Rental values may rise due to demand-supply gap.
After a dearth of supply for most part of 2010, Ahmedabad witnessed marginal fresh supply of approximately 100,000 sq ft in office space in the first quarter of calendar year 2011, says a report by real estate consulting firm Cushman & Wakefield.
According to the report, most of the demand was concentrated in Satellite Road and C.G. Road even as the vacancy levels in Ahmedabad city remained between 8 per cent and 9 per cent in the first quarter.
"The growth in supply is due to the recent conclusion of the 'Vibrant Gujarat Summit – 2011', a global investors' conclave held by Government of Gujarat resulting in about 8,000 MoUs for investment of US$ 450 billion, which has reinforced positive economic sentiments amongst developers.
Additionally, the city continued to witness buoyant demand resulting in some upward movements in rentals across most micro markets," the report stated.
However, as against a rise of 100,000 sq ft in supply of office space, demand for the same in Ahmedabad was around 113,000 sq ft for the first quarter. In the first quarter, the major completion of office space construction in the city included Parshwanath E Square that was spread across an area of 100,000 sq ft. Also, the report expects construction completion of 1.35 million sq ft of office space by third quarter.
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Moving forward, according to the report, the limited availabilities of quality projects in the city could spur rental values in near future. For instance, average rental rates for Grade A properties in areas like CG Road, Ashram Road, SG Highway and Satellite Road grew by Rs 1, Rs 1, Rs 2 and Rs 1 per sq ft per month, respectively.
"As most developers are witnessing an increase in enquires coupled with limited availabilities in Grade A projects, rental values are expected to witness some further appreciation over the next 3 to 6 months. In addition to telecom and banking sectors, which are also principal demand drivers for office space, the city is also expected to witness an increase in demand from the IT, auto ancillary sector and small corporates," the report further stated.