Ahmedabad’s real estate market, once a beacon of growth, now faces a concerning slowdown in new project launches. During FY 2023-24, Gujarat’s property sector saw a 7.7% decline in new registrations compared to the previous fiscal year, with Ahmedabad leading the trend. This downturn signals shifting dynamics in the city’s housing landscape.
Key Factors Behind the Slowdown
1. Rising Construction Costs and Land Prices Developers say escalating land prices and material expenses are primary hurdles. Post-pandemic recovery saw land costs spike, making new launches more expensive. Coastal states like Gujarat face heightened competition for land, worsening the challenge.
2. Surge in Urban Redevelopment Projects Older areas like Navrangpura and Memnagar are hotbeds for redevelopment initiatives. Repurposing existing societies into modern residential complexes with tech-integrated amenities has reduced demand for new developments. As Swara Group’s Kartik Soni noted, buyers now prefer upgraded in-city living over moving to outskirts.
3. Shifting Consumer Preferences Post-Covid demand favors larger, premium homes with advanced facilities, sidelining mid-segment offerings. Affordable housing projects saw a significant cut-down as tax benefits under Section 80(IB) lapsed, dissuading lower-cost development.
Impact on Market Dynamics
- Oversupply in Commercial Segments Post-pandemic commercial projects now outpace demand, leaving unsold inventory. Developers like Rajkot Builders Association’s Paresh Gajera highlight hesitancy in launching mid-market commercial projects.
- Region-Specific Variations While North Ahmedabad leads in new residential launches (37% share in Q4 2024), areas like West and South struggle with inventory declines. Redevelopment loopholes exacerbate these disparities.
- Developer Strategies Evolve Many opt for single-project focus due to liquidity constraints, slowing overall market activity. Experts predict renewed momentum with upcoming festivals, assuming interest rate cuts revive affordability.
Government and Policy Context
GujRERA data underscores regulatory compliance hurdles affecting new launches. Limited support for affordable housing post-policy changes has redirected developers toward higher-margin projects. Industry bodies like Credai emphasize evolving buyer expectations as a catalyst for market adaptation.
Moving Forward
While short-term contractions pose challenges, long-term prospects remain buoyant. Urban development priorities and infrastructure expansion (e.g., healthcare, transit) continue to attract investment. As Jay Deliwala of Kunvarji Realty Advisors remarked, Gujarat’s economic resilience and regulatory stability position it favorably despite temporary setbacks.