While the residential market in Ahmedabad continued to witness sluggish demand for the month of November, demand for office and retail spaces saw some upswing.
Moreover, in the residential properties market, while the city saw some activity in the affordable segment even as the luxury segment saw a decline in 10-15 per cent. As per developers and industry experts, stagnant purchasing power among consumers led to decline in demand for luxury segments.
"Purchasing power among real estate consumers has been under pressure since sometime due to economic slowdown. This has led to decline in demand for luxury units," said a city-based developer.
According to the latest monthly real estate monitor by JLL India too, affordable projects in and around the city continued witnessing demand especially in the nodes such as Bopal & Chandkheda. As per the report, office space demand rose notably during November in Ahmedabad. Select pockets such as Prahlad Nagar and S G Highway showed good traction. Select companies from BFSI and manufacturing executed the deals.
Further, Ahmedabad retail market witnessed noteworthy transaction activity in the month of November. Select categories such as retail banking & QSR were seen expanding their footprints in SBD submarket of the city.
In terms of vacancy levels, while the same was down for office segments, the levels remained stagnant in retail space. The month of November also did not witness any major residential project launches.
Of the three segments, Ahmedabad has witnessed the highest growth of absorption in the office segment, especially in the first three quarters of calendar year 2014 year-on-year. According to another global real estate consulting firm Cushman & Wakefield, as against 356,590 sq ft of office space absorption in January to September period in 2013, Ahmedabad saw the net office uptake rise to 1,139,100 sq ft for the said period.
The rise in net absorption of office space in Ahmedabad is being attributed to increase in number of deals in the IT-ITeS and manufacturing sector. Other sectors that added to the increase in Ahmedabad were media and pharmaceuticals.
In Ahmedabad, total supply for the first three quarters of 2014 was recorded at 1.7 msf, a substantial increase of 74 per cent compared to same period last year as a number of developments that were deferred in the previous year became operational. Net absorption of 1.1 msf in the first three quarters of 2014 was due to new leases and pre-commitments measuring 400,000 sq ft that were taken up during the said period in Ahmedabad, the Cushman & Wakefield report stated.
Meanwhile, although the average transaction size remained similar to last year same period at 12,000-15,000 sq ft, the increase in number of deals in the IT-ITeS and manufacturing sector led to the increase in net absorption. Further, with high levels of supply in Ahmedabad, vacancy levels increased by 4.6 percentage points to 18.5 per cent at the end of the third quarter. Given the high vacancy levels rentals in most submarkets have largely remained stable over the last year.
