September 4, 2023: Real estate consulting firm CBRE, in partnership with Credai, unveiled a collaborative study titled West Bengal: Leading the Eastern Growth Story at the Statecon 2023 event. The report highlights the policy ecosystem, advancements in infrastructure and a promising business milieu in West Bengal, collectively fostering enhanced prospects for investments across diverse realms within the realty domain.
The report mentions that owing to its advantageous positioning and accessibility, Kolkata maintains its status as a pivotal business and financial hub in the Eastern region of India, establishing itself as the epicentre of commercial real estate operations in West Bengal. Its proximity to industrial zones and ports has positioned the city as a prominent trading centre. In April-June 2023, Kolkata, the report said was one of the major players in industrial and logistics leasing in India, accounting for 8-12% of the activity. This reflects significant sector growth, establishing Kolkata as a key hub for businesses and investors. This trend is expected to boost the local economy through job opportunities and increased economic activity. The city’s strategic location, transportation infrastructure, economic trends and demand for warehousing contribute to this leasing trend. The entry of international stakeholders has propelled globalisation in the sector, encompassing local real estate developers.
Tier-2 cities contribution
While Kolkata retains its position as the primary real estate market in the state, the impetus on infrastructure development, highlighted by projects like the Andal airport and the Silicon project, combined with favourable policies, has driven real estate growth towards Tier-2 cities like Durgapur, Siliguri and Darjeeling.
Kolkata’s real estate trajectory
Office sector
Presently, the city boasts an office space stock exceeding 34 million sqft (msf). Moreover, approximately 2.4 msf of investment-grade space, including projects like Ideal Unique Center (approx 7,56,000 sqft), The Summit (approx 3,50,000 sqft) and Imagine Tech Park (approx 3,50,000 sqft) in PBD, are set to conclude construction by the end of 2024.
Furthermore, the Peripheral Business District (PBD) was at the forefront of the expansion, contributing 70% of the office stock share, trailed by the Central Business District (CBD) with a 24% share and the Secondary Business District (SBD) with a 6% share. Total estimated leasing by the end of CY 2023 is likely to be around 1 – 1.2 msf, while new supply is estimated to be 0.9 – 1.1 msf by end of CY 2023.
During Jan-June 2023, corporate occupancy reached 0.6 msf, predominantly favouring compact to mid-sized configurations. During Jan-June 2023, the CBD)observed an office rental value of Rs 95 per sqft per month, while the SBD saw Rs 75 per sqft per month and the PBD recorded Rs 45 per sqft per month in Kolkata.
Residential sector
The report highlighted that during Jan-June 2023, east Kolkata accounted for 31% of the residential supply, followed by north at 19% and south at 16%. Additionally, within the housing sector, affordable housing took the lead with a significant 45% share, followed closely by mid-range housing at 39%. High-end housing comprised 10% of the market, while premium and luxury housing segments contributed 6% collectively during the same period.
Retail sector
Currently, Kolkata boasts over 8 msf of organised retail area. The city’s expanding boundaries and favourable demographic trends indicate substantial prospects for retail sector expansion. As per the CBRE report, till H1 2023, organised retail supply distribution in Kolkata favoured South Kolkata with a 31% share, trailed by East Kolkata at 24%, West Kolkata at 17%, North Kolkata at 15%, and Central Kolkata at 14%.
Regarding rental values of organised retail spaces, South Kolkata dominated the past six months with Rs 375 per sqft per month, trailed by central and east Kolkata at Rs 350 per sqft per month each, while North Kolkata recorded Rs 175 per sqft per month. It is estimated that rentals for both High Streets and Malls are expected to grow by 5-10% by year-end.
Logistics sector
In the first half of the year (Jan-June 2023), the state saw record supply additions due to pending project completions. The report mentions that the state’s infrastructure enhancement, including roads and ports, is set to bolster the logistics sector. Kolkata recorded 8-12% share in leasing activity in Apr-Jun 2023.
Presently, the city has a stock of nearly 10 msf of Grade A logistics developments situated along NH-2, NH-6, Taratala, and other micro markets. NH-6 accounted for most of the supply at 57%, followed by NH-2 at 37%, Taratala at 4%, and other micro markets with a 2% supply share. Taratala recorded a significant rental value of Rs 23 per sqft per month in the past six months, followed closely by NH-2 with Rs 21.5 per sqft per month and NH-6 with Rs 20.5 per sqft per month.
Ram Chandnani, managing director, advisory and transactions services, India, CBRE, emphasised, ” The real estate dynamics in the state, especially in Kolkata, is at a stage wherein the addition of quality supply is boosting absorption, further enabling the state’s real estate growth trajectory. In fact, West Bengal is well poised to attract global investments further as it continues to capitalise on the right policy incentives. Furthermore, the industrial and logistics sector has showcased promising growth and is expected to grow further at 9-10% this year.”
Boman Irani, CMD, Rustomjee Group, national president, Credai, said, “Statecon 2023 – ‘West Bengal: Leading the Eastern Growth Story,’ stands as a pivotal event where we take a comprehensive plunge into the state’s real estate landscape. Our aim is to deeply assess its present state and future potential, spotlighting the pivotal role of Tier-II cities in this growth narrative. This platform serves as an opportunity for real estate stakeholders and the government to converge and engage in dialogue. Together, we can dissect emerging trends, exchange insights, and collaboratively propel the sector forward.”
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