Today’s Kolkata with well-planned urban centres, futuristic IT spaces and plush commercial developments belies its image of a ‘dying city’. Major FDIs such as the one finalized by the Salim Group of Indonesia, the renewed interest of international airlines, the burgeoning IT and ITES sector, and prospects of revival of some traditional businesses are fuelling investor confidence in the city.

Kolkata is a compact city, concentrated along the fringes of Hoogly river. The City of Palaces, which was once the second city of British empire, is no longer characterized by traffic jams, deplorable infrastructure and frequent bandhs. The city is transforming, shedding its traditional image and moving with the times. Old palatial bungalows are being replaced by modern structures and new residential townships with the latest amenities are cropping up all around the city. High-end housing projects, which were non-existent so far, are being sold out at a surprising rate. Old shopping haunts have either been renovated into aesthetically designed centers or replaced by malls. It is boom time for the real estate industry in Kolkata.

Residential
The residential real estate market in Kolkata is on an upward trend and has not witnessed such a phenomenal growth since a decade. Almost all housing projects which are coming up in different locations in the city and suburbs are getting sold out. Real estate properties within the Central Business District (CBD) have gone out of reach and are being transacted at prices one could not possibly imagine a few years back. Sale within the CBD has stabilized with no new supply coming up. Residential housing in the prime areas of the city which include Central and South Kolkata as well as Alipore, command anything between Rs 2,600 to Rs 4,000 per sq ft, and in Behala, Garia and EM bypass the price ranges between Rs 1000 to Rs 2500 per sq ft.

Since land within the city is scarce, people have started purchasing flats on the city fringes. Sales in the suburbs, particularly in the southern fringes and along EM bypass, have shown significant growth with prices increasing by at least 12% to 18% per annum. These locations have witnessed the coming up of important residential projects in the last two years. Residential lease rates, which were stable in the first three quarters of 2004, grew by about 4% in the last quarter. A good example of the real estate market trend is the development of a massive project in the new township of Rajarhat.

Among the major buyers are Bengali NRIs and those belonging to the younger generation who constitute 40%-50% of the buyers today, thanks to speedy disbursal of loans from the banks.

Commercial scenario

Boom is also being witnessed in the commercial real estate segment. Properties are being transacted at unheard-of prices. The land prices presently prevalent in IT spaces have shot up three to four times of what it was two-three years ago. Many MNCs are showing keen interest in investing here.

Many major domestic and international players are launching their projects in and around Kolkata and of course, in Rajarhat, the upcoming satellite town. Says Todi, “The arrival of major players like DLF and Unitech will certainly raise benchmarks in the city and ultimately the competition will help raise the quality of real estate in Kolkata.”

Pradeep Sureka, MD, Bengal Park Chambers and also part of the South City Consortium, echoes the same thought. According to him, “There are certain social and local issues which the outside players might find difficult to understand so they need our expertise. This will definitely improve the scale of operation, bring in more professionalism, more transparency and risk-bearing capacity. It is good for branding of the city.”

East Kolkata is fast emerging as a new commercial zone. Real estate experts forecast that Kolkata will see a low sales activity in commercial sector and IT companies and their allies will prefer leasing than buying offices.

Retail segment

Kolkata has several popular brands both Indian and international which have standalone showrooms or are housed in Forum, the shopping mall at City Centre. Shopper’s Stop, Pantaloons, Westside, Metropolis and the new Gariahat Mall are some of the popular shopping destinations. The Music World outlet in Park Street is its most profitable centre in India. Pantaloons at Gariahat and Sony World at Ultadanga have emerged as the highest revenue earner per square feet for their brands on a national level.

Kolkata offers a variety of retail format to its citizens as it has a large middle and upper middle class population forming a huge pool of potential customers. Some of the malls in the pipeline are South City Junction, Lake Mall, Forum II, Mani Square, Oasis Mall, DLF Rajarhat, City Centre II Rajarhat and Peerless’s Axis Mall. Keeping pace with the trend the Heritage Market and the New Market are also getting a facelift. This follows the renovation of The Town Hall.

New pastures

“Though Salt Lake offered housing solution to some extent, it could never really take off the pressure from Kolkata as it became a night town, wherein people went back to their homes in Salt Lake in the evenings. The traffic pressure on Kolkata was not eased,” says Rahul Todi.

The solution perhaps lies in the development of Rajarhat, a very large township coming up in an organized manner in the northeastern fringes of Kolkata.The development of Rajarhat coincided with the IT boom. Nobody thought that acres and acres of land could become a hot destination for the builders. The government is slowly turning the area into a full-fledged city and in the coming years it may emerge as a true sister of Kolkata.

The West Bengal Housing Infrastructure Development Corporation Ltd. (HIDCO) was set up to undertake the development of Rajarhat. The corporation has been given wide powers to acquire and sell land, develop the entire range of infrastructural services, construct housing and commercial premises and also to maintain the new town till such time a regular body is established for the delivery of such services.