Real estate market volatility, the post pandemic market depression coupled with global uncertainty has taken a toll on the Gujarat government’s marquee commercial real estate project – the 204 hectare Commercial Business District in downtown Ahmedabad.
The project, which envisages creation of a high-end, top quality commercial space along the banks of the world-class Sabarmati Riverfront is yet to find suitable takers. Speaking to FE, top officials at the helm of the estimated 4,800-crore CBD project revealed that prevailing market conditions were not conducive for marketing “such prime and precious real estate.”
“Going in for selling at this point of time would tantamount to a distress sale. This is prime property and we have to optimise and not rush into it,” said Keshav Varma, chairman, Sabarmati Riverfront Development Corporation, the nodal body for executing the complete water front project.
It may be recalled that though the Gujarat government had received an overwhelming response to its exploratory Expression of Interest (EOI) a year ago, the prices offered were underwhelming. In view of this, a decision was taken to rope in JLL, world leaders in the real estate firmament to constantly study and thoroughly research the evolving market and steer the project accordingly.
“We are not looking at selling individual plots on an ad hoc basis but rather to create a world class ecosystem to attract multinational giants and high end users including banks, business houses, corporates and finance firms,” Varma said. He went on to add that the Ahmedabad CBD envisaged by the SRDCL would be “a unique CBD surrounded by history and social infrastructure,” and therefore had to be planned professionally for which JLL had been brought in. “We have JLL to feed regular market trends both nationally and internationally in order to enter the market at the most opportune time,” he disclosed.
Varma is hopeful that the CBD project, which constitutes 4.6% of the total Sabarmati Riverfront land, would be able to generate anywhere between2,992 crore to approximately 4,800 crore worth of sale revenue. According to Varma, as per estimates done on the basis of market research, the value that can be derived from potential sale of these marketable land parcels varies from2,992 crore in the most pessimistic case, to an optimistic case of 4,796 crore. The base case prices are estimated at4,266 crore.
Further, till such time that the project finds takers, the Gujarat government is considering making the first move to kick start the venture by taking up some land for the creation of conference centres and retail areas.
Interestingly, market observers are sceptical about the Ahmedabad CBD attracting high-end takers on a few counts. First, the commercial market may take time to stabilise on account of international turmoil. Second, Gujarat still has some way to go to create world class IT infrastructure at par with vibrant commercial real estate hubs like Bengaluru, Hyderabad and Pune. Last but not the least they fear that Ahmedabad may lose out as a magnet both for MNCs and foreign investors as well as young professionals because of Gujarat’s dry state policy which would serve as a great deterrent. It is believed that proposals have been made to permit licences in certain areas but no progress has been made on that front either.