Developers in Ahmedabad,the largest real estate market in Gujarat,are currently sitting on a pile of unsold inventory worth over Rs 3,000 crore. While large developers are refusing to budge on the price front,smaller ones with poor holding capacities and lack of financial access are silently selling their stock at 25% lower than the existing market rates,according to real estate experts.
Most of the unsold units have piled up in the 300 premium residential projects units here are priced between Rs 50 lakh and Rs 2 crore that dot the landscape between the High Court and Prahlad Nagar localities in the more affluent western parts of Ahmedabad.
For instance,Sun Builders,a reputed developer in the city,is struggling to find buyers for 75% of its stock of residential units. I have been able to sell just six of my apartment units,each priced at Rs 1.25 crore. In spite of being in the real estate business for the last 30 years,I am not getting any buyers for my project for the last six months, says N K Patel,managing director of Sub Builders.
The pile-up of unsold units is also bringing about a price correction even in some of the more affordable locations in the city where the property market has been on an upswing since 2009.
For instance,a year ago,real estate prices in the Gota locality of Ahmedabad hovered around Rs 2,555 per square feet. Now,builders developing residential projects in Town Planning scheme number 33 near the locality are selling at Rs 1,888 per square feet. According to real estate experts,the areas around Gota have an estimated inventory build-up of 15,000 residential flats,which is pulling down the prices.
This could be just the beginning. Poor sentiments have caused the buyers to disappear. It has also caused prices to correct by 25% in some areas like Gota, says Pravin Bavadiya,president of Ahmedabad Realtors Association.
According to Bavadiya,developers building luxury residential projects in posh localities like Thaltej,Shilaj,Drive-in,Prahladnagar and Bodakdev are struggling to find buyers.
However,demand for flats priced below Rs 20 lakh remains high,developers say. Recently,I floated a 600-apartment scheme in New Ranip locality. All the units in the one-bedroom-hall-kitchen format,priced between Rs 14-16 lakh,have been sold while the response is poorer for the two-bedroom-hall-kitchen format priced between Rs 24-26 lakh, said Patel of Sun Builders.
Even commercial projects in the city have seen a price correction. Corporate office space in some of the posh locations are being sold at prices that are 20% below the market prices.