Kolkata Insite Report Jul-Sep 2017

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Market Movers

West Bengal misses RERA deadline

The State’s inability to announce RERA rules, appoint a regulator and launch the RERA website translated into subdued market sentiment.

Effective waste management on the cards

With the aim of tackling waste dumping issue, the Kolkata Municipal Corporation (KMC) proposed to offer tax exemption to housing societies with composting system in the premises. If successful, the move will improve the liveability index of the city.

Possibility of safer building structures to create fresh demand

The KMC planned to form a special committee to find solutions to the issue of unsafe structures. Formed at a borough level, the committee will be headed by the local chairperson. It is expected to open the way to redevelopment of dilapidated buildings in the city.

Kolkata to bring unused allotted land under the scanner

Allotted plots, in the absence of any construction, would be liable for a withdrawal by the Housing Infrastructure Development Corporation (HIDCO), thereby opening up land parcels for real estate development.

Infrastructure on government’s radar

Development of infrastructure received a push with an investment of Rs 12,180 crore allocated for road, power and water supply projects in the city. A large chunk of the funds are planned to go towards development of 12 road projects in Kolkata, including six flyovers and an elevated corridor.

Kolkata at a Glance

Kolkata outlook

 

99ACRES OUTLOOK

The Jul-Sep 2017 quarter witnessed a distinct change in Kolkata’s realty landscape – the conventionally-preferred destinations of BT Road, Dunlop and Salt Lake made way for the peripheral localities of Barasat, Baruipur, Narendrapur and Chinar Park. Availability of cost-effective land parcels in the fringes buoyed Kolkata’s preference for compact homes, at the same time, offering the option of emigrating from the congested city hubs to relatively greener and wellmaintained communities, with modern amenities.

Growth in physical infrastructure – east-west metro expansion and six-laning of NH-2 – continued at the same pace. The impact of the development was, however, truncated by the exuberance of upcoming festive month and the confusion associated with the new policy reforms. The successive quarters are expected to unleash the full impact of RERA and GST on the developer fraternity, which might not have a bearing on sales but is anticipated to improve market traction.

From a macroscopic viewpoint, proximity to IT hubs might propel capital ‘asks’ in the eminent residential belt of Rajarhat, New Town and the commercial belt of Sector V. The residential pockets along the Barrackpore Trunk (BT) Road – Bara Nagar, Belgharia, Khardah – and the localities that are witnessing new phase launches – Joka, Barasat, Agarpara, Narendrapur, Garia and Baruipur – are set to take the centre stage in Kolkata’s real estate story in the next one year.

Key Highlights

While revolutionary policy changes – starting with demonetisation in 2016, followed by RERA in May 2017 and GST in July 2017 – catapulted the Indian real estate sector into a transitionary phase, Kolkata continued its meandering trajectory, awaiting the new reforms to hit the ground. Average property values in the city remained stable in Jul-Sep 2017, vis-à-vis the preceding quarter, while the rental market strengthened by two percent, YoY.

  • Jul-Sep 2017 was testimony to the emergence of North Kolkata as a preferred residential destination, shedding its industrial identity. Certain parts of the EM Bypass – from Garia to Baruipur – which were earlier looked upon as hinterlands also came to the forefront in the residential market.
  • Joka, Barasat and Agarpara, the bastion of affordable housing projects, witnessed home values surging to the tune of 4-5 percent, QoQ. Launch of new phases in existing residential projects and upcoming metro connectivity bolstered capital prices in Joka. Improved mobility on the back of metro connectivity helped the areas register a rise in enquiries and ‘ask’ rates.
  • Barasat topped the capital charts in Jul-Sep 2017 due to the presence of a plethora of affordable housing projects, boasting of the lowest price tag in Kolkata. Being an IT hub, Rajarhat has always been the star locale of the City of Joy, with a surplus of under-construction and ready homes. Although demand for property continued to be in deficit to supply, the residential pocket clocked a rise of three percent in capital values, QoQ.
  • Market sentiment remained meek in Garia, Baruipur and Narendrapur in Jul-Sep 2017; however, the localities hold great promise due to the rising number of new launches in the affordable housing segment.
  • Kolkata’s rental landscape continued to trace the growth path in Jul-Sep 2017, vis-à-vis 2016, with Prince Anwar Shah Road carrying the baton of progressive charts with a whopping rise of 14 percent, YoY. The locality specifically caters to single professionals, students and nuclear families. The presence of an active broker community in the area also helped it garner more tenants.
  • Proximity to the airport and persistent demand from the aviation staff propelled annual rental ‘asks’ by nine percent, each, in and around Chinar Park and Dum Dum.
  • Santoshpur and Kalikapur, riding the wave of excellent connectivity via the EM Bypass, reported an eight percent growth in average rental values. Being in the vicinity of Prince Anwar Shah Road also lent an additional leverage to the housing pockets.

Kolkata capital and rental performersDemand-Supply Analysis

In sync with the real estate story of India, Kolkata reported a skewed demand-supply equation in Jul-Sep 2017 vis-à-vis Apr-Jun 2017. Availability of houses outweighed the popularity parameter by 10 percent despite a drop in new launches. This disparity existed in all budget categories, save the affordable segment.

  • Kolkata demand supply graph 1Kolkata has always exhibited a penchant for budget homes. At present, the incentives offered under the Pradhan Mantri Awas Yojana (PMAY) have further galvanised developers in the affordable segment, gearing over 50 percent of the total demand towards properties priced within Rs 25 lakh.
  • The rest of the budget brackets delineated a disequilibrium of 3-7 percent in demand and supply; the largest gap being in the luxury housing segment where availability of apartments exceeded their preference by 14 percent in Jul-Sep 2017.
  • Supply across mid, high and luxury segments continued to weigh down market sentiment, while demand remained constant amid the impending reformatory changes.
  • While increasing incidence of project delays had already amplified buyer traction in the ready-to-move category, policy initiatives such as GST and the impending RERA have augmented the trend as these promise to instil transparency and accountability to the sector.

 

Kolkata demand supply graph 2

Annexures

CAPITAL VALUES- APARTMENTS

RENTAL VALUES- APARTMENTS

Locality

Jul-Sep 2017

% Change

Locality

Jul-Sep 2017

% Change

Action Area I

4900

0

Action Area I

15

0

Agarpara

2600

4

Baguihati

11

5

Alipore

12700

-1

Ballygunge

29

2

Baguihati

3200

-6

Bansdroni

14

4

Ballygunge

11900

1

Behala

13

4

Bansdroni

3750

3

Chinar Park

12

9

Barasat

2300

5

Dum Dum

13

9

Behala

3650

-1

Garia

13

-7

Behala Chowrasta

3550

0

Gariahat

27

4

Belgharia

3150

-2

Jadavpur

16

0

Bhawanipore

9100

-4

Jodhpur Park

20

5

Chinar Park

4600

4

Kaikhali

12

4

Dum Dum

3275

-2

Kalikapur

14

8

Garia

3725

-6

Kasba

17

3

Jessore Road

4175

1

Kestopur

11

0

Jodhpur Park

7550

-4

Lake Gardens

18

3

Joka

3250

5

Madhyamgram

9

-5

Kestopur

3325

1

Naktala

14

4

Narendrapur

3600

1

Narendrapur

11

0

Netaji Nagar

3750

-6

New Alipore

21

0

New Alipore

6870

1

New Town

14

0

New Garia

3500

-3

Patuli

13

-4

New Town

4850

-5

Prince Anwar Shah Rd.

28

14

Park Circus

5950

-2

Rajarhat

13

0

Picnic Garden

4650

3

Salt Lake

17

0

Prince Anwar Shah Rd.

10085

-4

Santoshpur

13

8

Prince Anwar Shah Road Connector

5000

-1

Southern Avenue

27

4

Rajarhat

4500

3

Tollygunge

18

3

Salt Lake

5775

-1

VIP Road

13

-4

Santoshpur

4200

1

Sodepur

3125

1

Southern Avenue

10075

2

Tollygunge

4800

2

Uttarpara

2800

-5

VIP Road

4400

-4


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