Bangalore: Sagar Sheth is not fazed by the realty slowdown in India.
A director with Ahmedabad-based property firm Sheth Builders Pvt. Ltd, he is busy with a 1,300-acre township coming up only a few kilometres from Sanand, where Tata Motors Ltd is building a factory to produce its small Nano car later this year.
The slump in real estate in India, a result of a liquidity squeeze in the economy and contracting demand for homes, offices and shops, has not held back the fervent pace of construction in Sanand, around 8km from Gujarat’s capital. Local builders have been battling it out to pick up large chunks of land, some as big as 500-1,000 acres, in and around Sanand, a town with some 200,000 people, since the country’s largest auto maker announced it would set up a factory spread over 1,110 acres there. The firm is relocating from Singur in West Bengal in the wake of local protests.
Concrete intentions: An impression of a commercial project by Sheth Builders, one of the 20 undertaken by them around Sanand.
“We are very lucky that the factory is coming up in Gujarat because it opens up many prospects for developers like us. Every builder has been busy planning a number of project launches in 2009 and the entire belt will see large-scale development over the next few years,” said Sheth, who is also building 100 villas, 7km from Sanand, that he is confident of selling at Rs3 crore apiece.
Sheth’s not an exception. At a time when most developers are slowing luxury ventures and promoting budget homes to attract buyers, in Sanand, a variety of deluxe properties are coming up—from multi-crore golf villa projects, large integrated townships and premium shopping space, to affordable homes.
Jateen Gupta, a builder of a shopping mall that would be the closest retail space available for residents near Sanand, thinks he will have a first mover’s advantage. Though 22km away from the proposed factory, Gupta says his is the only option for organized shopping in the vicinity and has finalized contracts with retailers such as Landmark and Trent Ltd’s Star India Bazaar and Westside supermarkets, a part of Tata group, and is now awaiting approvals ahead of construction.
“Though the mall is in Bopal, it is located on Sanand highway, which is easily accessible from Sanand,” said Gupta, managing director of JP Infrastructure Pvt. Ltd.
Earlier this month, Hirco Group, which specializes in large-scale, mixed-use townships and has ongoing projects in Navi Mumbai and Chennai, launched a township project in Gujarat. The project is in the Ahmedabad development zone with the Nano factory in the vicinity.
Property deals, too, continue with hardly a pause. At Sanand, there are buyers in scores scouting for attractive pieces of land, say local developers. Though the larger pieces have already been picked up, there are plots in the range of 50-100 acres each that are available.
“Speculative buying of land has been at its peak in the last few months since the (Nano) project announcement and landlords are quoting abrupt prices. Land buying has been in anticipation that other industries will grow in this area,” said Subhankar Mitra, assistant vice-president (strategic consulting) with property advisory Jones Lang LaSalle Meghraj. Land prices had touched Rs6-8 lakh an acre around Sanand in early 2008 but after the Nano development, prices have gone up to a minimum of Rs12-16 lakh per acre.
In the second half of 2007, it was just Rs4 lakh an acre.
The sudden spurt of development in Sanand is not different from the way in which Reliance Industries Ltd’s oil refinery changed Jamnagar. “Like Sanand, Jamnagar evolved from a small manufacturing and trading hub into a self-sufficient township with residential and shopping facilities. Secondly, both the sectors require setting up ancillary industries that will further boost growth,” said Mitra, who anticipated that the impact would be felt over a period of time.
The recent Vibrant Gujarat Global Investors Summit 2009 saw an unprecendented flow of nearly 400 non-resident Indian customers looking for land and properties around this area, says a local builder.
“There has been a lot of hype about the project and the Nano venture being on the world map, and even Sanand now is at the centre,” said Devang Shah, managing director of Navrang Developers Pvt. Ltd, an Ahmedabad builder, constructing 1,000 villas about 11km from Sanand.
Developers such as Tata Housing Development Co. Ltd, the property development arm of Tata group, is also eyeing a 100-acre plot that has been allotted by the Narendra Modi-led state government to build social infrastructure such as housing and retail space for Tata Motors employees who will work on the Nano project.
“We had proposed to build a township by ourselves since the company is going to steer the project. But the government will soon invite public tenders to develop this land,” said a senior executive of Tata Housing, who didn’t want to be named because he is not authorized to speak to the media. Media reports last October quoted Modi as saying that the Nano project will generate nearly 10,000 jobs, of which Tata Motors will directly account for 1,000.
The government is clear Sanand is an opportunity for a new manufacturing hub in a state that is already described as the most-industrialized in India. Road-widening projects are on and it is planned that a metro rail project proposed from Vasna in southern Ahmedabad to Gandhinagar is to be stretched to Sanand.