EVERYBODY WANTS a piece of Ahmedabad. With the city featuring in Fortune’s 15 Best New Cities for Business, the Adanis, Godrej Group, and the Tatas are rushing to cash in on this booming real estate market. By 2012, Ahmedabad is expected to have about 12,000 new residential units, one of the highest among Indian cities.

“It’s a boom town. The Gujarat economy is doing extremely well and incomes in the state, especially Ahmedabad, are rising strongly,” says Adi Godrej, chairman, the Godrej Group. He predicts that the $3.3 billion (Rs 15,064.5 crore) group’s trademark consumer goods business will be overtaken in size by the real estate business in the next decade, partly aided by development in Ahmedabad.

It is building a 13,000-apartment Godrej Garden City designed by American architecture and engineering firm Skidmore, Owings & Merrill—the builders of the Burj Khalifa in Dubai, the world’s tallest building.

The Adani Group’s flagship 600 acre housing project, Shantigram, with 440 million square feet of development, includes high rises (from two-to five-bedroom homes), bungalows, a club, a nine-hole golf course, an athletics arena, and a cricket stadium. Built along the Sarkhej-Gandhinagar highway on the outskirts of the city, Shantigram is the biggest real estate development project in Ahmedabad.

“Ahmedabad is demolishing, once and for all, the idea that it’s a small town,” says Tarwinder Singh, CEO of the real estate arm of the Rs 27,000 crore, Ahmedabad-based Adani Group, pointing to the real estate boom in the city where property prices have risen by 35% since 2009. “This is about the best in class.” Another project is the Arvind-Tata Housing joint venture spread across 134 acres with a built up area of 9 million square feet. Around Rs 2,000 crore is being invested in the project coming up in western Ahmedabad.

It helps that the city has good roads and an efficient traffic system. Last year, Ahmedabad’s bus rapid transit system, which started in 2009, won the U.S.-based Institute for Transportation Development and Policy’s Sustainable Transport Award. This is awarded each year to a city in the world that “made [the] most progress to increase mobility for all residents while reducing transportation greenhouse and air pollution emissions”.

Housing price surveys show a 57% rise in the western parts of the city and 55% in the north—the two most sought-after regions—in the last 24 months. To cater to the wealth being created, 11 new malls (around 5 million square feet) are also coming up, taking the count in the city to 24.

There are, however, some fears of price corrections. But Anuj Puri, head of real estate consultancy firm Jones Lang LaSalle India, says the underlying story in the city is very strong. “Even if there is a 15% to 20% price correction, this will only fuel demand for housing because there is a lot of FDI flowing into companies in Ahmedabad which are expanding their workforce. This means a lot of people are considering moving to the city, which, in turn, is fuelling demand for housing and malls.”

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