Kolkata is fundamentally a Tier II city, and its real estate market is not as volatile as those of the primary cities. Because of this, Kolkata’s residential property sector was not as seriously impacted by the nationwide slump in the real estate market as cities like Mumbai, Delhi, Pune or Hyderabad.
Though traditionally quite conservative when compared to these cities, the Kolkata residential property market now has a rather heavy complement of investors driving it. The eastern micro-market – specifically Rajarhat – has seen the highest presence of investors, with investor sales outnumbering end-user sales in recent years. At the moment, it would be safe to say that around 60% of Kolkata’s residential real estate market is driven by investors.
The pace of recovery from the slump has been steady – but like every other city, the growth in residential property rates is not been uniform across all locations. Established central areas show much the same dynamics as those in cities like Mumbai and Pune do because appreciation potential hovers around the peak levels for these areas already. At the same time, demand for these locations is also constant.
To illustrate – the CBD (Central Business District) locations from Dalhousie to Elgin Road have not seen much upward or downward movement in residential rates. In 2007, they ranged from Rs.10000-12000/sq.ft. and now are at Rs. 12000-15000/sq.ft. The prime areas of Alipore and Ballygunge in the SBD have residential rates and market dynamics matching those of the CBD.
The SBD (Secondary Business District) areas like Dariahat, the Eastern Metropolitan Bypass and Central Avenue upto Lake Town on VIP Road have seen higher appreciation as housing demand spread outward into more affordable areas. In these areas, housing rates ranged from has been higher – from Rs. 2500-4000/sq.ft in 2007 to Rs. 3000-7000/sq.ft. today. In the PBD (Peripheral Business District) areas beyond the SBD, rates have also been fluctuating (though less dramatically) from around Rs. 1500-2000/sq.ft in 2007 to Rs. 2000-4000/sq.ft. today.
As a matter of interest, the costliest residential areas in Kolkata today are Park Street, Ballygunge, Alipore and Camac Street, where rates range from Rs. 12000-15000/sq.ft. The cheapest areas are in the PBD, in areas such as Dumdum and Garia. Rates there range from Rs. 1500-2500/sq.ft.
I expect residential capital values in Kolkata to rise steadily in the feature, not least of all because of the advent of reputed developers such as Godrej, DLF and Unitech. In fact, considering the demand, prices are likely to rise much faster for residential properties than in other real estate segments.
Mayank Saksena, City Head - Kolkata
The author is the City Head – Kolkata of Jones Lang LaSalle India
