Sales of houses in Ahmedabad property market has touched a five-year low in 2015.
Close to 42,000 newly constructed homes are lying unsold in Ahmedabad, states a report released on Wednesday by global real-estate consultants Knight Frank. The report states that builders are under tremendous pressure as the sales of houses in the city have touched a “record five-year low”.
In the last six months between January-June 2015, real-estate developers in the city managed to sell only 7,750 housing units. “This is the lowest sales recorded in the last five years and is 26 per cent less than those sold during the same period in 2014,” said Dr Samantak Das, chief economist and national director research of Knight Frank while releasing the report titled Ahmedabad Residential Market.
“Slower-than-expected recovery in the economy, poor business sentiment and a delay in reduction of home loan interest rates by banks have hampered the revival of sales volume. Moreover, majority of investors that were active during 2011-13 period have refrained from fresh investments in the last six months due to slower-than-expected rise in prices,” states the report which adds that the year-on-year price rise has just been around three percent in the Ahmedabad property market which has driven away investors from housing market.
“The unsold inventory (read homes) in Ahmedabad is close to 42000 units. Of this, the maximum of about 30 per cent of unsold units are in West Ahmedabad,” said Das who went on to add that West Ahmedabad comprising of areas like Prahlad Nagar, Satellite, Thaltej, Vastrapur and Bopal were among the “worst performing” area within the city.
Developers in Ahmedabad will need on an average two years to sell this unsold inventory. “Developers in West Ahmedabad will require at least 3.5 years to sell the unsold inventory in their area,” said Das who said that the age of the unsold housing projects in Ahmedabad were around three years which indicated that developers in this part of the city were not able to sell their unsold houses even three years after launching their projects.
The report pointed out that premium market (all of which were in West Ahmedabad), where houses were priced at Rs 1.5 crore and above, developers were finding it difficult to sell even five years after launching their projects. “This is a very long period for builders,” said the official.
In the coming six months (July-December 2015), the quantum of unsold houses is expected to rise in Ahmedabad. “We expected 36 percent increase in the new housing projects being launched in the second half of the year. However, the growth in sales of these homes will only be 11 percent, which will meant an addition to the existing unsold inventory,” Das added.
The Knight Frank report also stated that East Ahmedabad will witness higher sales in coming months, “as the construction work on the initial phase of the metro project is in full swing. This phase will eventually connect Vastral in the east to Thaltej in the west, thereby reducing the effective travel time between the two most densely populated micro-markets in the city.”
“East Ahmedabad comprising of areas like Nikol, Vastral, and Naroda is currently the most affordable zone for home buyers,” Das said adding that the houses were priced around Rs 20-25 lakh.
“North and East Ahmedabad will continue to dominate in terms of new launches, as proximity to GIFT City and the availability of large tracts of vacant land make these micro markets attractive to developers for launching new projects,” the report added.