In what could become a trend in the booming retail business, Reliance Retail, Future Group and Bharti-WalMart are among leading retail companies that are acquiring housing societies and colonies in Ahmedabad to knock down and build mega-retail stores.
Bharti-WalMart's proposed retail venture has approached Goyal Park Row Houses, an upscale area west of river Sabarmati, at Rs 33,750 per sq yard, almost double the prevailing price of Rs 15,000 per sq yard.
There are 140 houses in the row, each with an average size of 251 sq yard. The joint venture, therefore, will be paying Rs 119 crore for 35,000 sq yard of land. The society also has a parking lot and a park.
Nearly 4 km away, Reliance Retail has acquired a 6,700-sq-yard plot, Paritosh Bungalow, bordering the commercial Chimanlal Girdhardas (CG) Road. The company is learnt to have paid Rs 37,000 a sq yard, or nearly Rs 25 crore, for the plot 8-10 months ago. The prevailing price along CG Road is Rs 60,000 per sq yard.
Latching on to the trend, real estate developer Navratna Organisers and Developers, a leading construction group in the city, has acquired Panchavati Apartments, an apartment block, along CG Road to build a mall and lease space to retail chains.
Navratna paid Rs 36.60 crore for the 6,000-sq-yard plot. "We will be constructing a 1,25,000-sq-ft mall in that space and leasing it to retailers," said Pranav Shah, managingdirector, Navratna, adding that the company had applied to the Ahmedabad Municipal Corporation for a change in land use.
Navratna is also developing a 12,700-sq-yardmall named Kolonnade Centre for Big Bazaar, a part of Kishore Biyani's Future Group. Shah declined to comment on the size of the deal and the duration of the lease.
Another developer in the city, Agrawal Builders, has acquired a housing complex spread over 28,000 sq yard, about 2km from Goyal Park, to construct a multiplex and business centre.
Explaining the trend, Gujarat Institute of Housing and Estate Developers President Jaxay Shah said, "The reason for retail companies approaching housing colonies is the scarcity of premium plots in commercial areas and also since old housing colonies would provide a larger floor space index (FSI)for construction. The buildings in these areas have also completed their life cycle."
For residential areas, the law requires space to be kept for utilities, which reduces the size of the built-uparea. Commercial buildings, on the other hand, tend to have fewer utilities and therefore more space for construction.Shah added that companies have to pay a premium of 15 to 20 per cent for commercial plots along the Sarkhej-Gandhinagar Highway on the edge of the city, where a significant level of commercial construction is taking place. Buying land in the heart of the city, therefore, was considered a more viable option.