East-West Metro gets a green signal
The railway board gave the nod to commence the commercial run of 5.5 km-long section of the East-West Metro corridor from Sector 5 to Salt Lake Stadium, boding well with both buyers and realtors. In addition, Kolkata metro achieved a major milestone by conducting the trial run of Phoolbagaan – the first underground station - scheduled to be operational by October 2019.
Civic body to organise demolition drive in the city
In a pre-emptive measure, the civic body has decided to demolish over 100 dilapidated buildings with the potential of a near-future collapse. The authority has planned to provide proper dwellings for rehabilitation at the site. In another move, 700 illegal buildings constructed without proper licenses and legal approvals are planned to be razed out.
State amends Thika Tenancy Act
The amendment has permitted the slum dwellers in Kolkata, Howrah and Asansol to build houses of over 9.5 meters on the Thika land. The move would unlock over 2,500 acres of land to pave the way for vertical expansion of the city, benefiting areas such as Ahiritola, Burrabazaar, Garden Reach, Gouribari, Kasba, Metiabruz, and Tangra.
BMC to impose strict property tax penalties
Bidhannagar Municipal Corporation (BMC) has initiated a collection drive to recover pending property tax dues worth several crores by September-end. The revenue is planned to be used for the development of various infrastructure projects across the city. The tax evaders who fail to clear dues by the given deadline will attract about 15 penalties.
The threat of brewing political instability, NBFC crisis and the revised GST regime without Input Tax Credit (ITC) benefits put downward pressure on average property prices in Kolkata. Notably, prices in about 60 percent of the tracked localities either remained unaltered or dipped by 1-2 percent. The remaining witnessed a moderate hike of 1-4 percent in Apr-Jun 2019 versus the previous quarter. The rental market continued to remain upbeat with average ‘asks’ heading north by three percent, YoY.
Sale conversions remained restricted despite steady demand for 2 BHK and 3 BHK housing units in Rajarhat, New Town and areas of South Kolkata. Timid home buying sentiment, increased regulatory environment and financial crisis made the developers take a backseat. The quarter subsequently recorded an addition of around 1,000 new units. Inventory overhang remained unchanged with over 40,000 housing units in the quarter.
With East-West metro corridor inching closer to its completion, housing demand in nearby localities such as Salt Lake, Barrackpore and Dum Dum is expected to improve. Additionally, the reduced home loan and repo rates, along with the launch of Real Estate Investment Trusts (REITs) are anticipated to open fund-raising avenues for the developers to complete their existing projects and launch new ones.
The snail-paced implementation of WBHIRA proved to be a growth dampener yet again. With some small and mid-scale developers merging with reputed players in the market, the second quarter of 2019 might see some new project launches in the affordable and mid-housing segments.
Reasons including, but not limited to revised GST implementation, snailpaced project registrations under WBHIRA and political upheavals kept Kolkata’s real estate market sluggish in the quarter ending June 2019. In the absence of any improvement in the sales volume over the last quarter, developers refrained from adding new inventory to the market. Average rentals, however, posted a hike of three percent, YoY.
While property prices remained under pressure, Kolkata drew nearly 70 percent of its total residential enquiries from Rajarhat, New Town and areas of South Kolkata such as Tollygunge, Joka and Behala, among others. However, steady housing demand did not translate into sales. In turn, Rajarhat and New Town reported a decline in the average capital values by 1-2 percent, QoQ.
About 75 percent of the total housing demand was noted for properties priced within Rs 50 lakh. An unmet supply of 25 percent resulted in muted sales, yet again. As the demand for affordable and mid-income segments continued to rise, the appetite for premium segment went further downhill. The city has an oversupply of about 20 percent in luxury and ultra-luxury categories, leaving prospective homebuyers spoilt for choices.
Backed by improved infrastructure and connectivity, localities of North and South Kolkata such as EM Bypass, Dum Dum and Alipore remained the preferred choices for launching new projects among the developer community. With developers failing at launching projects in the right budget bracket again, new launches, albeit minimal, offered residential units for around Rs 50-80 lakh. This consequently widened the demand-supply gap by about 20 percent, with availability outweighing need.
While homebuyers were seen apprehensive of entering the market in anticipation of the GST rate cut in Jan-Mar 2019, the revision with the exclusion of ITC benefits resulted in price corrections to the tune of 1-4 percent. Southern localities such as Bagha Jatin, Bansdroni and Rajpur were among the limited ones recording a price increment of four percent, QoQ.
The residential rental graph recorded an uptick of three percent in Apr-Jun 2019 vs Apr-Jun 2018. Baguihati in North Kolkata emerged as the frontrunner recording nine percent hike in rental rates, YoY, on account of ambitious ‘asks’. Owing to improved connectivity and rise in co-living spaces in New Town and Salt Lake, the rental values of both the localities witnessed a surge of six percent, each, annually. Among all zones, the tenant community preferred the micro-markets of South Kolkata including Dhakuria, Bhawanipore, Bansdroni, Mukundapur, Patuli, New Garia, Santoshpur and Kalikapur. Consequently, the localities saw prices inching up by 7-8 percent, each, YoY.
BUDGET WISE SUPPLY OF APARTMENTS