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West Bengal’s new IT policy aims to disseminate the IT/ITeS activities across the state, for the benefit of the population in the fringe and rural areas. This will be a game-changer for the state’s real estate market, as well as its larger economy, according to a report, ‘Kolkata: The East’s Icon of Balanced Growth’, by ANAROCK Property Consultants.
The state’s new IT Policy plans to achieve 25 per cent of the share of the country’s IT/ITeS exports by 2030, from the current share of less than five per cent. In order to achieve this ambitious target, the state has planned to develop 13 new IT parks across the state, the report pointed out. “As east Kolkata is saturated with IT developments, the state government is spreading the new IT developments into other parts of the state. Hence, other zones of Kolkata are most likely to witness housing demand, like eastern Kolkata,” the report added.
Commenting on the state’s property market, Anuj Puri, chairman, ANAROCK Property Consultants, said, “West Bengal’s real estate, since 2015, witnessed a marginal appreciation in its capital values. However, the market is expected to be back on a growth trajectory, with controlled supply, steadily growing absorption and with some significant reforms from the state government. The state has also undergone a strong transformation in the IT/ITeS sector, with the presence of 12 established IT parks and 13 more to come. However, West Bengal is struggling with a few growth inhibitors such as the slow-paced progress of key infrastructure projects, unavailability of skilled labour and relatively slower growth in IT/ITeS exports.”
West Bengal’s macro-economic indicators
- Exports improved by 10.5 per cent during FY 2016-17, over the previous fiscal.
- Debt as a percentage of Gross State Domestic Product (GSDP) reduced from 40.65 per cent in 2010-11 to 33.72 per cent in 2016-17.
- West Bengal has topped the list of states in the Business Reform Action Plan (BRAP), with a 99.73 per cent implementation score.
Kolkata residential real estate market dynamics
- Although 1,25,000 units were launched in Kolkata between 2013 and Q3 2018, there was a serious supply-absorption mismatch in 2014. Fortunately, the supply became more controlled after that. Kolkata saw 86,000 units sold during 2013-Q3 2018, with 2016 recording the highest absorption levels.
- Services is the fastest-growing sector with 15.6 per cent growth in 2017-18.
- Housing prices declined in Q4 2016 after demonetisation but recovered within four quarters, to register positive growth.
- Property prices increased from Rs 4,160 per sq ft in Q1 2015 to Rs 4,405 per sq ft during Q3 2018, registering a growth of two per cent.
East Kolkata property market
- East Kolkata is the buzzing IT corridor of West Bengal. Demand for residential housing has primarily been driven by the IT/ITeS sector.
- Micro-markets such as Salt Lake City, Rajarhat New Town and EM Bypass are experiencing traction for residential housing, amidst rising employment opportunities.
- More than 20,000 units were launched in this zone since 2015 while 18,000 units were absorbed during the same period.
- The eastern zone has an unsold inventory of 18,000 units, accounting for 36 per cent of the total unsold inventory stock of the city.
Key growth drivers
- Well-planned existing and upcoming road network.
- The upcoming East-West Metro (Line 2) will further enhance connectivity.
- EM Bypass facilitates smooth connectivity to various part of Kolkata.
- The region enjoys proximity to IT/ITeS establishments at Sector V in Salt Lake.
East Kolkata, the major employment hub of the city, is slowly getting saturated and unsold inventory has risen during the last few years, although it is lower than the levels of 2015. The inventory overhang is growing owing to the rising supply.
West Kolkata property market
- West Kolkata accounted for more than 5,000 units of supply since 2015.
- Despite having the lowest supply compared to north, south and east zones, west has the highest absorption levels, accounting for more than 6,700 units during the same period and exceeding supply.
- The last three quarters of 2018 witnessed a huge rise in absorption levels, which reduced the unsold inventory levels by 20 per cent.
- The west zone comprises of prominent micro-markets such as Santragachi, Howrah, Makardaha and Bandhaghat.
- Kona Expressway in the region is part of the Golden Quadrilateral project, which connects the four largest Indian metros: Delhi, Mumbai, Chennai and Kolkata.
Key growth drivers
- The stretch along Kona Expressway near Dankuni is likely to witness rampant developments, due to excellent connectivity with Delhi and Mumbai highways.
- Warehousing and logistics are emerging asset classes in the west, owing to its excellent connectivity via the national highway network.
- The upcoming metro rail network from east Kolkata till Howrah, is likely to drive the residential development of west Kolkata.
While the market has been active and prices have been mostly stable, it is anticipated that west Kolkata has the potential for rapid growth in the future. It is anticipated that west Kolkata will be home to major players in the warehousing and logistics, which is expected to transform the region.
South Kolkata property market
- South Kolkata witnessed a supply of more than 26,000 units since 2015, accounting for 39 per cent of the total supply in the city during this period.
- The south zone also has the highest absorption levels, when compared to other zones, accounting for 37 per cent of the total city’s absorption levels.
- The south zone comprises of prominent micro-markets such as Kalikapur, Garia, Narendrapur, Joka and Baruipur.
- A part of the EM Bypass, Gariahat Road and Diamond Harbour Road are the arterial roads in the southern zone.
- The zone predominantly comprises residential developments and a huge number educational establishments.
- Gariahat in Ballygunge is the biggest retail market of south Kolkata.
Key growth drivers
- The upcoming metro rail network under Phase 2 will provide hassle-free connectivity to the residents of southern Kolkata.
- Various flyovers are being constructed, to reduce traffic congestion in the region.
The sales momentum in the southern markets of Kolkata is expected to continue at lower prices, with the peripheral regions being the most active. Prices in the region are likely to remain stable in the short term.
North Kolkata property market
- Comprises prominent micro-markets such as Barasat, Dum Dum, Uttarpara, Barrackpore and Belgharia.
- More than 14,000 units were launched in this zone since 2015 and more than 10,000 units were absorbed.
- This zone has an unsold inventory of more than 11,000 units, accounting for 23 per cent of the total unsold inventory of Kolkata.
- Grand Trunk Road, Barrackpore Trunk Road, Kalyani Expressway, Belghoria Expressway, Jessore Road and SH-13 are the arterial roads in the north zone.
- Dum Dum is a key hub of Kolkata due to its proximity to the airport and presence of metro rail and suburban rail.
Key growth drivers
- Existing and upcoming metro rail network to enhance connectivity with the rest of the city.
- Presence of an excellent road network and further plans to widen the existing road network.
- Proximity to Netaji Subhas Chandra Bose International Airport.
High price points have caused the markets of north Kolkata to become sluggish, resulting in lower sales volume. However, improved infrastructure and connectivity may generate renewed interest from home buyers. Prices are anticipated to remain stable.