Over the past decade, property prices in Kolkata have been moving steadily northwards, with a 30-50% increase in price per square foot in some areas over this 10-year period. An ever-growing population, improving infrastructure, better economic conditions, and proactive government policies, together with global events, have all played a role in this upswing.
While the real estate market in Kolkata has always been seen as more affordable compared to other metro cities, the demand for new residences has been significantly boosted by the pandemic-induced new normal of remote and hybrid working models. The city’s strategic location has triggered substantial reverse traffic, and improved connectivity has also fueled demand.
Some of the factors buoying Kolkata real estate market in the past decade:
- Metro connectivity: The new Metro lines recently launched and those under construction and nearing completion have totally altered the dynamics of the Kolkata property market. Prices have gone up significantly in areas with easy Metro connectivity, like along the EM Bypass, Dum Dum, BT Road, Behala-Joka, and the like. Even the Southern Bypass has become a new growth area with a number of developments coming up, betting on Metro proximity and also much improved road connectivity.
- A stronger economy: With more businesses doing better and a raft of startups alongside established players, particularly in the IT and ITeS sectors, setting up shop, there are more jobs and more disposable income. Hence, demand for housing has of late outstripped ready stocks, leading to a rise in property prices over the past few years. The housing demand has also swelled in the post-pandemic period, the work-from-home and hybrid formats becoming quite the norm, and many working professionals returning to their hometown.
- Higher inflation: Rising inflation has triggered an across-the-board rise in prices of raw materials like cement and steel, not to mention labor costs, thus contributing to the generic rise in property prices around town.
- Proactive policies: Proactive government policies over the past decade or so, like tax incentives, stamp duty waiver, grant of subsidies, etc., have also contributed to market growth and rise in property prices. It has injected considerable energy into an erstwhile stagnating market.
- Investor role: The Kolkata real estate market was earlier not known for speculative buying as such. Over the past decade or so, however, a good number of investors have pinned their faith on the city’s burgeoning property market, which has also boosted sales. The newfound confidence is expected to grow further, given strong tailwinds buoying this segment, say experts.
Office space demand up
Also, after some slack, the demand for office spaces has started moving firmly northwards again over the past few years. Gross leasing across the leading cities of the country in the second quarter of last year almost touched 13 million sq ft, according to market experts, clearly defying international trends and once again underlining the resilience of India’s commercial real estate sector. Kolkata is very much on this bandwagon.
With such a high absorption rate, the momentum is expected to sustain itself over the next few years as well. Kolkata has been one of the pace-setters in this surge along with Bengaluru and Pune. While average office rents in the city have been rising by almost 2.8% year-on-year, the spike in the first six months of this year itself has almost touched double digits. Combined occupancy at the twin tech hubs of Kolkata – Sector V and Rajarhat – has been holding steady over 80% post-pandemic.
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