Competitively priced housing units and revised GST rates failed to revive the market sentiment in Kolkata, resulting in muted sales in Jul-Sep 2019. Property prices remained under pressure for the third consecutive quarter. The rental landscape, however, showed buoyancy with a three percent surge in average ‘asks’, YoY.
Rajarhat, New Town and the prime areas of South Kolkata remained the most popular housing hubs, registering about 70 percent of the total enquires received in Jul-Sep 2019. Nevertheless, sales remained restricted on account of tepid home buying sentiment.
Subdued sales prompted builders to restrict new launches and realign their efforts towards completing pending projects. A few small to mid-sized residential projects were launched in South and East Kolkata. Resultantly, the unsold inventory remained unchanged for the second quarter in a row at about 40,000 units.
While 75 percent of demand lies for properties within Rs 40 lakh, there is a shortfall in supply by about 30 percent. An oversupply in luxury and ultra-luxury segments kept the inventory vying for homebuyers. Going ahead, the metro from Salt Lake-Sector V-Salt Lake Stadium is expected to be operational by the end of October 2019. Also, the revision in Floor Area Ratio (FAR) rules and revamping of Majerhat Bridge are anticipated to bolster realty growth in the upcoming quarters.
Property prices in Kolkata posted a negligible hike of a percent, QoQ. Over 50 percent of the demand remained inclined towards 2 BHK and 3 BHK ready units priced within Rs 25 lakh. Resultantly, the localities such as Barrackpore, Madhyamgram, Barasat and Sonarpur witnessed a moderate hike to the tune of 2–4 percent, each, QoQ.
To align new supply with buyers’ demand for budget homes, builders have started reducing the average unit size of apartments to about 1,120 sq ft from the earlier 1,230 sq ft. The popular hubs of South and East Kolkata such as Rajarhat and Sonarpur witnessed maximum project launches within the budget of Rs 40-60 lakh, widening the demand-supply gap by six percent this quarter.
Mukundapur from the South scored the maximum capital appreciation of five percent on account of its robust connectivity to EM Bypass. Other residential pockets from South such as Santoshpur, Jadavpur, Mahamayata, Park Circus and New Garia witnessed a four percent hike in the quarter. In addition, the popular hubs of North Kolkata such as Baguihati, Dum Dum, Ultadanga and Barrackpore saw a growth in average capital ‘asks’ by four percent, each, QoQ.
The rental landscape of Kolkata grew at the rate of three percent, YoY. Ballygunge, Bhawanipore and Action Area III remained the most popular amongst tenants. The localities recorded an upsurge of eight percent in average rentals, each, YoY. Other popular micro-markets, such as Patuli, Santoshpur, Gariahat, Bansdroni and Mukundapur, saw an uptick of seven percent, each, YoY.
With limited number of new housing launches and muted sales, Kolkata’s realty exhibited meek signs of revival in Jul-Sep 2019. Single-window clearance of property mutation and building plans is a welcome move for developers to launch new housing projects in the ensuing quarters. In addition, builders received a relaxation of 92 percent on fire license fees to allow them to utilise the money towards timely completion of on-going projects. Given the current challenges, Kolkata’s residential sector might take another 3-4 quarters to start recovering.