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Flood of new homes in Ahmedabad before passage of Real Estate Bill

The report shows that over 7400 new housing units were launched in the six months between July-December 2015.

Written by Avinash Nair | Ahmedabad |
January 28, 2016 8:36:15 pm


Real estate bill, Real estate news, Ahmedabad Real estate, Real estate Ahmedabad, Ahmedabad housing projects Locations in Central Ahmedabad like Paldi, Naranpura and Vasana leads in new launches with a five-fold jump. (Express Photo By Pavan Khengre)

At a time when real-estate developers are battling to sell approximately 39,700 unsold homes in Ahmedabad, the number of new housing projects being launched in the city have shot up phenomenally by 50 percent during the last six months.

“There are currently 75,000 under construction homes in Ahmedabad. Of these 39,700 units that are under different phases of construction remain unsold,” said Saurabh Mehrotra, National Director (Advisory Services), Knight Frank, a real-estate consultant that released a new report on the residential markets of Ahmedabad Thursday.

The report shows that over 7400 new housing units were launched in the six months between July-December 2015. This is 50 per cent more than 4900-odd housing units launched during the same six-month period in 2014. Locations in Central Ahmedabad like Paldi, Naranpura and Vasana leads in new launches with a five-fold jump.

“This (new launches) has increased the stress in the market and worsened the oversupply situation in the city,” states the report that also goes on the present an estimate of over 9000 new housing units that are expected to flood the residential market in Ahmedabad in the first six months of 2016.

When quizzed if the Real Estate (Regulation and Development) Bill 2015, that is expected to be passed in the upcoming budget session of the Parliament, is one reason for the developers trying to flood the market with new launches, Mehrotra said, “It could be one of the reasons… but I believe there is fresh surge in demand for houses as the sale volumes have picked up in Ahmedabad by 13 percent in July-December 2015.”

The real-estate bill not only provides for a real-estate regulator but also put pressure on developers to change the traditional ways of managing funds, seeking approvals and completing projects.

Though Mehrotra choose to compare the 8,019 houses sold in Ahmedabad between July-December 2014, to the sales (9075 units) that happened during the same six months in 2015, to arrive at a 13 percent growth figure, the volume of sales of residential property in Ahmedabad is a far cry when 16,800 houses sold during the entire calendar year 2015, is compared to the 30,500 houses sold in 2012.

As far as Ahmedabad’s housing market is concerned, in the last four years real-estate developers in Ahmedabad have been cutting down on new launches to tackle the problem of rising inventory of unsold homes. Compared to 45,100 new homes launched in 2011, the numbers have steadily fallen in 2012 (30,700 units), 2013 (23,800 units), 2014 (14,011). It is only in 2015, the number of new launches has risen to 15,500 units.

Real-estate developers in Ahmedabad say that the rise in new launches is largely due to the improved sentiments in the market. “In comparison to the one residential project that I launched in 2014, I launched at least three projects of my own in 2015. However, it has nothing to do with the new real-estate bill,” said Dipak Patel, a leading developer and the president of Gujarat Institute of Housing and Estate Developers (GIHED), a city arm of CREDAI.

“Going forward, we expect new launches to increase by 13 percent between January-June 2016, with North and East Ahmedabad leading the way. However, sale volumes will witness a muted growth, as home-buyer sentiments is still lackadaisical,” the report adds.

According to Mehrotra from Knight Frank, this is the best market for home-buyers to crack a deal with developers. “The next 6-8 months are ideal for negotiations and for closing deals. The green shoots of recovery can already visible,” he says.

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