Realtors transform commercial projects into residential in the face of severe demand.

With the Covid-19 outbreak dampening commercial real estate demand, numerous realtors have transformed commercial projects into residential ones. So far this year, approximately 25 commercial projects have been converted to residential designs.

Revised building designs for 20 commercial developments in Ahmedabad Municipal Corporation areas have been approved (AMC). Five more projects in Ahmedabad Urban Development Authority (AUDA) districts have been converted from commercial to residential.

“At Panjrapole crossroads, we changed our commercial project into a residential one. The project now includes three-bedroom plus Work From Home (WFH) apartments, as well as showrooms. We modified our plans because there was a high demand for residential units in this area,” said Chitrak Shah, a city-based realtor and vice-president of CREDAI-Ahmedabad GIHED, a group of city-based real estate developers.

Venus Infrastructure, another real estate company, has turned its commercial project behind Rajpath Club in Bodakdev into an upscale residential complex after getting its updated building plan approved.

“Our commercial project was heavily retail-focused, and demand for retail premises plummeted following the pandemic’s spread. The project location was always suitable for residential purposes. As a result, we shifted our focus to the residential project,” said Rajesh Vaswani, Executive Director of Venus Infrastructure.

In Sanand, a builder proposed constructing a multiplex and a shopping centre. However, he revised the plan to a twin bungalow concept in the same neighbourhood.

Work from home, excessive inventory, corporates putting their expansion on hold, as well as territorial constraints and fewer footfalls in showrooms and malls owing to Covid-19, according to the real estate sector, have damaged demand for retail and office spaces in commercial projects.

Building plans were altered for three commercial projects in 2018-19, bringing the total to seven in 2020. However, according to AMC authorities, the number will increase in 2021.

There is, however, demand for residential housing, and the segment has also provided some cash flow to developers, prompting many to convert their commercial projects that are now in the planning stages to residential projects.

“Converting a commercial project to a residential one is a logical step forward whenever possible,” said Balbir Singh Khalsa, National Director industrial and logistics and Branch Director-Ahmedabad, Knight Frank India, a leading real estate consultant in India.

“On the one hand, vacancy in offices is rising and rental rates are declining; on the other hand, prospects for retail spaces remain cloudy due to pandemic fears. On the other hand, demand for residential residences is high, and residential housing inventory is now quite low. Currently, it makes sense to transition from commercial to residential,” he noted.

AMC and AUDA executives also stated that commercial projects were in high demand in 2018 and 2019. In 2021, the trend has shifted. At the moment, over 80% of building proposals awaiting clearance at both AMC and AUDA are for residential developments. In recent years, the figure has hovered around 60%.