Cushman & Wakefield has opened its new office in Ahmedabad on Tuesday, July 17. This is C&W’s first office in Gujarat and tenth office in India. Ahmedabad office will focus on servicing new opportunities in the growing Gujarat real estate market. This is a strategic development for the company to set up a physical presence in the city, while Cushman & Wakefield has been successfully conducting business in the region for nearly a decade.
Gujarat has seen a model growth in its state economy in the last few years, which has propelled the real estate market in recent times. While real estate market is largely driven by active industrial growth in the state, other real asset classes such as commercial office space, retail and residential markets have been witnessing widespread interest.
Commenting on the launch, Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield said, “Gujarat has been one of India’s most recent economic success stories which have ensured that the real estate market has seen a corresponding increase. Ahmedabad in specific has been on the rise on account of favourable governmental policies, backed by high interest from corporate India for the location. Gujarat market has been growing, we expect greater opportunities to emerge in this region.”
Cushman & Wakefield expects to keep pace with developments across Gujarat, with focus on aligning with clients to provide range of quality services including consultancy services, industrial and development project management, office leasing, land and industrial transactions amongst others.
Sanjay further added “. I am positive about our own growth in this market as we rely on our experience and talent to expand business in the region. Our focus on providing quality services to our clients remains foremost and we hope to continue bring the same professionalism to Ahmedabad.”
According to Cushman & Wakefield, Ahmedabad’s office market has attracted steadily increasing demand from Small and Medium Enterprise (SME’s) and branch offices of large companies leading to an increase in quality supply, which is expected to be approximately 3.3 million square feet (mn. Sq.Ft.) by end of this year. The result of this increasing commercial office activity is that with larger number of people finding Ahmedabad an attractive employment destination, demand for housing in the affordable and mid segments has been strong. Further, a growing and increasingly upwardly mobile population is spurring growth in the city’s retail sector. Besides the vibrant high street retail business, Ahmedabad now has 14 operational malls covering a total space of 4.56 mn. Sq.Ft.
According to Sanjay Dutt, “Gujarat is an important centre for most businesses in the western region of India thus with its inherent strengths, superior infrastructure and position as the investments gateway in the state, is expected to see a steady growth. Its strong economic fundamentals support the real estate sector in the city, which is increasingly broad-basing itself and seeing sustained growth in all sub sectors.”
Key trends in the Office, Retail and Residential segment in Ahmedabad
OFFICE ABSORPTION SURPASSES PRE RECESSION LEVEL
According to Cushman & Wakefield the Ahmedabad office market has seen steady absorption over years with 800,000 Sq.Ft. absorption in 2011 and 440,000 Sq.Ft. this year till date. Demand for office space in 2011 and expected absorption in 2012 has now exceeded pre recession level of 2007 then recorded at 650,000 Sq. Ft.
Prahlad Nagar is catching up with S.G. Highway as the most popular commercial hub. It has seen and absorption at 200,000 sqft. In first half 2012 same as S.G. Highway. This is due to better infrastructure and quality Grade A developments preferred by corporate and easy access to residential hubs.
The city is expected to witness supply of approximately 3.3 mn. Sq.Ft. by end of the year, which will be 16% higher than previous year. Ahmedabad has witnessed 1.4 mn. Sq.Ft. of supply. in the first half of the year with approximately 1.80 mn. Sq.Ft. likely to be operational in second half.
S.G. Highway and Prahlad Nagar will witness majority of the supply during the year. Rentals at C.G. Road and Ashram Road have increased 6% over the past year while Prahlad Nagar witnessed 9% over the year.
Sanjay Dutt said “The upward trend in demand is expected to continue with BFSI and manufacturing companies involved in pharmaceuticals, textiles, petrochemicals, automobiles and ancillary to setup base and/or expand their operations in the city. On the supply side, with approximately 8.8 mn. Sq.Ft. of planned office developments by 2014, we expect to see increased influx of quality developments on SG Highway, GIFT City and Mani Nagar.”
RETAIL MALL VACANCY AT 34%; DOWN FROM LAST QUARTER
- Average mall rentals up by 18% with Vastrapur at 33% increase over last year
- Main streets rentals also increase by average 14%; Prahlad Nagar sees 24% increase
Ahmedabad has a total of 14 operational malls with a total space of 4.56 mn. sq. ft. majority (38%) of which are concentrated on S.G Highway. The highest rental increase of 33% over previous year was noted in Vastrapur, followed by Mani Nagar, which recorded an increase of 18% led by demand for quality space in mall developments.
On the other hand, high street rentals at Law Garden and Prahlad Nagar have appreciated in excess of 20% over the past year while S.G Highway has appreciated 6%.
Overall mall vacancy has reduced to 34% over the previous quarter due to increased leasing activity in select markets such as Vastrapur and Mani Nagar. Although mall vacancy has declined over the quarter, it is still the highest compared to other prominent cities as most malls are strata owned and lack good tenant mix and efficient mall management services. Select malls in Vastrapur and Mani Nagar that are on lease model have seen increased interest and have attracted renowned brands with a good tenant mix.
Sanjay Dutt said, “With high mall vacancy in the city, it is imperative that the developers offer malls on lease model and focus on the right tenant mix along with delivering quality developments. Currently, main streets are preferred destination for both shoppers as well as retailers.”
OVER 32,000 RESIDENTIAL UNITS TO ENTER IN NEXT 2 YEARS
According to the Cushman & Wakefield report, Ahmedabad market is expected to see 32000 residential units in the next 2 years. More than 75% of these under construction projects are concentrated in the peripheral locations such as S.G. Highway, S.P Ring Road, Bopal, Naroda, Vejalpur and Vadsar-Kalol Road as they witnessed heightened interest from end-users and investors in last two years
Of the total residential units nearly 85% (27,000 units) cater to the mid-segment category. High end developments have also gained prominence with around 4,100 units under construction in locations such as S.G Highway, Vejalpur, Prahlad Nagar and Thaltej.
Mid-segment projects, that are nearing completion, have seen values increase by upto 10% in locations such as Bopal, Navrangpura, Shahibaug, Gulbai Tekra and Paldi in the last six months. Mid segment capital values in S.G.Highway witnessed 15% increase over the year while Prahlad Nagar saw an increase of 6%.
Although the most active segment is the mid income group, there is a rising interest for high end projects that lead to increase in values upto 13% over the year. Vastrapur saw significant increase of 13% followed by Satellite that noted a 10% increase over the year.
Sanjay Dutt, said “Ahmedabad’s residential market has been stable over the year and demand has been mainly driven by investors. Should the Government consider revising the Development Control Rules (DCR) it is likely to notify an increase in FSI in R2 & R3 zones, which will positively impact the residential markets with increased new launches.”
