Effect of Real Estate Regulatory Bill in Market of Ahmedabad

In Ahmedabad the Real estate developers are struggled to sell approximately 39,700 unsold homes, the number of new housing projects being launched in the city has risen phenomenally by 50% during the last six months."Up to 75,000 homes are under construction currently in Ahmedabad. Of these 39,000 units that are under different conditions of development remain unsold," Saurabh Mehrotra (National Director), Knight Frank, a real-estate consultant has released a new report on Real Estate markets of Ahmedabad. In the report, it is mentioned that over 7400 new housing units were launched in the six months between July-December 2015; This is 50% more than 4900-odd housing unit started in the same period of 2014 in central Ahmedabad like Paldi, Naranpura and Vasana lead in new launches with a five-fold jump.

"This new launch has increased the presser in the market and decline the oversupply situation in the city," states the report that also goes on the present an estimate of over 9000 new housing units that are expected to flood the Real Estate market in Ahmedabad in the first six months of 2016.The Parliament of India passes the Real Estate Regulation and Development Bill 2015 is the main reason behind the flood in Real Estate market. Mehrotra said, "It could be one of the reasons… but I believe there is the fresh surge in demand for houses as the sale volumes have picked up in Ahmedabad by 13 percent in July-December 2015." The real-estate bill not only provides for a real-estate regulator but also put pressure on the builder to change the conventional ways of managing funds, seeking approvals and completing projects.

Though Mehrotra chooses to compare the 8,019 houses sold in Ahmedabad between July-December 2014, to the sales (9075 units) that happened during the same six months in 2015. The volume of sales of residential property in Ahmedabad is a far cry when 16,800 houses sold during the entire calendar year 2015, is compared to the 30,500 homes sold in 2012. Compared to 45,100 new homes launched in 2011, the numbers have steadily fallen in 2012 (30,700 units), 2013 (23,800 units), 2014 (14,011). It was only in 2015, the number of new launches has risen to 15,500 units.

Real-estate developers in Ahmedabad say that the increase in new starts is mainly due to the improved sentiments in the market. However, it has nothing to do with the new Real-Estate bill," said Dipak Patel, a leading developer and the president of Gujarat Institute of Housing and Estate Developers (GIHED), a city arm of CREDAI.

"Going forward, we expect new launches to increase by 13 percent between July-December 2016, with North and East Ahmedabad leading the way. However, sale volumes will witness a muted growth, as home-buyer sentiments are still lackadaisical," the report adds. According to Mehrotra from Knight Frank, this is the best market for home-buyers to crack a deal with developers. "The next 6-8 months are ideal for negotiations and for closing deals. The green shoots of recovery can be already visible," he says.

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