as a differentiating factor to bring in efficiency by taking the lead in e-governance and computerisation of land records. This has led to an increased availability of information for acquisition and registration. One of the areas which require impetus is greater transparency in customer communication for all aspect of a project. Developers should be more articulate on the details of project approvals, ensure fair and transparent customer agreements, display more information related to consultants, approval details, and construction status on their websites,” says Nigam.

Manan Choksi, Regional Director, RE/MAX MGM is of the opinion that the early adopters of best practices are the ones who earn more in a growing market, and hence there is a fast adoption of such improvements by the key developers across the state. According to him, in cities of Gujarat the market is seeing the development and not just the growth.

“Fast delivery of projects, clarity in total cost of the investment and no problem with municipal permission are things worth emulating for an overall eco system of best practices in the state. Sell on carpet area, commission to the broker on booking, return on investment, easy liquidity of investment are required in Gujarat. But yes, it may be slow but the wave of change is definitely there,” says Manan.

Analysts believe that best practices like use of overhead cranes for fast development, adoption of advanced fire safety measures, adoption of best labour safety standards, development of earthquake resistant structures, use of fly ash bricks and concrete blocks for construction, development of rain water harvesting system which ensures good water table level etc are being adopted by real estate developers across Gujarat. Also, many developers are adopting to the concept of green buildings wherein designing is done in such a way that it leads to better air ventilation, better space usage, waste recycling and better usage of natural lights.

Legal documentation is now done for full/higher value of the property which is leading to more transparency regarding the true value of a real estate property. Although there is substantial evolution in the real estate market in Gujarat there are still many areas wherein there is scope for improvement. Investors play a big role in the Gujarat real estate market which drive the prices and create artificial demand. Thus, regulations like compulsory registration of property deals on 20% payment as in cities like Mumbai should be adopted.

Since these are early stages of evolution, for many developers there is lack of clarity on various issues. For instance, with regards to the tenure of the accountability of the developer for maintenance of the property there is no industry accepted benchmark. Due to the lack of understanding some additional charges like car parking charges are still being collected by many developers under different names. The mandatory provisions like the property delivery date being explicitly mentioned in the Sale Agreement which needs to be incorporated to ensure accountability of the developer is also an area where the bigger developers are nowadays being more careful for their brand reputation.

However, with some of the new developers operating only in the select local market Sale Agreements constitute only one-sided clauses for penalty on the buyer for delay in payment. However, there is no penalty clause being observed for the developer for delay in delivery of the property. The real estate developers in Gujarat must adopt to these best practices for a collective image makeover; something that will lead to more investors’ confidence towards the sector.

What can be vouchsafed at this point of time is the fact that the adoption of best practices by real estate developers in Gujarat has been in line with the pace of adoption across the nation. In fact, with the higher growth that Gujarat has witnessed over the last decade and major upcoming infrastructure projects in the State, the adoption of best practices by developers in many cases has spread faster in Gujarat compared to many other states.

Majority of developers in Gujarat have understood the fact that if they want to lure the potential service sector companies and the growing cosmopolitan customers they need to offer the best. This, however, is only the beginning and on the learning curves of best practices the sector has a long way to go before Gujarat emerges as a ‘model case’ of being a market with best practices followed in letter and spirit.

Market sentiments picking up in Gujarat

Posted on by Track2Realty

Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: The sentiments in the property market are subdued across the country and the transactions have nosedived in most of the major markets. However, Gujarat real estate seems to be picking up to buck the trend otherwise and the sentiments are changing for the better. This is reflective in the transactions that are happening across the state.

If the State Government’s revenue figure is any indication, then the property transaction rate has picked up and is better than the national average. It seems the right property in the right market at the right price point is doing brisk business in Gujarat, even though reports may not reflect it and instead focus on the general macro level outlook.

Facts speak for themselves. The State Government’s income from the stamp duty and registration fee is increasingly scaling up and had actually gone up in 2013 as well even though the year had not gone so well for the sector otherwise due to many factors.

The collections had been in the negative in 2012 largely due to wishful thoughts of a price correction in general and crash in certain select markets. However, the average monthly collection in 2013 compared to 2012 average monthly has been much higher and the trend has been maintaining the momentum till date this year as well.

Some of the analysts tracking the Gujarat property market maintain that the investors and buyers have started investing again as they feel that the market rate will increase soon after Lok Sabha elections. A closer look, however, suggests that not only the wishful and fancy expectations of a price crash has already crashed in the collective consciousness of the buyers, the developers have also woken up to the reality that it is time for prudent fiscal management. Many of them have started restructuring their marketing strategies to offer freebies and discounts.

It is generally believed that even though the property prices are all set to appreciate post the General Elections, disposing off the inventory and going for the new launches makes more business sense than to hold the property and keep paying the interest over loans. This realism is driving the Gujarat real estate market to a new era of creating an equal opportunity market. The buyers are equally conscious of this cost & benefit opportunity that the real estate market is offering as of now.

The policies of the Gujarat Government have equally been responsible for the property market to adopt a pragmatic approach. For example, the State Government’s recent initiative of launching affordable housing schemes made the developers realise that the buyers need to be enticed with the price cut sooner the better. Failing this, these buyers would wait for the government schemes. After the State Government announced several housing schemes for the economically weaker sections, lower income groups and middle income groups, some of the developers even offered discounts up to 30 per cent.

There is a realisation in the Gujarat real estate market that if the next Prime Minister is elected from the State, then many such housing schemes would be coming in near future. Already Ahmedabad Municipal Corporation (AMC), Ahmedabad Urban Development Authority (AUDA) and Gujarat Housing Board (GHB) have received a good response from the prospective buyers. This makes the developers extra cautious to be seen as offering competitive projects at competitive rates to remain relevant to the market.

Manan Choksi, Regional Director, RE/MAX MGM seems to agree with the premise when he says that Gujarat realty market is looking up with healthy transactions and most probable Prime Minister candidate from state is the driving force behind the surge of market. Also, healthy stock market is another driving force. He believes Gujarat property market has just picked up at the right time.

“Yes we can give credit to clean image and progressive policies of the State Government for this positivity in the market. People are bullish about business in Gujarat. It is the market sentiments and progressive policies that are driving the Gujarat real estate, not the discounts and freebies. In my view, discounts and freebies are not affecting the market. I feel it is rather harming the market. Going back to basics is the kind of theme used by successful real estate marketers. Frills no more attract the customer,” says Choksi.

Requesting anonymity, an official of Gujarat Institute of Housing and Estate Developers (GIHED) says that the developers are more focussed now on moving on with projects, even with small margins and even with a price cut. The peer pressure to maintain the price momentum up has not worked for them and this new realism has found many takers among the buyers as well as financial institutions.

The buyers also seem to agree with this business philosophy. “For someone like me buying a mid range apartment even a price cut of Rs. 2 lakhs matter. I immediately gave my consent when the developer offered this lucrative deal. I am conscious of the fact that post the General Elections when the uncertainty with the overall economy will give way to clarity the housing market will be among the first to get the momentum. So, in Gujarat property market it is like take it at the lowest level or leave it to repent later,” says Rakshit Shah, a home buyer in Ahmedabad.

Analysts believe it is the buyers like Rakshit who are the prime demand drivers in Gujarat property market today since they understand the dynamics of property market and are conscious of the overall macro economy. They are the buyers who know that the kind of deals that are available today in the property market would not be available after a couple of months. This is what is changing the gloomy outlook to positivity in the market.

Real estate, after all, is a game of sentiments and more than economic outlook, more than interest rates and more than discounts & freebies what brings the buyers to the market is a kind of positive sentiments that may or may not have a direct bearing with the fundamentals that drive or doom the property market.

As of now, these sentiments are bullish even though market fundamentals may need time to correct. That also indicates the resilience of the Gujarat property market. Once the basic fundamentals are in place post the General Elections, this positive buyers’ sentiments may take Gujarat real estate to a new high. After all, the sentiments have started picking up at the right time.

Gujarat a realistic market high on investors’ wish list yet not speculative

Posted on by Track2Realty

Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: Real estate markets across the country have the uniform pattern of being speculative if the given market is high on the wish list of investors. On the contrary, end-user driven markets are always modest in appreciation but nevertheless carry genuine appreciation and provide a level playing field to all the stake holders, including the buyers.

However, the property markets of Gujarat, most notably the cream of the market in Ahmedabad and Vadodara, defy this conventional wisdom of economics in the real estate. These markets have traditionally been high on the wish list of the investors, yet have never been speculative by any stretch of imagination.

What makes Gujarat property market so realistic and different from the rest of the country? Analysts believe the property market dynamics of the region can not be disconnected with the overall economy of the region. The pockets of affluence are always balanced by the cost conscious spending habits in the state, and that reflects in the property market as well. That may be the reason that unlike other property markets, the residential developments in the state are not at the cost of each other in terms of various projects meant for different class of people.

Of course, the focus is nowadays shifting towards the luxury and other high-end projects but not at the cost of compromising with the mid-income housing or even affordable projects. There are all kind of residential launches, often in the same micro-market and the thrust is more on the project amenities in the high end projects than a mere developers’ playing on the land competence in the name of over-glorified terminology of ‘location, location & location’.

Dhaval Ajmera, Director, Ajmera Realty & Infra has a point when he says with steady demand being noted for affordable housing segment, residential developers have now recognised the prospective evolution of this sector. They have been imparting concentrated development for upper mid and luxury segments, where the market is appreciating in the last decade due to the arrival of many affordable projects.

“It is a realistic market at a time when property markets across country are speculative. The current momentum for investment in the city is quite stable, but it is temporary as the Ahmedabad’s potential is strong and is based on real and concrete growth. It will soon resume the progressive path. Looking at the current scenario for Ahmedabad, the future yield will be high, making investors compliment their investment,” says Ajmera.

Property watchers in this market maintain that the property rates here are still realistic as compared to other cities which bode well for investors and developers. This is often seen as a strange paradox at a time when the state in general and cities like Ahmedabad and Vadodara in particular are witness to increased focus on industrial and other economic activity. Various industries in and around the city is fuelling demand in Ahmedabad with IT giants such as TCS and Info City entering the city.

Manan Choksi Regional Owner, RE/MAX India, Gujarat says affordable may be going slow but is a steady segment of housing here. There is a strong demand and even though sentiments are low, people are still buying. Most of the people are first home buyers and depend on home loan. So, the slowdown in property market has not really affected the market.

This buying trend may reflect that the property market is not different from other parts of the country, yet the fundamental question here is how realistic is the market at a time when property markets across country are speculative.

“Ahmedabad market has been always been investor driven. The people have excess capital and they park it in properties. Even then the prices don’t fall and the market is not very volatile like that in other parts of the country. This shows that it is a realistic market,” says Choksi.

Well, since the investors in these markets are mostly local people who are not investing in the property for short-term trading, the market is not speculative either. Most of the Gujaratis are investing beyond one house for long term capital appreciation or to park money in a safe investment instrument. There are hardly any outside investors in the state pumping money for speculation.

Moreover, most of the developers in the Ahmedabad or Vadodara are either the local residents or the Gujarati builders who have tasted the perils of speculative markets in Mumbai and other regions. So, they are quite conscious of the fact that the short term speculative buying may provide liquidity to the developers in the immediate term, but often takes the project out of the hands of the developers. This kind of strategy often misfires to the developers who are then forced to strategise their marketing plans as per the wishes of the investors or the under-writers.

Hence, this realisation helps the developers to maintain a stable trend, something that may be a case study for the developers operating in other highly leveraged markets. In a nutshell, the property markets of Ahmedabad and Vadodara are uniquely poised today in the sense that these markets are pretty high on the wish list of the developers, yet not speculative in terms of its rental yields or capital appreciation. These are the markets meant only for either the end-users or the investors who have a long gestation period in mind.

As a matter of fact, even at the worst phase of economic slowdown between 2009-2011 when the property markets across India either corrected a bit or maintaining rigid price by the developers led to piled up inventory, this bearish cycle was weathered so very well over here. There has been no significant crash and inventory hangover has again never been a reality in this part of the world. That probably defines the resilience of Gujarat property market very well.

Property preferred over gold in Gujarat this Akshay Tirtiya

Posted on by Track2Realty

Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: Akshay Tirtiya holds special significance in Gujarat both for the traditional Gujaratis as well as the youngsters with the modern outlook to the culture and traditions. This festival is seen as the right time to acquire assets and traditionally the business of gold touches a new high on the day of Akshay Tirtiya.

However, this year on Akshay Tirtiya it is the real estate that is expected to touch a new high and the developers confirm that many deals are being sealed to make a formal booking on the festive date. It seems the outlook towards wealth acquisition is fast changing in Gujarat in favour of real estate than gold.

Part of this change in the aspiration and choice of property over gold is due to the realisation that real estate is a better investment option and partly the high gold prices have deterred the Gujarati investors. Moreover, with most of the youngsters opting for nuclear families the demand of new homes is ever increasing and the deep rooted faith in Akshay Tirtiya only acts as a catalyst to wait for the auspicious date to make the investment.

Even women who have traditionally been gold buyers are today opting for a piece of real estate as the investment choice. As per a study by the ASSOCHAM, young working women prefer real estate over gold as their investment.    

Analysts tracking the Gujarat market maintain that this is a highly tradition-oriented market, and people have always been on the buying spree during Akshay Tirtiya, with a small component of this investment falling into real estate due to its sheer size. However, what has changed, of late, is the fact that nowadays buyers wait for Akshay Tirtiya and property investment is very high during the festive spirit.

Most Gujaratis are any way inclined to link property possession with auspicious dates and Akshay Tirtiya is one such important date other than Navratra. Though the same tradition has been following for years, nowadays major property buying occurs during festive times, especially Akshay Tritiya.

A lot of buyers prefer to wait for an auspicious occasion like Akshay Tirtiya to make new investments in realty. There are definitely a large number of buyers, who want to have the satisfaction of at least getting possession of their dream homes on this day. This year the market analysts believe some new offers, freebies and marketing innovations will ignite the subdued market and change the sentiments to positive.

Many even believe this will be the beginning of the revival of property market of Gujarat. This optimism also stems from the fact that immediately after the Akshay Tirtiya there will be a new government taking charge of office at Centre and thereafter the direction of both the economy and the real estate market is expected to go northwards. Hence, this Akshay Tirtiya is the right time to buy property as the inventory may not be at this price point again in future.

Manju Yagnik, Vice Chairperson, Nahar Group maintains that Akshay Tirtiya is one of the auspicious occasions as per the Hindu calendar. Akshay Tirtiya is mainly an auspicious time for buying gold but with the changing times, people look out for more returns in investment and thus real estate is another investment that people look out for. In the past the real estate market has been receptive to this occasion. Both, the developers and the home buyers have shown immense interest in property transactions on this occasion, thereby making Akshay Tirtiya an important occasion for the real estate market.

“Like past, this year too the occasion of Akshay Tirtiya is expected to bring in the much needed positivity and vibrancy in the real estate sector. We expect that home buyers who have been holding on their plan to buy new homes will go ahead with their decision to buy home on this auspicious occasion. New launches and offers can also be expected from developers on this occasion,” says Yagnik.

Dibyendu Banerjea, CEO West Zone, Pashmina Developers agrees that home buying is a very important decision as it involves an emotional as well as a rational aspect in the minds of Indian consumer. Festivals are considered to be prosperous and promising time for investments, especially Akshay Tirtiya.

“Property market in recent years have witnessed an upward trend in terms of enquires and sales. Since, Akshay Tirtiya is considered as an auspicious occasion for wealth creation and good fortune, developers at this time seek to capitalise on these festive sentiments via increased marketing efforts. In that respect, festivals like Akshay Tirtiya can act as a powerful market force,” says Banerjea.

However, Manan Choksi, Regional Director, RE?MAX MGM does not feel gold and property investment on Akshay Tirtiya has any co-relation. According to him, while the gold investment on the festival is by small investors, property acquisition is a much bigger investment by those who have plans beforehand.

“Normally when the gold prices are high, people tend to look for other investment instruments. Similarly, when the property prices are high, people do not want to invest. At this moment, prices are any way moving in the same direction for both the gold and real estate,” says Choksi.

It is not just the domestic market of Gujarat that is so upbeat on property acquisition this Akshay Tirtiya, but even the non resident Gujaratis have a strong emotional connection with the festival. If the enquiry level with various developers in the prime markets of Ahmedabad and Vadodara are any indication, many of these expat Gujaratis are on the lookout for right kind of property to make their bookings on the festive day. It is noteworthy that even in the wake of rupee depreciating against the dollar that led to the expectations of NRIs investing in Indian real estate, Gujarat has been the front runner in the expats investing in the property while other markets just kept expecting that to happen.  

“Festive time of Akshay Tirtiya brings in the positive sentiments. Even the NRI demand for properties during this time is quite high. The real estate sector definitely witnesses an increase in the number of buyers closing the deal. The past sales record of the property market have spotted adequate rise in the number of home aspirers finalising deal on their dream projects.  Buyers wait for a favourable period for booking and their demand is centric to value for money. If the project is valuable and has amenities, investors are definitely willing to pay more,” says a broker active in both the Ahmedabad and Vadodara market.

So, the Gujarat property market waiting for a turnaround has a date with Akshay Tirtiya. Many believe that the investment this year will shift from gold to real estate and that will be the beginning of the revival of Gujarat real estate market. This optimism has some sound market fundamentals and some high emotional quotient. But the emotional connection with the festive spirit of Akshay Tirtiya is definitely driving the investors to Gujarat property market.

Entry point attractive for end-users in Gujarat

Posted on by Track2Realty

Bopal, Ahmedabad, Gujarat, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Track2Media, Track2RealtyTrack2Realty Exclusive: Statistics only tell half the story and this old adage is all the more relevant in the property market where the transactions and appreciation/depreciation may or may not have a direct co-relation. In Gujarat real estate market the prophets of doomsday had a field day in the last over a year time due to slow pace of growth. They cited the National Housing bank’s Residex that shows Ahmedabad witnessed only 6 per cent growth in property prices in last one year.

The property price index in the city has remained volatile in last one year. The index was at 180 points in July-September quarter 2012, which increased to 191 in October-December quarter. Residex went down to 186 points in April-June 2013 quarter and reached 191 in July-September quarter 2013.

However, what this raw statistics does not reveal is the fact that during the same period many of the cities that Residex tracks down did witness either no change or downward change. Out of the 26 cities that it covers across the country, only 12 cities witnessed marginal appreciation, and two cities of Gujrat-Ahemdabad and Surat-registered 6 per cent and 5 per cent growth respectively. More importantly, the transaction rate in the cities of Gujarat did not dip. That reflects the property markets of Gujarat had been moving, even though the pace of movement has been slow.

Analysts tracking the market at ground zero seem to be bullish on the prospects of Gujarat real estate market. They maintain moderate property appreciation is actually indicative of the market’s resilience and the fact that speculative buying is not happening in this part of the world. That also means entry point is extremely attractive for the end users and the right time is now. After all, the state has seen a booming rise of big infrastructure and industrial projects coming up with rapid growth.

These factors definitely contribute in ensuring good returns on property investment. What has hampered the growth of the real estate sector is the negative sentiments borne out of negative macro-economic factors. The fundamentals of the property market are quite grounded to realism across the cities of Ahmedabad, Vadodara and Surat.

Dhaval Ajmera, Director, Ajmera Realty & Infra asserts that this is the right time to buy property in Gujarat. According to him, Gujarat as a state has seen remarkable growth in various verticals, real estate being one of them, which also is indicative of a healthy economic activity in the state. It is a known fact that Gujarat is acknowledged as the most industrialized state in India. The state currently is one of the fastest-growing states in the country and definitely has huge potential in terms of real estate investment due to industrial growth. The prices of properties and land will see a good return of investment in the forthcoming years.

He, however, does not think that discounts and freebies are way forward to entice the buyers. Many other analysts also feel that discounts and freebies that have been used as a marketing methodology only in those projects that have failed to take off. The right project in the right market at the right price point does not need to offer discounts as there are enough takers in the market.

“Developers are more focused towards rendering the buyers with value added services. Buyers are no longer wooed to discounts. The services and amenities offered to the investors through the projects play a significant role in translating into sales. These enhanced services are the driving force that bequeaths the end users for investments,” says Ajmera.

Manan Choksi, Regional Director, RE/MAX MGM also believes it is a good time to buy property in Gujarat. The prices are at the lower side and there seems to be positive sentiment from the political standpoint. He believes this is the right time for end users to identify his right entry point since inventory is easily available with decent room for negotiation.

“The discounts by various developers are translating into sales but all depends on the segment of property. There is a good movement in three, four and five BHK apartments. However, there is a total slowdown in plotting schemes. Offices of smaller footprint are getting sold but large spaces have few takers. In fact, discounts have acted counter-productive to sales in some of the cases. The builders providing discounts/freebies have usually not been able to sell 100 per cent of inventory in last six months,” says Choksi.

Property brokers active in the market assert that it would be safe to call that the Gujarat property market is a buyers’ market to a large extent as of now. But it would not be right to say that the price correction in the state has been a uniform pattern across the micro markets. In fact, semi urban market has seen more correction. There is no correction in the prime market. In fact in a few high end properties there is an increase in market price.

So, it seems ‘one size fits all’ solution may not be available in the property market of Gujarat; reasons why correction in certain markets are being projected as the overall slowdown when the data is collated for taking out average. But the right project in the right market at the right price point is still selling at a brisk pace. More importantly, since there is enough ready to move inventory available now in many of the prime localities across the state in general, and Ahmedabad, Vadodara and Surat in particular, it is turning out to be boon for the end users.

The property markets across the state of Gujarat may not be truly buyers’ market in the conventional sense of the term, but what can be vouchsafed is the fact that this is the right time to buy the property. The market is attractive not just in terms of the price point but also the kind of ready apartments with even discounts on offer in some of the cases; it may not be the same in the time to come. Post the General Elections it is anticipated that the economy at the macro level will start coming back on the track, and then there onwards the property market across the state of Gujarat will once again turn out to be red hot. Does not that sound tempting for the buyers who have the liberty of choice as of now to opt for ready to move apartment with prospects of handsome appreciation ahead.

Approvals biggest building block to unlock potential of Gujarat realty

Posted on by Track2Realty

Ahmedabad, Gujarat Real Estate, Gujarat Jantri,india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyTrack2Realty Exclusive: Gujarat real estate has seen phenomenal growth in the last over a decade and property markets of Ahmedabad and Vadodara are among the most sought after hot spots. The growth story, however, would be incomplete without understanding the stress level of the sector which weathers multiple challenges to perform, with approvals being the biggest challenge.

And hence, to say that Gujarat realty has picked up momentum would be an under-statement for the true potential of the real estate prospects in the state. There, of course, is a mismatch between the potential and the performance. Approvals at every level are coming in the way of unlocking the true potential of the real estate in Gujarat.

It would be safe to maintain that Gujarat real estate has rather modestly performed, if not outrightly under-performed, in the last few years and its true potential is yet to be unlocked. Approvals are proving to be the biggest building block and developers assert it is also affecting their execution capabilities, input costs, finances and sales. This vicious cycle often takes the project out of the hands of the developers, particularly for small developers with limited resources and urgent need to finish and sale the project.   

Facts speak for themselves. Data collated by Track2Realty finds that realty projects worth around Rs 12,000 crore have been waiting for clearance in the state. This statistics has piled up in the last around four years only and is compounding on a year-on-year basis. Post the Central government’s directive in 2009 which makes it mandatory for all realtors to get an environment clearance certificate from the Union Ministry of Environment and Forest (MOEF) or its state-level body before launching building projects, many projects are stuck in the state. Some developers have even been forced to scrap the projects due to this policy hurdle.

Developers crib that once a file is moved for environment clearance, it takes about six to eight months to complete all formalities and then an equal time is necessary for the plan approval by urban authorities. This causes inordinate delays and jeopardises projects as in some case it becomes financially unviable for the developers. The corporation and urban bodies in Gujarat approve the building plan only after they have drainage and sewerage disposal systems in place. This takes care of the environment concerns. However, the concerned authorities have no deadline pressure to clear the files on a timely manner and the developers are forced to wait endlessly.

Dhaval Ajmera, Director, Ajmera Realty & Infra says approval procedure has been the foremost hindrance for the real estate sector. A single window clearance can facilitate in reducing the time taken to secure permissions and thereby allow developers to seek all the requisite permissions in a time bound and rationalized manner.

“Gujarat real estate market has tremendous potential and is seeing a huge boom in realty. Gujarat has witnessed soaring raw material prices, shortage of labour, which have been minor hindrances, but with the infrastructure boom the State has been vibrant and developers are ensuring to meet up with the challenges of the ever growing demands of the buyers. Approvals often play the dampener,” says Ajmera.

The developers complain their input goes up due to delay in approvals as delay in approvals further leads to steady rise in the price of construction material, like cement, steel, bricks, coupled with a shortage of skilled labourers, which also leads to further sky rocketing prices. They demand a more pro-active response by the authorities to ease the pressure on them. Timely clearances will eventually be beneficial for the end-users as well, they maintain.

Manan Choksi, Regional Head, RE/MAX, Ahmedabad points out that it is not just the environment clearance that is causing the delay but due to new city plan the approvals are stuck. There is lack of clarity in the developers mind regarding the new laws. The new projects are not launched because of approval delays. Among his wish list to make Gujarat property market more delivery oriented are good public transportation, inviting FDI openly and the government should have policy clarity.

“Project delays in Gujarat are beyond mere delay in approvals. Lack of booking is also major problem, as the builder is not able to sell fast, he cannot finish the project early. Lack of construction capability is an issue as most builders have not finished the project in time except a select few. As a result, there is at least 25 per cent increase in the total cost of project due to delay in approvals. This is due to interest on capital employed, increase in raw materials cost due to inflation and interest to be paid in booking done,” says Choksi.

So, there is a major cost increase due to delay in approvals. This usually is borne as a profit loss or an increase in cost by the end user. The developers assert they are not against environment clearance but let such regulation should be implemented for projects that are spread over more than 20 lakh sq metres.

Furthermore, they demand that the MOEF should simultaneously allow the developer to move his project file for environment clearance while he acquires the final approval from the civic bodies. Many within the built environment of Gujarat real estate believe the state is better poised to meet the challenges of slowdown than any other state provided the ‘approval of uncertainty’ is not hanging over their head all the time. 

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