Home sales in Ahmedabad at 4-year high in 2019; launches jump 176% YoY: Knight Frank India

Ahmedabad: Despite the general economic slowdown, Home sales in Ahmedabad, the most populous city in Gujarat and seventh across India, has seen a 4 year high in 2019 and the new launches have also jumped by 176% as compared to the last year, the India Real Estate half yearly report by Knight Frank Indian a leading independent global property consultancy today said.

According to the report issued by Knight Franks local Director Balbir Singh Khalsa here today shows that home sales in Ahmedabad recorded a four-year high of 16,713 units in 2019. The new launches in Ahmedabad also witnessed a mammoth 176% annual upsurge in the same period. Office leasing in Ahmedabad in 2019 was the highest in the last 10 quarters, registering a 50% Year on Year (YoY) jump to 0.14 mnsq m (1.55 mnsqft). New completions in 2019 however far outpaced the leasing activity, at 0.45 mnsq m (4.88 mnsqft), witnessing a 58% increase over 2018. This has kept the office market rents stable despite the significant rise in-office transactions, mostly to maintain the market’s competitive edge.

Khalsa on the occasion said, ‘Both residential and office market of Ahmedabad has performed well in 2019.The commercial sector has seen a rise in leasing transactions, additionally many offices are also consumed in outright purchase for self-use. Positive sentiments in the office transaction are also being reflected in the residential market which has also started to show signs of growth in the sales volumes. Looking through market-wise, in the residential market, micro-segment and affordable housing has played a key role in H2 2019 and on the other hand, Central Business District (CBD) West garnered the largest share in office space consumption in H2 2019. The city witnessed the launch of 11,487 new residential units in 2019, registering a mammoth 176% annual jump over 2018.’

According to the report an increase in home launches in the INR 2.5-5.0 million (INR 25-50 lakh) bracket gave a fillip to overall city launches. In H2 2019, the new residential launches surpassed the year ago period by 184%, at 8,089 units. The share of ticket sizes within the bracket of INR 2.5-5.0 million (INR 25-50 lakh) increased from 37% of total launches in H2 2018 to 62% in H2 2019. West zone of the city, comprising areas such as Shilaj, Shela, Ghuma, Bhadaj and Science City Road, remained the most preferred micro-market with a 35% share of launches in H2 2019. Despite a marginal uptick of 3% annually over 2018, 2019 was the year which witnessed the highest number of units sold in the past four years, at 16,713. Comparing H2 2019 with H2 2018, there was only a miniscule 5% uptrend in sales, at 8,501 units. Homes priced in the range of INR 2.5-5.0 million (INR 25-50 lakh) garnered the highest share of 43% in the overall sales in Ahmedabad, followed by ticket sizes < INR 2.5 million (INR 25 lakh) segment with 30% share. North zone, comprising areas such as Gota, New Ranip, Tragad, Chandkheda and Motera, grabbed the highest share of the total sales, at 31%. West came a close second with a 25% share in the city’s sales volume, with locations such as South Bopal, Shela, Shilaj and Thaltej and Science City Road witnessing good sales velocity due to rapidly developing social infrastructure. The unsold inventory reduced by 35% YoY in H2 2019.The reduction in the unsold inventory levels have impacted the Quarters-To-Sell (QTS) positively, which climbed down marginally from 3.7 in H2 2018 to 2.3 at the end of H2 2019. Weighted average home price in Ahmedabad stand increased by 2% YoY to INR 31,173 per sq m (INR 2,896 per sqft) in 2019, which is the lowest in the country across the top eight cities including Hyedrabad, Pune, Delhi, Mumbai, Kolkata, Bengaluru and Chennai. Khalsa said, 'Steady uptake of ready-to-move in or near ready residential inventory in Ahmedabad has been instrumental in sales trends maintaining a positive momentum despite the real estate sector itself undergoing a structural change in the recent past. With low unsold, inventory and QTS levels, developers would be motivated to plan future residential supply to cater to the inherent residential demand in periods to come and we can expect new launches to improve further in 2020.' According to the report, the office leasing in Ahmedabad was the highest in the last two and a half years, registering a 50% YoY jump to 0.14 mnsq m (1.55 mnsqft) in 2019. The H2 witnessed 0.09 mnsq m (0.96 mnsqft) of office space leasing, which is a mammoth 70% YoY uptrend over H2 2018. Central Business District (CBD) West, comprising locations such as Bodakdev, KeshavBaug, Prahladnagar, Satellite, SG Highway and Thaltej, was the most preferred market in H2 2019, accounting for 51% of total leasing. Peripheral Business District (PBD), comprising Gandhinagar and GIFT City, accounted for the remainder 49% share of office leasing in H2 2019. The new supply infusion in 2019 has helped increase office space take-up in GIFT City. IT/ITeS sector emerged as the top office space occupier, increasing its share in total transactions to 43% in H2 2019, from 11% in H2 2018. BFSI accounted for a 36% share as many financial institutions and banks leased spaces in CBD West and PBD. Bank of America (BoA), the second largest bank of the United States, recently set up set up its global services centre at the Special Economic Zone (SEZ) in the GIFT City, which has majorly contributed towards BFSI sector. New office supply in 2019 far outpaced the leasing activity, at 0.45 mnsq m (4.88 mnsqft), witnessing a 58% increase over 2018. The availability of quality supply has been a big catalyst behind healthy occupier leasing volume. In H2 2019, 0.21 mnsq m (2.23 mnsqft) of new office spaces became available, representing only a small uptick of 3% YoY over the supply infusion in H2 2018. Of the total new supply in H2 2019, nearly 80% was in CBD West, the new established business hub of Ahmedabad. Office space vacancy in Ahmedabad jumped from 26.40% at the end of 2018 to 35.85% at the end of 2019 due to huge supply infusion. Weighted average monthly rentals in Ahmedabad have declined by 9% YoY and stood at INR 462/sq m/month (INR 43/sqft/month) in H2 2019 due to high double-digit vacancy. Khalsa said, 'The office market in Ahmedabad has seen a strong growth in 2019. With the necessary physical infrastructure in place, developers are stepping in to meet the requirements of companies either moving into the city or expanding their presence in the city. In the present day, this has led to a situation where the supply outstrips demand and explains the double-digit vacancy rates in the city.' DeshGujarat