#DemonetisationAnniversary: End user-driven Kolkata remains resilient in the face of currency ban


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Demonetisation story Kolkata

The sudden government move to jettison black money from the Indian economy not only inconvenienced citizens but also brought cash down businesses to a grinding halt. The months after the ban of Rs 500 and Rs 1000 notes proved nightmarish for the real estate sector, especially the cash-dependent resale market. It has been one year since the radical reform shook the country; however, the realty segment continues to grapple with the remnants of the reformatory decision. 99acres takes a detailed look at how the real estate landscapes of the top eight cities of India coped with the change.

The revolutionary note ban move of November 2016, which created havoc in the inventory-laden property markets of Delhi NCR and Mumbai, produced only a fleeting dent in Kolkata’s real estate. Kolkata, known to be one of the least policy-responsive markets in India, was sheltered against the storm by the prevalence of a huge end-user base, which acted as a buffer. While large-scale impact was evaded, the market did receive a temporary jolt by the unforeseen governmental endeavour, which aimed at flushing out black money.

Kolkata’s real estate responded with an abrupt dip in project launches as the construction sector is largely cash-dependent. New launches dropped by almost 18 percent between Oct-Dec 2016 and Jul-Sep 2017, as an aftermath of demonetisation. Homebuyers, too, either got into a contemplative mode and postponed purchase decision or exercised more bargaining power, thereby, demanding larger discounts. However, Kolkata was the least impacted city among the metros in India, posting a 20 percent downturn in home sales in Q4 2016.

The only category which withstood the demonetisation impact was the residential land segment in the city. In contrast to other metros, this category witnessed no shift in consumer sentiment, nor a dip in sales volume since transactions in land parcels continued to remain limited to low budget ranges of Rs 10-15 lakh. Demonetisation, therefore, did not impact the residential plot segment in the city.

The impact of demonetisation on the real estate sentiment in Kolkata lasted for about two quarters, although the landscape, thereafter, continued exhibiting caution in terms of transactions. Lack of migrant population due to limited IT firms ensured that the property market continued its meandering trajectory, with stable home values. The delay in infrastructural improvement and the absence of investors manifested in plateauing price points, at the same time, reinforcing the city’s resilience to market uncertainties. 

Market Analysis

Kolkata Story_demonetisation

Impact of Demonetisation

Primary Residential Market

Being highly end-user centric, there was no adverse impact of the currency ban move on Kolkata’s primary market. Prior to this, the city had an inventory overhang of three years. Builders were contemplating restriction on new launches in order to offload stock. The Central government’s move left them with no option but to curtail new project launches as most raw material purchases were cash-driven. To this end, builders slowed down project development and awaited clarity not just on the market scenario but also over the then-anticipated policy changes – RERA and GST.

Anticipating a backlash on property price tags, homebuyers, on the other hand, withdrew their purchase decision from both, the ready-to-move and under-construction segments. Property transactions, temporarily dipped by almost 30-35 percent in Oct-Dec 2016. Developers, however, offered a slew of incentives to stir up enquiries, which smoothened in the Jan-Mar 2017 quarter.

The only long-lasting impact of demonetisation was the heightened attraction for affordable homes. Kolkata has always exhibited a penchant for low-priced properties. The note ban move further heightened this characteristic. The affordable segment reported an increase in traction as 90 percent of the buyer base comprise salaried or self-employed people, who rely on loans for financing home purchases.


NJ Quote


Secondary Residential Market

The resale market bore a slight impact since the cash component in this segment is typically 30-40 percent of the total ownership cost. There was a 10-15 percent dip in resale transactions in Oct-Dec 2016. However, an abundance of end-users, who purchased homes on the basis of liveability convenience and a negligible number of investors ensured that the impact of demonetisation was minimal in Kolkata’s secondary market.


Current ‘ask’ rates*

Capital Growth**

Growth Drivers




  • Availability of surplus under-construction and ready homes
  • Proximity to IT hubs

New Town



  • Accumulating stock at premium prices spilled demand to affordable locations
  • Presence of IT companies led owners and developers to retain ‘ask’ rates

Dum Dum



  • Proximity to airport and metro connectivity




  • Excess resale housing stock




  • Projects nearing completion and presence of ready stock

* Current ‘asks’ are median rates for listings in the respective localities posted on 99acres.com in Jul-Sep 2017 – both resale and new projects

**Capital growth is calculated basis the changes in average weighted ‘asks’, YoY – Jul-Sep 2016 vs. Jul-Sep 2017

Rental Market

Kolkata has traditionally struggled with getting a regular influx of migrant population. Inadequate IT growth and service jobs is one of the primary factors, which prevents rental housing demand from picking up, unlike Bangalore, Pune and Hyderabad. Hence, the rental market did not stand to benefit a lot over the last one year. Even the preferred residential pockets such as Salt Lake and EM Bypass witnessed average leasing rates maintaining status quo. Characteristically, tenants in the city shift from one rented apartment to another at the time of lease agreement renewals. To this end, demonetisation could do little to lift the rental market of Kolkata.

Demonetisation rental graph Kolkata

National Outlook

National Outlook_Demonetisation

Kolkata’s resistance to change worked as a bulwark for the real estate market during demonetisation. After a brief hit in sales, the market reverted to normalcy within a couple of quarters. At present, the city has several infrastructural development projects in the offing which may impact realty sentiment positively. Further, the upcoming quarters are anticipated to witness the launch of RERA and unleash the full impact of GST on the developer fraternity. While this will not push sales volume up by a huge margin, it could improve market traction. 

Expert Opinion

By Ashish R Puravankara, MD, Puravankara Ltd

By Niranjan Hiranandani, Founder & CMD, Hiranandani Communities

By Aaron Solomon, Partner, Solomon & Co

By Saurabh Jindal, JMD, SVP Group

By Sanjay Jain, Group Managing Director, Siddha Group

By Arjunpreet Singh Sahni, Executive Director, Solitaire Group

By Pankaj Kumar Jain, MD, KW Group

By Mukund Patel, MD, Rutu Group

By Shishir Baijal, Chairman & MD, Knight Frank India

By Manju Yagnik, Vice-Chairperson, Nahar Group

By Aashiesh Agarwaal, Founder & Managing Partner, Pinakin Advisors LLP

By Anuj Puri, Chairman, ANAROCK Property Consultants

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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  • Comments
  • Pradeep Gupta November 9, 201711:35 am

    Is demand of flats gone down in ranchi jharkhand in prime locations like burdwan compound

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