Kolkata: An emerging hotspot for luxury realty?

With Kolkata witnessing a spurt in launches of luxury properties, we look at what's on offer in this segment and whether such projects can garner sustained demand in a cost-sensitive market

At a recent financial seminar, a panelist suggested that amidst the over-supply in markets across Mumbai, Bengaluru and Delhi-NCR, the luxury segment in Kolkata stood out. This raised the question of whether a cost-conscious city like Kolkata, could get big ticket investments in the luxury segment. An outside impression could indicate that lower ticket sizes are being sold as luxury properties in Kolkata. Does this suggest that Kolkata has come up in the luxury and ultra-luxury property segments, due to the lower ticket size?

According to industry estimates, the city has witnessed a 20 per cent rise in the sale of luxury properties, amidst the overall slowdown.

Luxury segment in Kolkata – A snapshot

  • Kolkata has the third-highest number of high net-worth individuals (HNIs) in India, with net assets of USD one million or more, as per the World Wealth Report 2017.
  • Kolkata has 9,600 millionaires, which is more in number than major cities such as Bengaluru (7,700 millionaires), Hyderabad (9,000 millionaires), Pune (4,500 millionaires) and Chennai (6,600 millionaires).
  • Trump Tower, which was launched in Kolkata with a starting price of Rs 3.75 crores, reported 50 per cent bookings within 40 days of its soft launch.
  • Tata Housing is developing a project at Alipore in Kolkata, with a price tag of Rs four crores.
  • Forum has launched Atmosphere at Topsia, where the price band is between Rs 12 crores and Rs 16 crores.
  • Upscale housing project, The 42 at Chowringhee, has a selling price of Rs 16 crores.
  • Swedish fashion retailer Hennes & Mauritz AB (H&M) has bet on Kolkata with a 18,000-sq-ft retail outlet.

See also: Upcoming micro-markets in Kolkata

Subhankar Das, a local property broker, asserts that luxury properties in his portfolio have been more consistent in the city, than affordable housing. According to him, there has never been a dearth of rich people in Kolkata. However, their preference has always been towards plotted developments.

“In my opinion, south Kolkata is a far better performing market than south Mumbai, south Delhi or south Bengaluru. Upmarket projects that have come up in posh localities like Chowringhee, Rawdon Street, Ballygunge and Jodhpur Park. These expensive launches, targeting the HNIs, have many takers from the Bengali, Marwari and Gujarati communities, who have switched to living in apartments that offer far more comfort and amenities,” says Das.

 

The demand-supply equation, vis-à-vis luxury properties in Kolkata

The healthy demand for luxury properties, raises the question as to whether luxury properties are in short supply in the city. Rakesh Gupta, director, Squarewood Projects, point out that luxury properties in Kolkata are not just catering to individuals from the city but also to the rich clients from across east India.

Buyers from Ranchi, Jamshedpur, Asansol and Guwahati, are betting big on the luxury properties in Kolkata. “Kolkata is the only metro city in east India and hence, it is witnessing traction from rich people across the cities of the east. However, there is definitely an over-supply in this segment now. The luxury developers are also over-leveraged and debt is very high. It will take no less than seven to eight years, for the luxury properties to get absorbed. Most of the luxury properties, other than Trump Tower, have had a long wait, for buyers,” Gupta elaborates.

Analysts maintain that while many developers strive to pull off luxury projects, over-supply could be detrimental, in the absence of product differentiation in the segment. Developers with over-leveraged balance sheets may fail to stay afloat. It all depends on the business model of the developers. Nevertheless, those who are sitting on prime land parcels and opting for joint ventures or joint developments, will be able to survive.

(The writer is CEO, Track2Realty)

 

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