SURAT: There is a supply overhang of houses in the Diamond City with around three lakh flats lying vacant for a couple of years now.
The Census by the Registrar General & Census Commissioner, India in 2011 found that the Diamond City topped the list in Gujarat with 2.86 lakh vacant residential units. The situation has become worse now as in three years, two lakh new units have come up in the city and 20 per cent of them are vacant. At least 20 per cent of these two lakh units are owned by investors, according to Jivan Patel, director of planning, Surat Municipal Corporation.
The national average of supply overhang in residential property market is 32 months and in 2015 Surat is on the top of the list with 2.86 lakh vacant residential units followed by 2.31 lakh in Ahmedabad.
Nirav Kothary, Gujarat in-charge of Jones Lang Lasalle, a leading real estate investment management firm, said: "Surat is at the top of supply overhang chain and hence very few new projects are coming up and the market has gone into a buyers' mode. This will continue for another 30 months. The major reason for over supply is an aggressive position taken by a large number of local realtors after announcement of Surat Diamond Bourse (SDB) project at Khajod."
CREDAI-Surat president Velji Sheta said, "When people take an aggressive position, market tends to react negatively. This is what is happening in Surat."
Realtors in the city jumped on the SDB bandwagon even before the state government allotted land for the SDB. Majority of realtors announced projects around the project site namely Althan, Vesu, Khajod and Sarsana.
"The liquidity crisis in the diamond and textile sectors has compounded the problems for the real estate market. Only the end users are buying houses supported by housing loans, while investors have just vanished," said Dalpat Patel, a realtor in Varachha.