With developers still waiting for an anticipated increase in floor space index (FSI) norms, the year 2012 saw a major drop of close to 50 per cent in total number of residential units being launched in Ahmedabad.
Moreover, while majority of the launches were in the mid-end segment, the high-end segment comprised just over 12 per cent of the total units launched in Ahmedabad, even as developers stayed away from launching any luxury residential units last calendar year.
As against 12,270 residential units in 2011, Ahmedabad saw only 6,607 units in 2012, registering a decline in supply of 46 per cent, says Cushman and Wakefield, a real estate consulting firm.
"Most of the developers were awaiting the state elections to conclude post which the proposed increase in FSI is expected to be cleared," it stated. Segment-wise, while supply in mid-segment increased from 2069 in 2011 to 5185 in 2012, the same fell in the high-end segment from a whopping 10,201 in 2011 to a meagre 792 in 2012.
Apart from want of FSI, the supply also went down due to considerable supply in secondary market.
Secondary market is one where a real estate property is being sold for the second time by the first buyer.
"FSI is being anticipated since sometime now even when there are not many feelers from the government. However, it was also the ongoing transactions in the secondary market which discouraged developers to launch fresh supplies," said Neeraj Tomar, head-Ahmedabad operations, Jones Lang LaSalle (JLL) India, another real estate consulting.
However, the market situation is such that even if the new year will see an increase in supply it will be at the cost of margins for developers.
"One can't wait too long for government policies especially on FSI to change before increasing supply. So while 2012 saw a decline in supply, 2013 may see some increase. But market sentiments have been such that developers will have to take a cut in their profit even as they increase supply," said Jaxay Shah, director, Savvy Infrastructure Pvt. Ltd. and president, CREDAI Gujarat.