GIFT city Impact on Real Estate Market

The first-ever IFSC (International Financial Service Centre) and the Operational Smart City of India is the GIFT City (Gujarat International Finance Tec-City). GIFT (Gujarat International Finance Tec-City) has secured permission that allows builders to offer units to entities that are not functioning in the SEZ (Special Economic Zone). GIFT City (Gujarat International Finance Tec-City) is the first-ever SEZ (Special Economic Zone) in the nation to get approval from SEZ (Special Economic Zone) Board and Government of Gujarat and the Board of Approvals (BoA) which sees the Ministry of Commerce.

RESIDENTIAL DEVELOPMENT AT GIFT CITY_ © Business Standard

The Divisions

The SEZs (Special Economic Zone) have mainly divided into two parts viz., the non-processing area and the processing area. The Non-Processing area looks after the housing, colleges, schools, institutions, post office, and other activities. On the other hand, the Processing area looks after the core commercial activities of the SEZ (Special Economic Zone) units.

The Non-Processing area would be divided into further two categories after the approval, viz., the social or commercial infrastructure to be used under both SEZ (Special Economic Zones) and the domestic tariff area under dual-use. While the other would be used by SEZ (Special Economic Zone) exclusively. The first category will not be enjoying tax exemptions, but the other category will get tax concessions.

The social and commercial infrastructure area will be permitted to be used by SEZ (Special Economic Zone) units and will be bonded and physically separated from the rest of the non-Processing area.

Government Decision

During Union Budget 2021 presentation, Nirmala Sitharaman, the finance minister of India, stated that government plans to facilitate a world-class fintech hub to settle in GIFT City (Gujarat International Finance Tec-City). Spanned over 886 acres with 62 million sq. ft. of built-up area, GIFT City (Gujarat International Finance Tec-City) is a planned business district that includes office spaces, residential apartments, retail areas, hospitals, schools, clubs, and recreational facilities. It is planned to contain domestic as well as multi-service SEZs (Special Economic Zone). Being located on the bank of the Sabarmati River, the city connects Ahmedabad and Gandhinagar. This planned city aims to provide a conducive business environment having ease of doing business, tax regime, and quality of life.

The ownership conditions through which anyone can build and own their residential property in GIFT City (Gujarat International Finance Tec-City), have been relaxed by the government. This relaxation enabled both ownership and occupancy conditions to be no longer restrictive and become accessible to all. There are around 10,000 workforces in 225 units of GIFT City (Gujarat International Finance Tec-City).

The Impact

When the tax incentives were announced in the Union Budget along with stamp duty exemption by the government of Gujarat, the GIFT City (Gujarat International Finance Tec-City) addressed that it is witnessing a higher interest of participation from corporates who plan to do their offshore business onshore of GIFT City (Gujarat International Finance Tec-City).

Approx. all the major banks and stock exchanges showed a great response in GIFT City (Gujarat International Finance Tec-City) in the last few months. Operations of ICICI Bank, Federal Bank, and Yes Bank have already started, while other banks are in the process of setting up stores in the following months. It is a positive side for the project and the city, as all the major financial players of India have shown interest in GIFT City (Gujarat International Finance Tec-City). If anyone wants to experience international financial centers as such Singapore, Dubai, and London, they can draw some conclusions from Ahmedabad’s real estate market which is set to witness a massive development with the growth of this project and city in the coming years.

With the growth of GIFT City (Gujarat International Finance Tec-City), Ahmedabad is on the path of witnessing a blast in the service sector jobs, essentially aided by the IFSC (International Finance Service Center) in the GIFT City (Gujarat International Finance Tec-City). The city is going to attract many brokers, bankers, and financial experts. It will also aim to attract numerous international forex traders. This will ultimately increase demand in the residential sector of the city, especially in the higher and medium sectors.

As the residential areas in proximity to the GIFT City (Gujarat International Finance Tec-City) still lack social infrastructure, there are chances that areas like Science City Road, Tragad Garden City, Thaltej Road, Sola City Road, and Godrej Garden City will take benefit from this. Besides being accessed by major arterial roads like Sardar Patel Ring Road and Sarkhej Gandhinagar Highway, these areas are also highly developed from the perspective of social and physical infrastructure. The recognition of GIFT City (Gujarat International Finance Tec-City) as an IFSC (International Finance Service Center) could not have come at a better time than this as the real estate of the city is under the way of a severe slowdown for the past two years.