The Hindu Business Line : Marginal rise in realtyoccupancy cost in Q1

Real estate occupancy cost for commercial office space in Kolkata has witnessed a "marginal" rise during the first quarter of 2007 compared to the previous three-four quarters due to high demand from IT/ITES sector, according to report by DTZ India, a real estate consultancy firm.

Rentals in the peripheral areas of Salt Lake and New Town (Rajarhat) have marginally increased to Rs 40-45 per square feet per month from Rs 35. However, rentals in the CBD (Central Business District) have remained stable during the first quarter at about Rs 55-70 per square feet per month.

"Real estate occupancy costs in Kolkata have marginally risen due to rising demand from the IT/ITES sector, which is the primary demand driver and accounts for 80 per cent of the absorption," said Mr Ankur Srivastava, Managing Director, DTZ India.

UPCOMING SUPPLY

The major upcoming supply includes Unitech Infospace Phase I (about 8,00,000 square feet), Godrej Watershield Phase I (about 6,00,000 square feet), Infinity Benchmark (about 5,60,000 square feet) and Globsyn Crystal (about 4,00,000 square feet). The city is expected to have a total supply of 8.2 million square feet during 2007, the report said.

Rental values in Salt Lake and Rajarhat are expected to remain stable in the short term. However, according to Mr Srivastava, "if the increase in demand is greater than expected, then the developers who have delayed construction activities would not be able to deliver their projects on time to match the demand.

This could lead to a shortterm supply crunch and push rentals and capital values upwards."

The report suggested that Kolkata requires piling work to strengthen foundations due to the soft alluvial soil which further adds three to five months to normal construction time.

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