Flowing against the tide

The Real Estate dynamics of Kolkata are changing fast. And unlike in other Tier I cities, sentiment remains strong here. Large pan-Indian realtors like DLF and Unitech have entered the market over the last 2-3 years and changed the rules of the game.

Prices have appreciated about 40-50 per cent, on average, since 2003, when the nationwide real estate boom really picked up steam. In top-end localities like South of Park Street, Alipore and Ballygunj, prices of residential properties have risen from Rs 3,000-3,500 per sq. ft five years ago to Rs 4,500-5,000 per sq. ft now. But supply of new properties in these areas is limited compared to localities like Prince Anwar Shah Road, Rajarhat and along and beyond the Rashbehari Connector of the Eastern Metropolitan Bypass.

Says Sumit Dabriwal, MD, Riverbank Holdings, a large Kolkata-based developer: “Real estate prices in Kolkata have traditionally remained stable. Prices had not gone up like in other metros; as a result, there is also that much less chance of a large correction.”

Key trends Residential and commercial prices are more or less stable. There has not been any major price correction, because prices had not risen astronomically as in other metros. In case of luxury apartments and bungalows, freebies like parking spaces and gardens are being offered. The stock of properties (residential, commercial or retail) remains modest and stable, compared to other cities. Substantial demand is being generated by players like call centre operators, insurance companies, information processing outfits, restaurants and retailers. Large developers like DLF, Unitech and Reit-Eden are making their presence felt in the suburban areas of Kolkata.

One factor that is changing Kolkata’s skyline is the launch of several really large projects, covering several acres, which offer residents world-class facilities and environment.

This trend, which began about a decade ago, with the launch of a few large-ticket projects, most notably by the Bengal Ambuja Group, is now becoming the norm. As a result, smaller developers are increasingly being squeezed out of the top-end of the market.

Rajarhat, on the eastern fringes of the city, has emerged as the new goldmine for realty players. Says Pradeep Sureka, MD, Bengal Park Chamber Housing Development, who is also the president of CREDAI (Bengal Chapter): “Rajarhat is much more organised than Salt Lake. It will also have much more commercial developments.”

Then, the emergence of West Bengal as an IT hub is giving a boost to both commercial and retail real estate demand. Here again, the new projects coming up in Rajarhat and in Salt Lake Sector V are much in demand.

However, there is also massive demand for the commercial buildings that are coming up in place of the old bungalows that still dot the Park Street area.

Park Street’s reputation as Kolkata’s leading shopping district and the relative scarcity of new developments ensure that prices remain high at Rs 7,000-10,000 per sq. ft. Kolkata’s rental market has remained flat for a long time, and good residential, office and retail spaces are still available at reasonable prices.