Track2Realty Exclusive: Property markets are often referred with reference to their key demand drivers. Every city has a key demand driver as far as the growth of the property market is concerned. Some have it by home grown end-user demand; others have it with investors finding it magnet for future while many have expat community driving the property market due to increased urbanisation and the professional opportunities.
Which category is actually driving the property market in the state of Gujarat in general and cities of Ahmedabad and Vadodara in particular? More importantly, whether the key demand driver has the potential to take the property market forward to the next level of boom once the macro-economic indicators get back in green?
Analysts maintain the demand dynamics of property market in Gujarat are so complex that is not easy to evaluate the key demand driver and its potential. Unlike many other property markets that are clearly driven by one or the other factors, the demand drivers of property in the state are multiple. End-users are as relevant to give momentum to the property market of Ahmedabad and Vadodara as the investors.
Even the expat community, mainly the professionals, have a fair share of investment in these markets. However, this rise and growth of the markets of Ahmedabad and Vadodara has not sky rocketed the prices to the extent where the native end-users feel the pinch.
“Gujarat property market is different in terms of its demand drivers. While in the initial stages of its evolution the home grown end-users had the major share, the non-resident Gujaratis later gave the market momentum. Now with the growth of the cities and infrastructure on a roll, investors are taking it forward to the next level. Of course, the expat professionals are also investing heavily into the market, fully aware that these are the cities poised for both the appreciation as well as to be settled,” says a realty analyst tracking the market in this part of the world.
Manan Choksi, Regional Owner Ahmedabad, RE/MAX India agrees that there are multiple demand drivers to give impetus to the Gujarat property market. According to him, there are three drivers behind the property market’s demand: investors, NRIs/NRGs, migrants and outside companies setting up shop in Gujarat.
“The expat entrepreneurs and professionals are a catalyst to keep the momentum up in property market. Expats from Middle East and Africa have setup a lot of businesses here. Also a few from Europe and US are keen to invest in Gujarat. The increased urbanisation is changing the face of Gujarat property market. The population in villages of Gujarat is dwindling while the cities the population is growing,” says Choksi.
Though the mega urban centres, the property markets of Ahmedabad and Vadodara are still very much within the reach of the average end-users. While artificial appreciation is an issue across many cities that deter the end-users, in the Gujarat property market the gap between the primary and secondary property markets is not that huge. In terms of affordability, the mid segment of housing at an average is priced between Rs. 3000 to Rs. 5000 per sq feet which is quite reasonable from the standpoint of any of the developed property markets across the country. Analysts even call it below average price keeping in mind the economic opportunities that these cities have to offer.
While NRI investment may have been a fancy thinking for many of the property markets across the country, the expectations of NRIs investing into the property market has actually been true n Ahmedabad market. As a matter of fact, majority of the NRI investment during the year 2013 has been in the Gujarat property market, which investors find more mature, stable and worth future appreciation. What is all the more significant is the fact that it is not just the Non-Resident Gujaratis but the expat Indians in general are finding the prospects of the city the new magnet to invest.
After all, the economic activity is on a roll in the state and the investors have sensed the resurgence of cities like Ahmedabad and Vadodara in near future. There are many industries coming up in these cities and all this is leading to the white collared and blue collared professionals flocking in search of employment. This has a chain effect on the property market in this part of the world. The expat professionals who were earlier known to drive the property market of Mumbai & Delhi-NCR, are today driving the Gujarat property market as well.
Investors who have burnt their fingers in some of the over-heated property markets by entering when the market was at its saturation point, find the Gujarat property market the right time to enter. Increased economic activity and some of the best infrastructure make them believe that this part of the world is set to emerge as the next global city.
In a nutshell, while one or the other demand drivers are behind the rise and growth of the property market in other cities, in the cities of Ahmedabad and Vadodara it is the multiple demand drivers that are taking the property market to the next level of growth. What is all the more important here is the fact that these markets have caught the fancy of big-ticket investors and mega projects at a time when the macro-economic problems have kept the overall sentiments subdued across the country. And hence, it is by and large agreed that once the sentiments go up next year Gujarat property market will lead the next rally of property boom. Post the General Elections in 214 it seems Gujarat real estate market will be leading the Indian real estate.
