Bengal drafts its first version of RERA
Although over-delayed, the state drafted Housing Infrastructure Regulation Act (HIRA) on 17 October, 2017, taking a massive leap towards infusing transparency in the real estate market.
Expanding transport infrastructure to set off Kolkata’s realty
Commencement of work on metro extension projects uplifted realty sentiment in the residential belts of Joka, Barasat and Salt Lake-Sector V. Further, development of elevated connector on Action Area II and a modern bus terminus in Action Area III gave a fillip to home values in the locales.
Rejigging of mid-income bracket set market abuzz
While the size of MIG homes under PMAY scheme was increased by 33-35 percent, a Union Cabinet decision brought a bulk of Kolkata’s inventory – including 3BHK and 4BHK configurations – under the mid-income ambit, offering a major financial impetus to buyers looking for ready homes.
Redevelopment endeavours uplift market sentiment
A surge of 30 percent in redevelopment deals in the last three years pushed new launches and brought the saturated areas of Ballygunge, Bhawanipore, Alipore in the limelight, despite an overall sluggish capital market.
Wait for new property tax system continues
Amidst poor response from property owners for the newly-introduced tax system, Kolkata Municipal Corporation intends to revise Unit Area Assessment (UAA), aiming to incentivise the buyer community.
After more than four quarters of what seemed like a free falling market, Kolkata witnessed a reversal of realty fortunes and clocked a stable capital market. While extension of metro network – Kolkata’s lifeline – played a major role in catalysing the real estate market, drafting of the Housing Infrastructure Regulation Act (HIRA) also acted as a growth promoter. At present, the developer and homebuyer fraternities are awaiting clarity on the Act, expecting a concrete improvement in real estate operations.
Meanwhile, the southern peripheral locality of Joka emerged as a potential residential destination in Oct-Dec 2017. In addition to the peripheries, this quarter was also witness to the prominent localities – New Alipore, Bhawanipore, Sodepur – coming to the fore as a result of redevelopment endeavours.
Stable office leasing in the city fringes, such as Salt Lake- Sector V, New Town and Rajarhat, continued to whet tenant appetite. Availability of Grade-A supply at comparatively low rentals benefitted this belt. Although presence of office and commercial occupiers did not directly impact the residential market in Oct-Dec 2017, persistence of leasing momentum is anticipated to translate into higher sales volume in the coming two quarters.
All in all, Kolkata’s real estate seems to be on a transit mode, acclimatisating to new structural changes and getting future-ready.
Oct-Dec 2017 was testimony to the drafting of Housing Infrastructure Regulation Act (HIRA), Bengal’s version of RERA, a colossal step towards ushering transparency and ensuring a buyer-friendly realty landscape in Kolkata. The move lent cheer to the homebuyer community, and coupled with infrastructural upgrades, translated into a marginal rise in property values. The market, however, awaits clarity on Housing Infrastructure Regulation Act (HIRA), likely to be implemented early 2018.
- While Central, East and North Kolkata reported stagnancy or a downtrend in the capital graph, the western and southern zones witnessed average capital values rising by 1-2 percent, each, QoQ. Notably, almost 70 percent of the tracked localities in South Kolkata posted growth on the back of resale activity and improvement in road infrastructure.
- The comparatively low-priced localities of Brahmapur and Purbalok recorded four percent surge in capital ‘asks’ in Oct-Dec 2017, becoming new entrants in the list of top performers.
- Prices bolstered by four percent, QoQ, in the established locales of Alipore, Tollygunge and Jadavpur. With properties changing hands from investors to end-users in Jadavpur, projects nearing completion in Tollygunge and premium project launches in Alipore, the rise in home values was expected.
- Property prices in Behala, Narendrapur and Kasba rose to the tune of three percent, each, over the last two quarters. While Narendrapur and Kasba enjoy proximity to the Eastern Metropolitan (EM) Bypass, Behala attributed its growth to the upcoming metro station at Joka and the recent augmentation of the Diamond Harbour Road.
- Sodepur and Barasat, posted a price growth of two percent, each, QoQ, owing to the presence of resale inventory and ongoing metro expansion.
- Surprisingly, Joka did not report any growth in realty transactions in Oct-Dec 2017. The locality, however, has been witnessing new launches by reputed players.
- The rental landscape continued to trace the growth path in Q4 2017, vis-à-vis Q4 2016. The consistent two percent upswing can be ascribed to price correction resulting from contractual renewals.
- The prominent commercial and IT hub, Action Area I topped the rental charts with 10 percent growth in ‘asks’, YoY, on the back of road infra enhancements. Rents here are expected to improve further in the upcoming quarters due to a flourishing office market.
- Santoshpur and Kalikapur recorded a rental surge of eight percent, each, YoY. Inflated ‘asks’, due to a quick uptake of rental inventory, emerged as a growth propeller.
- While rents climbed by three percent, YoY, in Salt Lake, the adjoining locality of Rajarhat witnessed a stable market, anticipating buoyancy in the forthcoming quarter on the wave of office space absorption.
A cursory glance at Kolkata’s demand-supply graph would showcase equilibrium in Oct-Dec 2017. A comprehensive analysis, however, revealed demand for ready homes exceeding availability by a considerable margin. The new launch segment remained stagnant as developers adopted a wait-and-watch mode, awaiting clarity on HIRA.
- Kolkata exhibited an increasing appetite for properties carrying a price tag of Rs 25 lakh or less in the December ending quarter 2017. However, supply of affordable homes could not keep pace with the ever-surging popularity.
- Supply of homes in the mid, high and luxury brackets, remained constant, QoQ, while availability fluctuated marginally in the affordable range of Rs 25 lakh and below and the ultra-luxury segment of Rs 1 crore and above.
- Only the ultra-luxury bracket, comprising homes priced above Rs 1 crore, was close to achieving demand-supply equilibrium in Oct-Dec 2017.
- The luxury segment reported a skewed graph, with properties priced between Rs 60 lakh and Rs 1 crore capturing 17 percent of the total market. Demand, on the other hand, remained limited to only three percent.
- The inclination towards affordable homes is anticipated to continue in the budget-conscious city. The forthcoming quarters might usher more transparency in Kolkata’s realty, thereby, strengthening consumer and developer confidence.