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The Ahmedabad real estate market is experiencing a resurgence of redevelopment agreements following the twofold increase in jantri rates. Approximately 30 redevelopment deals have been concluded over the past three months, and around 500 housing societies are currently in negotiations with developers, who have adjusted their offers in response to the rate hike.
The state government initially declared a substantial increase in the new Jantri rates, which were set at double the existing rates, on February 5. However, due to protests from builders, the decision was postponed until April 14. The rise in jantri rates, which represent the government-mandated minimum values for land and property in Gujarat, below which property registration in the government's records is not permitted, has occurred after a 12-year hiatus. The last time the state had made alterations to the jantri rates was in 2011.
However, developers argue that redevelopment projects are not economically feasible for most of these societies due to Floor Space Index (FSI) limitations. Following the jantri rate hike, the cost of FSI experienced a significant surge, rendering many redevelopment projects impractical. As a result, approximately 90% of the previously negotiated deals were cancelled. Subsequently, developers began presenting revised offers with reduced built-up areas and incentives, which property owners have now started to accept.
Nevertheless, redevelopment activity is picking up again, primarily driven by the pressing need for revitalizing numerous old societies. In the past three months, approximately 30 societies have successfully concluded revised deals, and approximately 500 societies are currently in advanced negotiations with developers. Societies situated in Transit Oriented Zones (TOZs) can access FSI of up to 4, making redevelopment projects feasible, but such societies are relatively scarce.
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