With the Covid-19 pandemic significantly impacting commercial real estate demand, many real estate developers in Ahmedabad have opted to convert their commercial ventures into residential projects. Approximately twenty-five commercial projects in Ahmedabad have undergone transformation into residential housing schemes during this year.
Driven by the continuing demand for residential properties and the need to maintain cash flow, numerous developers are strategically converting their commercial developments into residential offerings. Recent revisions to building plans have sanctioned the conversion of around twenty commercial projects situated within the Ahmedabad Municipal Corporation (AMC) limits. An additional five projects located in the Ahmedabad Urban Development Authority (AUDA) areas have also transitioned from commercial to residential usage.
According to AMC and AUDA, there was a higher interest in commercial projects during 2018 and 2019. However, a complete shift in trend occurred in 2021, with about 80% of building plans submitted for approval to both AMC and AUDA now pertaining to residential housing projects.
Real estate industry experts attribute this shift to the rise of remote work, existing high inventory levels, and a cautious approach by companies towards expansion. Restrictions on movement combined with reduced foot traffic in showrooms and shopping centers have further dampened the demand for commercial and office spaces. The revisions to building plans for commercial projects rose from three in 2018-19 to seven in 2020, with AMC officials anticipating a sharp increase for 2021.
Prime Location Drives Residential Conversion
Venus Infrastructure, a real estate firm based in Ahmedabad, converted its commercial project located behind Rajpath Club in Bodakdev into a luxury residential project subsequent to receiving approval on its revised building plan.
Rajesh Waswani, CEO of Venus Infrastructure, stated, "We have invested heavily in our commercial project; however, following the pandemic's onset, commercial space demand witnessed a steep decline. Given the project site's inherent suitability for residential development, we opted to adjust our strategy and transition to a housing project."
Residential Units and Commercial Spaces Offered
Chitrak Shah, a local real estate broker and Vice President of CREDAI-Ahmedabad GIHED, mentioned that his project at the Panjrapole crossroads has been transformed into a housing project, which currently provides 3 BHK plus work-from-home flats alongside showrooms as well. He added that the revision of our plan was driven by the considerable demand for housing units in the area.
Adaptive Strategy Viewed as a Prudent Move
According to Balbirsingh Khalsa, National Director of Industrial & Logistics and Director of the Ahmedabad branch at Knight Frank India, converting commercial projects to residential ones is a smart decision in the current market scenario.
He noted that the office sector is witnessing high vacancy rates and declining rents. He also said that the market’s potential for commercial space remains weak due to the ongoing pandemic concerns. Conversely, the demand for housing is strong, and the availability of residential units is currently limited, making the shift from commercial to residential real estate a logical move.
Also read:
Authorities planning to increase circle rates in Noida
Government to link e-court with land records to ease registration