Ahmedabad realty prices seen soaring

Mega city status, FDI liberalisation to fuel growth

Real estate prices in Ahmedabad are set to more than double in the next five years. Two major factors - the announcement of Ahmedabad getting a mega city status and liberalisation of foreign direct investment (FDI) in construction, are expected to trigger this price rise, say developers and civic officials of the city.

Ahmedabad, with a population of over 40 lakh spread over 192 square metre, was awaiting the status of 'mega city' for a long time and real estate development in Ahmedabad is expected to shoot up in the near future.

At present, the price of flat or office space in Ahmedabad is around Rs 1,000 per square feet, which may exceed Rs 2,000 per square feet in the next five years.

"We are all geared up to develop Ahmedabad as mega city. We are reviewing the plans and upgrading infrastructure through real estate development in the city," Surandra Patel, chairman, Ahmedabad Urban Development Authority told Business Standard on Wednesday.

Apart from getting the status of 'mega city', the liberalisation of foreign direct investment (FDI) in realty, will further lead to the increase in the prices of real estate in the city.

"The real estate development in Ahmedabad will be in full swing for at least next five years with the liberalised FDI in the retail sector. Corporates and international companies will be investing heavily in the city, enhancing the real estate prices in the city," Hasmukh Gadhecha, director, Diamond Infrastructure Pvt Ltd.

Ahmedabad has also become a hub of shopping malls and departmental stores with over a dozens new shopping malls and departmental stores coming up in the city in the last few years, which includes Pantaloons, West Side, Food Bazar, Super Mall, and Bazar Kolkata among others.

The latest entry is Star India Bazar, which was inaugurated recently. Pantaloons entered Ahmedabad in 1998, while West Side opened shop in 2003.

"We were awaiting the mega city status since long time. We will be making a detailed project report for developing infrastructure in the city to be submitted to the finance ministry for approval," said Dilip Kumar Mahajan, deputy municipal commissioner, Ahmedabad Municipal Corporation (AMC).

Meanwhile, liberalisation in the state government policies such as introduction of section 80 IB, which provides tax-free bonanza for housing activity in more than one acre of land and built-up area of 1,500 square metre has further enhanced the real estate development in the city. Section 80 IB will tempt the builders to take up bigger projects such as townships among others.

"The real estate prices in Ahmedabad will touch the level of Bangalore, Hyderabad and Pune, if not Mumbai, Delhi and Kolkata. Things are looking positive with the liberalisation of FDI in the sector. FDI will bring in new approaches and technology, which will help in faster execution of projects. The owners of the land would be the actual beneficiaries because of the price hike," said Anil Bakeri of Bakeri Engineers and Industries Ltd, one of the leading developers of the city.

The real estate prices in Ahmedabad have already gone up by over 20 per cent in the last one year due to hike the prices of steel and cement prices.

Moreover, with the sanction of the Government Development and Control Resolution (GDCR), no illegal construction will take place. Even the floor space index (FSI) has been enhanced from one to 1.8 and in the high-rise buildings one can construct 25 per cent more with certain charges paid to the corporation. All these factors have given boost to the real estate development in the city.