Real Estate

Realty sector outlook looks rosy in Kolkata, but supply concerns remain

Abhishek Law Kolkata | Updated on November 20, 2017

Brushing aside fears of a slowdown, the real estate market in Kolkata is looking forward to a promising 2013.

While volatility in prices is ruled out in the housing segment, good off-take for commercial space is expected next year. Overall, the market is expected to grow anywhere between 10 to 15 per cent in 2013.

“2012 has been slow. But we hope for some improvement in 2013 because of the new initiatives being taken by the State Government and faster clearances,” Harsh Neotia, Chairman, Ambuja Realty said.

Manish Mehta, VP, India Homes — an online real estate portal — is looking forward to softening of interest rates. “Lower interest rates would help in driving consumer confidence and sentiment,” he added.

Lower speculation

It is widely expected that investment buying would be slow in the home segment in 2013, thereby reducing the speculation element in pricing. Sources suggest approximately one-fifth of the total offerings in Kolkata’s housing segment are lapped up by ‘investors’.

“We do not expect spectacular price movement during 2013. Markets will remain stable with actual users dominating buying,” Harsh Patodia, President, CREDAI (Confederation of Real Estate Developers’ Association of India) told Business Line.

There may, however, be “marginal” upward movement, if raw material prices follows an upward trend. Input prices increased by 30 per cent in 2012 leading to 10-15 per cent movement in housing sector.

As in December, average square foot rates across north, central and eastern parts of the city stood between Rs 3,000 – 4,500 per sq ft. Along the fringes, price varied between Rs 2500 – 3,500 .

“A slight upward movement in prices can be expected in Kolkata,” Akshay Pasari, Director, Pasari Group, said.

Supply Constraints

Meanwhile, supply of homes will continue to remain a major constraint in 2013 offering support to prices. Smaller parcels of land and delay in regulatory clearances act as a deterrent for developing bigger projects in the city.

Ambuja Realty, one of the top builders in the city, for example, did not come out with any fresh offerings in 2012. “It’s not that we slowed down our projects. But obtaining the regulatory clearances took time,” Neotia said.

On the brighter side, Ambuja and Pasari Group have plans to launch new projects in 2013. Concast group, a new entrant in the segment, will launch a 2-acre project at EM Bypass on the eastern fringes of the city.

Rajarhat (east Kolkata), Behala, Diamond Harbour Road (Joka) and EM Bypass, are the key areas of focus for the real estate projects. Areas which have a metro connectivity or will be connected by metro in the future will remain hotspots for real estate activity.

Retail Space

In the retail/commercial space front, 2012 had turned out to be a good year for Kolkata developers. The year saw off-take of nearly 1.8 million sq feet – the higher than 2011.

According to real estate consultant, Jones Lang LaSalle, in 2013, new organized retail project completions across the county are expected to increase significantly (by 109 per cent y-o-y). Chennai, Hyderabad, Kolkata and Pune will be among the major contributors to this increase, with a 53 per cent share of the country’s overall mall supply for 2013.

Major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 9.5 million square feet of mall space in 2013.

“With focus on IT, Kolkata is likely to see good construction activity from IT majors like TCS and Cognizant for their new campuses here in the State. Going forward, this will aid the real estate sector in the State,” Mayank Saksena, Managing Director –Kolkata, JLLS, said.

> abhishek.l@thehindu.co.in

Published on December 28, 2012

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