Kolkata On A Forward March
ONCE THE CAPITAL OF BRITISH-INDIA, KOLKATA’S COLONIAL CHARM BLENDS WITH ITS CONTEMPORARY AESTHETICS. THE CITY NURTURES ITS HERITAGE STRUCTURES AND MODERN TOWERS WITH AN EQUAL APLOMB. REALTY+ GIVES AN OVERVIEW OF THE CITY’S REAL ESTATE.
By: Sapna Srivastava
The year 2020 dealt multiple blows to Kolkata from the vagaries of cyclone Amphan to the struggle of combating COVID-19. Amidst the hardships, the real estate of Kolkata not only stood resilient but has rebooted its real estate potential in 2021. Some of the large land deals and project launches are testimony to the revival of state’s realty sector.
Kolkata’s real estate market has pockets of opportunities for investors. The ample number of both affordable and luxury housing projects cater to people from diverse socio-economic strata. While, NRBs (Non Resident Bengalis) are driving the luxury property market of the city, the middle-income segment is dominating the real-estate buying in the 21-50 lakh range.
Additionally, Kolkata’s office space transaction market recovered 62% of the 2019 quarterly average in the third quarter of the 2020, clocking the highest recovery rate in India after the lockdown, a Knight Frank report.
RESIDENTIAL SALES GAINING MOMENTUM
There has been a pick-up in demand from October 2020 onwards with well-known builders getting good traction. Consumers’ preference to buy into projects nearing completion is encouraging the shift towards big branded players.
Launches have come down because builders are focusing on completing ongoing projects rather than taking up new ones. Since supply has become tight, old inventories are getting sold. Major developers in Kolkata say their focus on affordable apartments has helped prevent the price drops seen in other cities.
The grade A developers witnessed a lower y-o-y decline in sales in comparison to medium and small-scale developers. Sales activity has witnessed a slow recovery during the last quarter of the year and is expected to reach pre covid levels very soon riding on the high home buying sentiment of the people.
BEING RANKED 10TH IN EASE OF DOING BUSINESS, KOLKATA HAS SEEN:
- Planned investment of Rs 100 crore by PwC for Centre of Excellence in Artificial Intelligence and an Internet of Things (IoT) lab • Proposed infusion of USD 300 million by World Bank for setting up multi-modal logistics infrastructure
- Investment of USD 250 million by corporate conglomerate ITC Limited
- Hiranandani Group setting up of logistics and hyper scale data centre park in Kolkata’s Uttarpara locality with investment crossing Rs10,000 crore.
- Mindstone Mall Developers, wholly owned subsidiary of The Phoenix Mills (PML), acquiring approximately 7.48 acres of prime land in Alipore, for a total consideration of Rs 300 crore.
Kolkata is the most affordable residential real estate market as it overtakes Hyderabad, according to the Home Purchase Affordability Index by property consultant JLL. The sales of residential property appear to be gaining momentum in Kolkata. As new residential project launches remain limited, big developers are cornering a larger share of the pie in the market.
COMMERCIAL REAL ESTATE OUTLOOK
Kolkata is expected to witness new supply addition of 0.6 msf in Park Circus Connector and 0.28 msf in Salt Lake in 2021. IT-BPM sector is likely to continue playing a pivotal role with large IT players such as Infosys and ITC Infotech building their Greenfield campuses. The industry players expect a gradual pickup in office leasing over the medium term once the impact of COVID recedes further and business sentiments improve.
The city’s technology sector is being looked at with renewed optimism. Investments by large corporates is likely to a have a positive spill over effect on the office sector in the medium term and attract other smaller IT companies. In the retail segment, QSRs and dine-in restaurants, both have witnessed a gradual business recovery. With footfalls improving, consumer demand getting better and sale volumes showing signs of improvement, landlords / developers are reviewing their rental strategies.
In addition, the West Bengal government plans to develop five logistics hubs in the state. The development of logistics spaces in peripheral areas will help in creating an integrated ecosystem for warehousing, logistics and industrial occupiers, strengthening not only the industrial infrastructure in the city but also in job creations and driving the demand for residential, and other real estate assets.
KOLKATA’S CHANGING SKYLINE
Kolkata boasts of second most number of tallest skyscraper and high rise buildings in India after Mumbai and more are under construction. Also, the trend of integrated townships is fast catching up in Kolkata with major upcoming developments set to transform the city’s landscape. The plotted developments, villas, villaments Kolkata and apartment complexes are some of the residential models now being favoured. Not to mention, the retail malls, high street shopping and commercial spaces are raising the modernist quotient of the city bringing it at par with the international standards. Kolkata indeed is a city to watch out for as it taps it unreleased potential keeping up with the latest trends.
KOLKATA’S REAL ESTATE ACTIVITY
- 2021 Office: The upcoming quarters are likely to see a few more spaces getting vacated by occupiers, especially as work-from-home continues in some domains. Office space leasing is likely to remain subdued in the short term with smaller space requirements by corporates largely driving fresh demand in the market.
- Retail: While a revival in consumer demand is good news, retailers in the city continue to remain cautious and hold back their expansion plans resulting in negligible demand for new retail space in the city.
- Residential: Post relaxation of lockdown norms in the city while a 3.8x increase in unit launches was recorded between Q2 & Q3, the last quarter of the year saw a significant q-o-q drop (34%) in unit launches with around 1,066 unit launches being recorded in Q4 2020.
- Industrial: The city’s logistics and warehousing market is slated to move towards more organized developments as large players including IndoSpace, Embassy, Allcargo Logistics, Hiranandani, TVS Logistics and Welspun Logistics are actively scouting for land parcels to develop their logistics and warehousing parks.
- India Investment: Despite the disruption and delayed decision making due to COVID, annual investments (INR 377.4 bn) were just 4% lower than the 5-year (2015-19) average PE inflows of INR 392.2 bn. Cushman & Wakefield