City developers concede there is a slump in realty market, but claim factors like slowing world economy & higher interest rates have dented demand
With world economies and regulations in recession mode, the global slump seems to have caught up with Ahmedabad real estate too. Property prices have not appreciated as steeply but the demand for housing has slumped considerably, concede leading city developers.
The above-mentioned factors coupled with higher interest rates have adversely affected demand for homes in Ahmedabad. Developers, in order to sustain themselves in the market, are likely to resort to price cuts or at the least keep them stable.
Organised realtors such as the Bakeri Group, Adani Group and Sun Builders agree that the Ahmedabad market is experiencing a slowdown and demand for housing is likely to remain uncertain for a while.
Left with the task of firefighting inflation, the Reserve Bank of India has been on a rate hiking spree since March 2010 and has hiked key rates 13 times. This has squeezed the liquidity available with consumers and banks, resulting in a sharp decline in demand for housing.
Simultaneously, the global downturn has led to a sharp fall in NRI investments in real estate. As a result, many developers are willing to negotiate with customers on the price of a property.
Anil Bakeri, chairman of Bakeri Group, believes that developers have to be honest and ready to offer discounts. “The Ahmedabad real estate market is witnessing a slowdown. Let’s be honest and accept it. Developers are already offering discounts when the customer is ready with a cheque,” he said.
Due to the hike in interest rates, small real estate players (developers) are badly affected as they have to pay higher interest though their incomes have gone down because of the fall in demand. “Overall, the realty market will remain in a correction mode. The old players will not be much affected but aggressive new players will face a liquidity crunch. Moreover, developers will have to cut amenities to keep project costs low. Things are not likely to improve before assembly elections in Gujarat,” said NK Patel, CMD, Sun Builders.
One of the largest groups of Ahmedabad, the Adani Group, which has already launched around 1,500 units at its township, Shantigram, agrees that the realty market is facing a slowdown. “We have witnessed a slowdown in the past few months. Due to factors like rise in interest rates and the global downturn, the demand for housing is down,” said Tarwinder Singh, CEO, Adani Township & Real Estate Co.
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