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Ahmedabad the financial hub of Gujarat is among the smallest office markets in the country with annual transaction volumes rarely exceeding 0.1 mn sq m (1 mn sq ft). However, 2022-23 saw a robust recovery for the office market and as per the industry experts year 2024 will see a significant increase in the new commercial projects in the cities of Ahmedabad, Gandhinagar and Surat- the hubs of finance, business and diamond industry.
Ahmedabad saw the maximum increase in fresh supply of office space in 2022 among the nine major cities, with more than a five-fold jump to 4.6 million square feet according to the CBRE India. As per another data the new office supply in Ahmedabad jumped by over 400 per cent to 4.6 million square feet in 2022 from 0.9 million square feet in the preceding year.
Over 99% of space transacted in Gujarat office space were concentrated in the CBD areas during for the reasons of location, superior grade of office spaces being developed here along with the growing infrastructure. Apart from increasing volumes of flex spaces taking up commercial real estate, third party IT services companies share has been growing steadily in the Gujarat’s Ahmedabad office market.
THE MARKET DYNAMICS
The commercial property for sale in Ahmedabad is influenced by emerging trends and evolving market dynamics. The shift in demand for specific types of office spaces, such as flexible office solutions and mixed-use developments, reflects changing work patterns and consumer preferences. The rise of co-working spaces has gained traction among start-ups and freelancers, offering flexible and cost-effective alternatives to traditional office setups.
The renewed demand for office spaces with back to work of employees in full force, has also brought back the investors to the commercial segment with clear preference for grade A office spaces, well-located with good access and professionally managed. In addition, the co-working and managed office spaces sector is emerging as the fastest growing asset class within the conventional office space sector across the cities in Gujarat.
Further, GIFT City, Surat Diamond Bourse and SEZs are gaining traction as new areas for commercial real estate with from prominent industries from diamond, textile, manufacturing to pharma actively scouting for office space in these sub-markets.
THE DARK CLOUDS
While the commercial real estate is expected to do well in the coming years there are some challenges too, the foremost being the need for building offices for lease than sell.
Today domestic and international companies prefer leasing office space over buying office buildings to have more flexibility, control costs, and avoid some of the risks of owning a property. The developers too need to realign their development model from selling office spaces on outright basis to leasing model.
Another biggest challenge is the dearth of grade A buildings compliant to ESG, Green certification and other international benchmarks. With many MNCs entering Gujarat, there is a growing need for following global standards in office buildings in Gujarat.
THE OPTIMISTIC OUTLOOK
Going by the recession forecasts in the Western countries, it could impact commercial real estate demand across India. The ray of hope in the dark clouds is the India’s demographic dividend and growing economy which bodes well for the Indian office real estate market over the next few years.
Gujarat especially has grown to be a significant centre for commerce and trade, attracting an increasing number of investors and business from all over India. As a result, there is a healthy pipeline of office buildings and mixed-use developments that will keep the rentals range in bound. Whereas, superior-grade buildings in prime submarkets and GIFT City will keep attracting occupiers, keeping vacancies low.
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