GIFT City has received an exceptional response from all major banks and stock exchanges in the last few months. (Reuters)

The Gujarat International Finance Tec-City (GIFT) project has finally received the much-needed recognition as an International Finance Services Centre (IFSC) from the Finance Minister, Arun Jaitley in the latest budget. GIFT City was conceptualised by the Gujarat Government in order to cater to India’s large financial services potential by offering global firms world-class infrastructure and facilities. Apart from hosting an international finance centre, it also has a multi-speciality special economic zone (SEZ). It is located at a distance of 12 km from the Ahmedabad International Airport and 8 km from the state’s capital, Gandhinagar.

The latest union budget has approved the various tax exemptions that the finance centre was requesting since the past few years in order to make it globally competitive. Exemption from dividend distribution tax, securities transaction tax, long-term capital gains tax and commodity transaction tax, among others, were some of the incentives required to create a feasible financial centre at par with other global financial centres, such as Dubai and Singapore. With the regulatory and infrastructure framework already in place, tax exemptions were the only missing link and these have finally been achieved.

GIFT City has received an exceptional response from all major banks and stock exchanges in the last few months. ICICI Bank, Yes Bank and Federal Bank have already commenced their operations, and other banks are in the process of setting up shop in the coming months. The enthusiasm shown by all the major financial players of the country is a positive step for the project as well as the city. If one has to go by the experience of other international finance centres such as Dubai, Singapore and London, it can be easily concluded that Ahmedabad’s real estate market is set to witness unprecedented development in the coming years on the back of this project.

In the current scenario, Ahmedabad lags behind other Indian cities, such as Mumbai, Bengaluru, Delhi, Pune, Chennai and Hyderabad, in terms of service sector jobs. Although it has a very strong standing in the manufacturing sector, the absence of major IT/ITeS companies has deprived the city from high-income, white-collar service sector jobs. The real estate market of the other cities has benefited immensely from the growth in service sector over the last 10-15 years. Apart from fuelling a boom in commercial real estate, the high spending power of such white-collar employees also gives an impetus to the residential market.

Ahmedabad is on the cusp of witnessing a boom in service sector jobs, primarily aided by the IFSC in GIFT City. Apart from attracting numerous bankers, brokers, financial analysts and other intermediaries, the city will also attract several international forex traders. This, in turn, will drive the demand for residential properties in the city, especially in the premium and middle segments. Since residential locations closer to GIFT City still lag in terms of social infrastructure, we believe that areas such as Thaltej, Sola, Science City Road, Tragad and Godrej Garden City will gain the maximum from this. Apart from being easily accessible from the major arterial roads, such as Sarkhej-Gandhinagar Highway and Sardar Patel Ring Road, these locations are also well developed in terms of social and physical infrastructure. The recognition of GIFT City as an International Finance Services Centre could not have come at a better time, as the city’s real estate is undergoing a severe slowdown since last two years.

The author is vice-president – research, Knight Frank India