Land along Kolkata's Eastern Metropolitan Bypass is commanding a premium in a stagnant market.
When officials at the Kolkata Municipal Corporation opened the bid documents in May for a piece of land earlier dismissed as ‘wasteland,' they were shocked to see the prices being quoted.
A two-acre plot along the EM Bypass had commanded prices of over Rs 100 crore. The top three bids were Rs 115 crore, Rs 111 crore and Rs 96 crore.
Even though property prices in Kolkata have stagnated over the last three months and recessionary trends affected property sale, land prices in the eastern region are still commanding a premium. Over the last six months, Kolkata has witnessed two big-ticket deals accounting for nearly Rs 200 crore.
“Land in Kolkata is small and fragmented. And if it is in an attractive location and free from encroachments, as it is in the Eastern fringes, then it's bound to command a premium,” according to Mr Mayank Saksena, Managing Director, Jones Lang LaSalle, an international property consultant.
Earlier this month the city saw its highest property deal that went up to Rs 115 crore.
AHW-Unimar consortium of Mr S.S. Bagaria and Mr Harsh Pitodia — the highest bidders for a two acre plot along the Eastern fringes of the city beside ITC's The Sonar hotel — quoted a whopping Rs 115 crore. This made it the highest bid for any piece of land in the city so far.
At Rs 96-lakh-a-cottah (720 sq. ft) or Rs 57.5 crore an acre, this buy is nearly 37 per cent higher than the last big land sale in 2009 and an appreciation of 60 per cent compared to the first ever deal inked in the region way back in 2005.
While Mr Pitodia's Unimar is present in the real estate sector of the city through its luxury housing projects; AHW is the new entrant in the region. The Bagarias have a presence in the National Capital Region through Bagaria Realty and Bagaria Developers.
The bid for the prized plot was won after pipping real estate biggies such as Mr Rahul Saraf (Rs 111 crore) and the Arya Group (Rs 96 crore).
“We see good opportunity in the real estate sector here especially in the luxury homes segment,” Mr Bagaria said, adding that the plot will be used for setting up luxury homes.
This, incidentally, is the second such multi-crore land deal in the city in the last six months. The earlier deal was by Mr Sanjay Surekha of the Concast Group in January.
Primarily into the construction steel segment, the group went on to purchase a two-acre plot in the region (on the Eastern fringes of the city) from the city civic body at Rs 96 crore (or Rs 48 crore an acre).
Concast will invest another Rs 150 crore to set up luxury condominiums and service apartments on the land parcel. The Unimar and Heritage group will be the construction partners for the project.
The Eastern Metropolitan Bypass, connecting the northern fringes of the city with its southern counterparts, was initially unused wetlands. The civic body had been using the area as a dump yard while it leased out such “unutilised land” to corporate houses for beautification.
In 2005, the civic body, desperate to shore up its cash flows, inked a Rs 58 lakh-a-cottah deal that set the realty ball rolling in Kolkata and the region.
It was then that the authorities realised that they were sitting on a gold mine.
In 2008, it got in Rs 156 crore for a five-acre plot. DLF bought this land for Rs 55 lakh a cottah.
The jackpot was hit a year later in 2009. A 3.35-acre plot on EM Bypass was sold for Rs 135 crore or nearly Rs 70 lakh a cottah. The Apeejay Group outbid 19 competitors to win the plot meant to set up a five-star hotel.
This apart, several housing projects have already come up along the region making it a lucrative destination for home-buyers.
According to Mr Pitodia, President, Confederation of Real Estate Developers Association of India, Bengal, the big-ticket land deals really do not affect the market value in the affordable segment.
“I think the luxury segment will see more uptake and is largely unaffected by recessionary trends. There's a vacuum in the luxury segment and uptake is very high,” he maintained.