Ahmedabad emerged as a strong real estate destination despite multiple headwinds and regulatory change for the sector in recent past years. At every segment and every levels, Ahmedabad is justifying its dominance in real estate market. The sale of houses in Ahmedabad witnessed a strong recovery registering a 95 per cent growth in the first half of calendar year 2022, stated a report released by Knight Frank India. A total of 8,197 residential units were sold in the city between January and June this year. This is more than the 4,208 units sold during the same period in 2021. Residential unit's weighted price is 3 percent hike because of sale increased. The Ahmedabad and Gandhinagar are leading the race for office property transactions according the latest report by JLL. Office transaction volumes in Q1 2022 are 3x of Q2 2021 and over 4x of Q2 2020. The office transactions grew most in cities like Ahmedabad, Chennai and Hyderabad with significant growth between 72 to 165 percent YoY. Ahmedabad tops the list as the transactions have reached at 130 percent as compare to Q12019 (Pre Covid). As compare to Q1 FY21-22 the Ahmedabad witnessed 165 percent jump in transactions during Q1FY22-23. As per the Housing Price Index by national Housing Board, the cities like Ahmedabad, Gandhinagar, Hyderabad, Bhuvneshwar and Vadodara tops a list of price performers. As per the Ahmedabad price index jumped from 100 to 173 from year 2018 to year 2022.
The real estate sector anticipating demand from Non-Residential Indians during the festive season. Property get cheaper for NRIs when the rupee depreciates by more than 5 percent during the year. In Gujarat, NRIs from the state generally prefers to buy property in home state and that could support the buying in residential property, land, plots and office property.
The NHB housing price index is showing upward trend since 2018, as despite the multiple uncertainties like GST, RERA and Covid-19. Overall prices jumped by 20 percent across the nation, however price growth in some metro cities has underperformed. Indian real estate is also one of the most favored destination for NRIs due to price growth with stable rental income.
As we discussed, sizable metros have underperformed in terms of residential price growth. However the cities like Ahmedabad, Gandhinagar, Hyderabad, Bhuvneshwar and Vadodara tops a list of price performers as per data complied by NHB (National Housing Board). On state list, Gujarat Real estate market tops versus peers in terms of price appreciation according to data.
According to Knight Frank India’s affordability index, Ahmedabad improved from 46 per cent of 2010 to 22 per cent in H1 of 2022 in terms of the home purchase affordability index. During the pandemic and lockdowns in the nation, the affordability rates reached near to 20 per cent in 2021.
Pune and Chennai affordability rates stands at 26 percent each even as the Knight Frank India study found that all markets have seen a decline in affordability due to the late ascent in home loan rates set off by the 90 BPS ascend in repo rates. Among the remaining top five cities, Bengaluru was also in the list of most affordable with 28 percent affordability ratio. Following Bengaluru, NCR stands at 30 percent, Hyderabad stands at 31 percent and Mumbai stands at 56 per cent affordability ratio.
Despite of the recent jump in the prices of real estate in Ahmedabad, still the city tops the list of most affordable cities according to data complied by Knight Frank India’s affordability index. Pune and Chennai also having considerable affordability with the ratio of 26 percent each.
The demand momentum remains strong according to latest release of JLL Q1 2022 with all markets reporting a sequential growth in sales, and all markets except Mumbai, Pune and Chennai reported a YoY growth during the quarter. Stamp duty cuts were a significant mediation applied during the pandemic to extraordinary impact by the state legislatures of Maharashtra, Karnataka and West Bengal to support private deals. While the cuts in Karnataka and West Bengal still remain in effect, their repeal in Maharashtra did not make a significant dent in sales volumes in Mumbai and Pune where the sales grew steadily over the past three quarters.
Home buyers have been more inclined to acquire ready or near-ready inventory to minimize completion risk in recent quarters. The QTS (Quarters to Sell), which had surpassed 10 quarters at the beginning of the pandemic, plunged to single digits to 9.1 during the quarter.
New Launches During Q1FY22
As per data complied by JLL, new launched during Q1 2022 seen 3 percent growth. The higher launches seen in Kolkata, Ahmedabad and Chennai ranges from 25 percent to 141 percent YoY. However Mumbai launches contracted by 24 percent and also prices seen tepid according to data complied by NHB . New launched in Pune also declined during the Q2FY22 due to higher base.