As the Covid-19 pandemic has affected the demand for commercial real estate, several real estate agents have turned their commercial projects into residential projects. This year, about 25 commercial projects in Ahmedabad have been transformed into housing schemes.
There is demand for housing and this segment has also provided some cash flow to developers. As a result many developers convert their commercial projects into housing projects. A new reform in the building plans has been approved for 20 commercial projects. These commercial projects comes under Ahmedabad Municipal Corporation (AMC). Also five more projects in Ahmedabad Urban Development Authority (AUDA) areas transformed from commercial to residential.
AMC and AUDA added that there were many commercial projects in 2018 and 2019. However the trend completely changed in 2021. Currently, approx. 80% of the building plans, which must be approved by both AMC and AUDA, are for housing projects.
According to some real estate industry experts, work from home, high inventory levels, lets companies hold their expansion. Also the territorial restrictions and lower crowds in showrooms and shopping malls due to Covid-19 have affected the demand for commercial and office space projects. Building plans were revised for three commercial projects in 2018-19, up to seven in 2020. However, in 2021, their number will increase sharply, AMC officials said.
Project location is ideal for residential purpose
Venus Infrastructure, Ahmedabad based real estate company, converted its commercial project behind the Rajpath Club in Bodakdev into a luxury housing project after receiving approval for a revised building plan.
Rajesh Waswani, CEO of Venus Infrastructure said, we have invested heavily in our commercial project however the demand for commercial space dropped dramatically after the outbreak of the pandemic. The location of the project has always been suitable for living. So we decided to change our plan and switched to the housing project.
Apartments as well as Showrooms
Chitrak Shah, a city broker, also vice president of CREDAI-Ahmedabad GIHED said, we have transformed our commercial project at the Panjrapole crossroad into a housing project. The project currently offers 3 BHK plus work from home flats as well as showrooms. We revised our plan because there was a good demand for housing units in the area.
Converting commercial units to residential is a smart step for now
Balbirsingh Khalsa, national director of industry and logistics and director of the Ahmedabad branch to knight Frank India, said. Converting a commercial project to a housing project whenever possible is a smart step in the right direction.
On the one hand, office vacancy is high, rents are falling, and the prospects for commercial space remain weak due to fear of pandemic. On the other hand, the demand for housing is good and the number of residential units is also very low today. So, for now it makes sense to shift from commercial to residential real estate.
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