Some of the major realtors in Gujarat are now focusing on high-end housing construction, with mall development no longer an attractive proposition.

A notable commercial project under construction in Ahmedabad is the 12-lakh sq ft mall in Vastrapur area, being developed by the Gurgaon-based Alpha G:Group, which would have some 80 national and international brands. The mall is expected to open in September. Developing a housing complex for the rich, developers believe, may be a risk-free proposition.

One major mall developer, the NG Patel Group, which set up Gallops, Gujarat's first designer mall nearly six years ago, now plans to demolish it and set up a multi-storeyed hotel on the same site, in association with a major global hotel group. Another has abandoned a commercial project and launched a high-end housing township development at the same spot.

Mr R.K. Pugalia, partner, NG Group, said the oversupply in mall space and under-realisation of returns have been a deterrent in the development of new malls. He said he shifted to luxury housing segment as houses are relatively easy to market.

He has tied up with the Mumbai-based Gini Textile Group for an “affordable luxury housing” project in Ahmedabad where he is marketing three BHK flats for a minimum Rs 70 lakh.

Investor-driven market

JP Iscon Ltd, one of the pioneers in introducing the large format malls in Gujarat, has also joined the posh housing bandwagon.

It recently launched the Rs 350-crore Iscon Platinum, a township, at the same spot where it was planning an office-cum-mall project until last year. Mr Pravin Kotak, Chairman of JP Iscon Group, said: “The Gujarat realty market, particularly in Ahmedabad, is investor-driven and marketing such posh houses is not a problem as there is huge demand from HNIs and NRGs.”

Moreover, the cost of construction in a mall is almost double that of a housing complex.

To attract buyers, housing developers are offering fancy facilities, including furnishings, cars, lotteries, and freebies. If Mr Pugalia's project is offering a guest house embedded in the clubhouse as a USP for the purchasers, JP Iscon Ltd, too, is offering a range of nearly 40 facilities, including club like amenities. JP Iscon, which is constructing 480 dwelling units in the price-range of Rs 70 lakh to Rs 2 crore, is providing a garden in each five-BHK (bedroom-hall-kitchen) flat, besides common facilities like child care, laundry, car-wash area, squash court, golf course and cricket pitch.

“We are confident about selling these houses as we are getting inquiries from Dubai and other places,” said Mr Amit Gupta, Executive Director, JP Iscon.

There are an estimated two dozen schemes that offer flats worth over Rs 1 crore. And, there are also plush townships, offering hundreds of houses each in the next 10 years of phased development, floated by diversified industry and business groups like the Adanis, Godrej and Arvind Ltd.

This shift from malls to residential segment, according to Mr Pugalia, has been necessitated by a number of reasons. For one, many of the malls continue to bleed commercially due to unoccupied or vacated spaces. There are also issues such as mounting overhead expenses, high cost of inputs in construction, continued recession in retailing space, mounting arrears of rentals despite renegotiation and reduction, among others.

Since the 2008 global meltdown, when investors shifted focus towards the Asian countries, associations of Gujarat-based property developers and builders have been organising property fairs abroad to attract investments from high-net-worth income investors, particularly NRGs. The recent spurt in high-end housing construction is stated to be one of the reasons behind NRGs' preference in this regard.

As the NRGs are said to have deep pockets and patience, property prices did not undergo “correction” in Gujarat, unlike other places in India, to the extent expected during the global recession. This has also boosted the high-end housing business.

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