Commercial Realty Draws Investors Again | Ahmedabad News
Ahmedabad: Commercial real estate is drawing investors again. Prior to the Covid outbreak, investors had decreased their investments in commercial properties and Covid troubles had kept them altogether away from these properties. However, the demand for office and retail spaces is growing and rentals have also increased in some areas so investors are coming back to commercial properties. According to market estimates, investments in commercial properties have increased by about 35% and analysts say that the weak stock market is turning investors to real estate.
Tejas Joshi, the president of CREDAI-GIHED Ahmedabad, said: “Commercial properties are pulling back investors. However, this new segment of investors does not invest only for the appreciation of property prices, but also for long-term rental income.” Joshi added: “Bank interest rates are low, so many senior citizens also invest in offices to get higher rental income.” Joshi said that prior to the Covid era, most investors had shifted to open land and the ratio of investors and real users in commercial office space had decreased to 20-80. “It has now increased to 35-65,” he said.
According to sources, rentals have risen in some areas of western Ahmedabad, which is attracting investors. A majority of the investors prefer long-term pre-leased properties with a clause stipulating rental appreciation every three years. So builders now negotiate with brands and after leasing out properties, they sell them to investors.
Jigar Bharwad, an Ahmedabad developer, said: “Many national and global brands are arriving in Ahmedabad so retail is again gaining momentum in prime locations.” He added: “Co-working space is also attracting investors. Globally, office space demand is increasing after the Covid peak and new launches in Ahmedabad are spurring inquiries from investors.” Bharwad said that the stock market has fallen sharply in 2022 so many investors are shifting their funds to real estate.
Commercial projects worth about Rs 5,000 crore may be launched in Ahmedabad till Diwali as developers anticipate safe traction for this segment during the upcoming festive season.
Praveen Bavadiya, a property consultant, said: “We see many lease deals happening in retail and office segments so investors are attracted to these properties.” Bavadiya added: “Inventories are almost sold because there were no new commercial projects for almost two years during the Covid peak.” He said that due to the work-from-home culture and Covid restrictions on gyms, restaurants, and coaching classes, the demand for offices and for retail spaces on ground and first floors was very low. Bavadiya went on to say: “However, recovery has been faster than expected, so investors are again choosing commercial properties because open-land prices have increased sharply, making them less attractive.”