Realty demand dips for luxury segment in A'bad

Even while the affordable housing segment thrives in Ahmedabad, the mid-luxury and luxury segment is going through a rough patch.

According to industry experts, oversupply has resulted in clogging of luxurious residential units in the city.

"Demand for affordable housing has been constantly on the rise. There may be a slight short term impact due to hike in interest rates, demand for affordable units has more or less been growing steadily. However, it is the mid-luxury and luxury apartments or residential units that have taken a beating in last few months," says Hitesh Shah, chief executive - residential properties, Space Management, a city-based real estate consulting firm.

While demand for affordable housing is 85 per cent, mid-luxury and luxury segment are attracting only 15 and five per cent, respectively unlike previous years. This despite the fact that rise in interest rates have been impacting demand for affordable housing as well in recent times. According to Jones Lang LaSalle India (JLL), another real estate consulting firm, the decline is as recent as January this year.

"Till January, the market had been upbeat which had led to lot of real estate developers jumping the luxury bandwagon. This resulted in an oversupply of luxurious apartments over a period of time," says Nirav Kothary, regional director (Gujarat) at JLL India.

Apart from oversupply, it is also the shift in buying from investment purposes to consumption that has slowed the growth in luxury segment. "Lately, investors have been shying from the luxury segment which has also impacted its growth," adds Shah.

The impact on the segmet comes in the wake of the likes of Ajmera Group and JP Infrastructure announcing residential projects in mid-luxury and luxury segments in recent times in Ahmedabad.

However, industry players also believe the trend is shortlived.

"Slowdown in the luxury segment may not be such a cause of worry since bulk of the real estate demand is towards affordable housing," says Vijay Shah, a city-based developer, adding that while affordable and mid-luxury segment wary from Rs 35-70 lakhs and Rs 70 lakhs to Rs one crore, the luxury segment is pegged at around Rs 1.25 crore.