Realty market in the city has been giving return in range of 18 to 24 % per annum for last 8 years; other cities give return of 10-15% per annum.
The real estate industry may be going though a rough phase right now, but it has not shaken investors’ faith in Ahmedabad real estate market.
Talking to DNA on the sidelines of ‘Credai Conclave 2011’ in New Delhi, Lalit Jain, president of Confederation of Real Estate Developers Association of India (Credai) said that investors are more confident of Ahmedabad market compared to any other city in the country.
Other industry experts also agreed with the views of Jain saying that political stability, good infrastructure, proactive governance and large product basket has resulted into good return for investors, making Ahmedabad a more preferable market.
“Fortunately, Ahmedabad has emerged as one of the fastest growing cities and the industrial development there has also led to job creation. This is why investors have more confidence in Ahmedabad market,” said Jain.
Industry experts believe that the market in Ahmedabad has been traditionally driven by the investors and majority of the projects have around 60 to 70% investors.
Moreover, market has consistently given higher returns to investors making it an investor-friendly destination.
“Ahmedabad market has been giving return in the range of 18 to 24 % per annum and in last eight years it has only accelerated,” said Nirav Kothary, regional director (Gujarat) of Jones Lang LaSalle India. On the other hand, cities like Hyderabad, Pune, Mumbai and are providing around 10-15% average return per annum to investors.
Political stability has been a major issue in a number of states and it has a serious impact on the real estate market. “Telangana agitation has discouraged investors from investing in Hyderabad market and the developers are feeling the heat,” said N Jaiveer Reddy, chairman of Credai Andhra Pradesh. He said that prices have started falling in last two years due to political instability and agitation and flats that were sold at Rs4,500 per square feet are selling at Rs3,200 per square feet now.
Moreover, volatile market condition in NCR, Mumbai, Pune and other markets has also shaken investors confidence, while Ahmedabad market has remained more or less stable. Similarly, the state government's approach towards development has also been catalyst to growth of the industry and has boosted investors' confidence. Investment, coming through Foreign Direct Investment (FDI) is made with the expectation of around 25% internal rate of return (IRR), but delay in projects results into IRR of 25% in three years.
In case of Ahmedabad, timely completion of projects has facilitated investors to exit at the right time making Ahmedabad market more attractive. The project approval process in Ahmedabad takes around 60 days except environment clearance, while in other cities the time is as long as 9 to 15 months.
"The developers in Ahmedabad are very focused and deliver the project on time. The delay in project delivery doesn't make amount of risk taken by FDI worthwhile," said Sachin Sandhir, managing director, South Asia, Royal Institute of Chartered Surveyors (RICS). The industrial growth and good infrastructure facilities like roads, power, water and wide range of product basket from flat and bungalows to farm houses and plotted development projects have also helped attract more investors in the city's realty market.
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