Out of 4,200, only 150 offices remain operational in Surat Diamond Bourse. Here’s WHY

Despite the opening of the world’s largest office building in Gujarat, Surat Diamond Bourse (SDB), a year after its completion, it remains largely unoccupied. According to a report by the Times of India, only 150 of the massive 4,200 offices have become operational so far.

The SDB was inaugurated by Prime Minister Narendra Modi on 17 December 2023.

Why SDB is unoccupied?

The SDB was unveiled with great fanfare and it dethroned the Pentagon in the United States to become world’s largest office building. The report claims that all the 4,200 offices have been sold out, but only about 150 are operational.

Aimed at transforming the diamond industry, the SDB now face local and global challenges leading to sluggish occupancy.

The Surat’s diamond industry has been grappling with global slowdown, which tampered enthusiasm for relocating from Mumbai’s established hubs and Surat’s traditional markets to the SDB.

To address this issue, SDB president Nagji Sakariya had said, as quoted by TOI, that significant infrastructure and services have been established to support diamond-related operations.

What SDB offers:

The SDB offers operational branches of six banks, a safe deposit vault, custom services, diamond processing facilities and three restaurants to cater to the users.

Also, over 1,000 brokers have registered themselves from Surat’s Mahidharpura market have registered with the SDB.

Slowdown reasons:

The biggest reason for the slowdown remains the fall in demand for diamonds in the biggest markets, China and the USA.

The TOI stated that the demand in China is down by 50 per cent. While, the diamond sales in the largest global market – the USA – are expected to drop slightly by 2024-end, despite demands higher than pre-pandemic levels.

As per multiple reports, the exports for cut and polished diamonds from India plunged by 20.6 per cent in the first half FY 2024-25, which totals to $6.91 billion, compared to $8.7 billion in the same period last year. In 2024, the diamond prices have fallen 5.7 per cent.

Various estimates claim that this decline is over 30 per cent from all-time high in 2022.

Why people are not buying diamonds?

Diamonds are not valued like gold, which gives almost 30 per cent returns, but the prices of diamonds have depreciated. Chinese consumers – facing economic challenges – are buying less diamond due to its low resale value. This has dwindled the incentives for buying diamonds as an investment.

Also, Western sanctions against Russia have also played a key role in Surat diamond industry, with Russia being the biggest source of rough diamond for India.

Among other reasons for the decline in diamond sales is the increasing use of lab-grown diamonds, which are making significant inroads into the consumer markets. They are 85 per cent cheaper than natural-grown diamonds, not subjected to the same production constraints, and are also a greener alternative.

Looking into the details, the lab-grown diamonds’ sales surged from 2 per cent of the global diamond jewellery market in 2017 to 18.4 per cent in 2023.

These reasons have plunged the demands for naturally-grown diamonds, that are impacting Surat’s diamond industry and the people who are employed with them.

However, SDB management hopes the situation will improve once the connectivity and services are well in place.