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Property booms in Ahmedabad

December 27, 2006 11:30 IST

Ahmedabad may just be the next big thing on the property metre. Neighbours watch out!

Ahmedabad looks like a big construction site today -- what with malls, flyovers, roads, residential townships, a waterfront development plan, and office spaces that are fast changing the city's landscape.

Add to it, Ahmedabad's very own metro rail service that is in its planning stage. The city's real estate sector is expected to get an investment shot of about Rs 15,000 crore (Rs 150 billion) over the next one year.

If one is to believe Jaxay Shah, president, Gujarat Institute of Housing and Estate Developers, at the moment Ahmedabad is one of the best cities to invest in with prices literally at the rock bottom (at least compared to more mature markets like the NCR, Mumbai or even Hyderabad).

To showcase Ahmedabad's real estate potential, GIHED is organising a property show called Brand Ahmedabad Target 2020 in the city soon. And we can see another successful real estate story unfolding here.

According to Deepak Bhavsar, president (consulting and land agency group), Trammell Crow Meghraj, this is a good time to enter Ahmedabad real estate market.

"Ahmedabad today is what Hyderabad was five years ago" he says, adding, "The city's planning and implementation is very strong."

A reason why the city is free of congestion even as construction work moves in full steam. Ahmedabad already has three ring roads and a fourth one is being planned.

The Ahmedabad Municipal Corporation and the Ahmedabad Urban Development Authority have spent Rs 2,000 crore (Rs 20 billion) on city development over the last five years.

Another Rs 10,000 crore (Rs 100 billion) has been committed for strategic planning under the National Urban Renewal Mission. Rs 3,200 crore (Rs 32 billion) is being spent on Ahmedabad Metro Rail and another Rs 1,179 crore (Rs 11.79 billion) will aid Sabarmati River Front Development. For infrastructure development in AMC and AUDA areas, another Rs 412 crore (Rs 4.12 billion) is being spent.

All of these developments are good news for investors. As for now, big real estate players are already there. DLF, Unitech, Alfa G, Adani, K Raheja, Reliance, they are all investing in townships, SEZs, and retail in and around Ahmedabad.

DLF is making a world-class convention centre at Gandhinagar, near Ahmedabad and is also developing malls and other infrastructure along river Sabarmati. On the hotel front, 2,000 more rooms are expected to come up in the next two years.

The government of Gujarat is encouraging six different types of townships in the state -- technology parks, education-based townships, medical and healthcare townships, tourism-related townships, logistics parks and, more obviously, residential townships.

The investment potential in the real estate sector can be gauged by the fact that in a majority of areas in Ahmedabad (for example CG Road), land prices have gone up from Rs 35,000 per sq yard in 2005 to Rs 50,000 per sq yard today. Even in some of the town planning schemes in Ahmedabad, for example the Vejalpur area, land price has appreciated 266 per cent in six years from 1999-2005.

"At the moment, the demand for residential development in Ahmedabad is much greater than the supply. These easily account for a growth of 15 to 20 per cent a year in residential property prices in the city," says Shah, who goes on to add that many non-resident Indians and non-resident Gujaratis are building their second homes in Ahmedabad.

And this is just the tip of the iceberg. Once the IT potential of this state is unleashed, the picture will be completely different. Gujarat's IT exports are about Rs 300 crore (Rs 3 billion). According to NASSCOM, Haryana exports IT worth Rs 8,350 crore (Rs 83.5 billion) while Karnataka is way ahead at Rs 37,000 crore (Rs 370 billion). Get the picture?

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Ravi Teja Sharma in New Delhi