Kolkata has always been considered the underdog of Indian real estate market but seeing how the city is showing signs of stability even when the Indian real estate market is about to hit the real estate bubble, is slowly bringing Kolkata in the limelight. In the recent times, Kolkata Real Estate has been in the news for all the right reasons – from finding itself on the top in the list of cities with least commercial space vacancy to new infrastructure developments aimed at the growth of Kolkata property market.

This article is all about Kolkata’s real estate market – commercial and residential. It highlights the trends related to – Capital & Rental analysis, Demand & Supply of Properties, and also notes what governed the Office Property Market of the city in the Second Quarter of 2016.

Residential Property Market

There are a number of factors that governed and laid the basis of how the coming quarter would be for the residential real estate market of Kolkata. Here are the factors that influenced the residential real estate market of Kolkata in the second quarter of 2016 –

  • Affordable housing has been gained prominence in Kolkata with average launch price declining by a whooping five percent in Q2 2016, as against Q2 2015. The present launch price is around Rs 2,500 per sq ft., which is expected to boost the home ownership sentiments.
  • The new aid in the water connec­tion to G+4-type flats scheme, before obtaining the completion certificates, have been working well for the registered land taxpayers.
  • Liquidity con­straints, high construction costs, and a delay in obtaining the project approvals continues to trouble the community of devel­oper.
  • The infrastructure deficiency, recent upgrades that continues to affect the Kolkata real estate market has been hurting the attractiveness index and thus the investment decision.
  • There was no development related to the establishment of IT/ITeS (SEZs) Special Economic Zones.
  • The supply of afforda­ble projects rose by around 3-4 percent on the Q-o-Q basis, with the support of the various tax incentives by central government.
  • Kolkata’s developers have introduced various deluxe amenities, like rooftop joggers’ tracks and skywalks even in their affordable projects just to capitalize on the back of a price-sensitive market.
  • To strengthen the city’s civic infrastructure by the year 2019, the Kolkata Municipal Corporation has articulated a plan to refurbish the water supply and restore the drainage network.
  • Areas like Kidder­pore, Mominpur, Metiabruz, and Ekbalpur houses more than 4,000 illegitimate projects, thereby loading the urban background of the city.
  • There was a decline in the development of new launches because of the rising inventories, mild demand (other than the affordable segment), and various liquidity constraints that were faced by the city’s developers.
  • The Private equity (PE) investments in the retail properties dried up because of the slow traction in Kolkata’s residential market.

The Capital Analysis

  • The residential market continued to stay under humongous pressure, thereby seeing zero capital growth in the second quarter as against the last quarter.
  • A few localities that gained because of the IT/ITeS companies’ presence included VIP Road and in North Dum Dum; Rajarhat in the East Kolkata. The values here swelled by 7-10 percent on Q-o-Q basis.
  • The launch of new residential spaces and improved connectivity gave a push to housing demand in Naktala region, where the prices went up by seven percent.
  • The dropping project launches trend continued tormenting the real estate market of Kolkata. The percent of decline of the new launches is a lot more than the rate of their absorption, showing that residential market is struggling to reach an equilibrium in the upcoming quarters.

The Rental Analysis

  • The rental scenario of Kolkata described a relatively happier story in Apr-Jun 2016 bringing by an increase in demand for the flats for rent in Kolkata vis-a-vis the capital market. This lead to a yearly appreciation of two percent, despite of the slow rate of migration in Kolkata.
  • With the increasing trend in nuclear families, localities having 1 and 2BHK units – Kestopur, Kalikapur, Narendrapur – received maximum queries of people looking for flat for rent in Kolkata.
  • The sustainable model development for the supply of drinking water in Kalikapur has also increased the area’s attractiveness index, which accounted for 12 percent increase in the rental rates on Y-o-Y basis.
  • The demand for rental properties fell in areas like VIP Road and Salt Lake that houses bigger sized units. Still, Rajarhat was the one exception, which witnessed a rise of eight percent Y-o-Y.

Demand and Supply Analysis

Property Type:

  • Apartments hold three-fourth of the Kolkata’s demand and supply market. While the supply continued exceeding the demand in the Apr-Jun quarter 2016, vis-a-vis Jan-Mar 2016, the crack between them continued increasing Q-o-Q, while being aligned with the inactivity in the property sphere.
  • Builder floor was the only section, where both supply and demand were a seamless match in spite of bagging around eight percent of the whole market share.
  • The demand for independent villas/ houses in the city exceeded supply by a noteworthy margin, with the maximum availability of the property type in western Kolkata.


  • Half of Kolkata’s housing market was seized by properties in the affordable and mid-income segments.
  • Though, the demand and supply graph united in the mid-income housing sector, the request for the affordable properties surpassed their supply in Kolkata. This was not withstanding the number of affordable housing projects propelled in H1 2016.
  • The South and North zones of Kolkata counted for almost 40 percent of the total share of the affordable housing segments.
  • South Kolkata sheltered a strong share of mid and high-income housing residential projects.


  • While the 2BHK segment has stayed the most popular configuration demanded in Kolkata, the 3BHK units were equally popular during the Apr- Jun 2016 quarter, as compared to the Jan-Mar quarter of 2016. More than 45 percent of the market included 2BHK units. While 3BHK made up to another 40 percent of Kolkata realty landscape.
  • The city saw a supply crunch of the 2BHK houses. While the buyers were on a lookout for the lower ticket configurations, the supply continued to be on the lower side.
  • 4BHK units were least in demand and their supply was equally weak; though, the 1BHK group saw the bottommost supply in all the four formats.
  • Supply of the 3 and 4BHK units in Kolkata overrode their demand.


  • The number of project deliveries that are being delayed are extensive, and the demand for ready to move in units are over 82 percent in the present quarter, while the supply is only 68 percent.
  • Replicating the last quarter’s trends, South Kolkata has again contributed to 45 percent to the city’s total ready-to-move-in portfolio.
  • While the south zone observed the maximum number of new launches in the Apr-Jun 2016, the number of new project developments rose by around 5-7 percent in the North and East Kolkata.
  • Overall, a negligible movement was seen in the supply and demand of units across all zones, therefore indicating an inactive market.

Office Property Market

Currently, Kolkata commercial market is showing a rise in the net absorption and decline in vacancies. Other than that, these occurrences were prevalent in Kolkata commercial market this quarter –

  • Approximately, 45,000 square feet were supplemented to the Grade A new projects in the second quarter of year 2016 of Sector-V, Salt Lake, which was a steep decline of 91% from the last quarter.
  • The 1.3 million sq. ft. IT project of Rajarhat, which was scheduled for its completion in this quarter is now postponed to fourth quarter of this year.
  • The second quarter Grade A net absorption was documented at 215,070 sq. ft., which is at an increase of 58.0% from the last quarter.
  • Out of all the submarkets, Salt Lake showed the maximum share in Grade A net absorption with 65%. Here, the telecommunication and education sectors contributed around 21% to the total Grade A renting activity in the quarter. While the education and telecom sector saw a rise, IT-Business Process Management (BPM) domain declined to 15.0% from 36.0% of the last quarter.
  • There was a decline in Grade A vacancy by around 0.8 percentage points, which then stood at 42.4% in the end of the quarter 2 as a result of limited new supply and increased net absorption.
  • The average rents in Grade A developments rose in most of the submarkets in the second quarter except CBD, the Central Business District that witnessed a fall of 5% because of the lower rents quoted by the developers.

No new projects are scheduled for completion during the next quarter. However, around 2.4 m. sq. ft. of land space is anticipated to be added to the general stock until the last quarter of this year. A majority of this commercial supply is going to be utilized for IT developments in the Salt Lake and Rajarhat submarkets. Owed to this, the rental values all across the submarkets can be expected to maintain its highly stable stand in the next quarter.

To supplement the lowering vacancy, with only 5% of the 0.3 million square feet of new inventory in mall space is lying vacant in Kolkata, Bengal Government is leaving no stone unturned to change the commercial investment picture of the city. Mamata Banerjee, Kolkata’s Chief Minister Plan to set up businesses in the state seem to have started getting responses. City’s commercial space deals has witnessed a 15-20% increase in the last two months.

The biggest commercial realty space deal in Kolkata was that of the Fosma’s 30,000-sq realty space, which was bought by Fosma’s in the Salt Lake region. “Companies like Fosma have been on the lookout to enter Kolkata for a long time but were unsure about the idea. The stable government is finally closing deals. To begin with, Fosma Maritime Institute and Research Organization has bought the space in Godrhe Riverside for approximately Rs 16 crore,” said Rahul Baid the Champalall & Co’s head of corporate transactions.

While big names such as Tata Metaliks having signed deals with the Kolkata state bodies, a huge number of international and national brands alike, including Uber, Oracle, and Honda, have rented out their office spaces in the city.

The central business district area, which does not even have modern facilities in most of their buildings have seen some developmental activities since the past six months with the older properties receiving a facelift. The best example of this revamp is the Diamond Heritage building on the Strand Road.

“Even if the deal sizes were not too big, a mixed bag of companies, be it startups or infrastructure companies or shipping firms, have taken up around 5 lakh square feet of commercial space,” said Jitendra Khaitan, consultant in Pioneer Property Management Ltd.

With Jimmy Choo being the latest entrant in the Kolkata retail market, a number of other retailers too have planned on a diversification mode with companies such as Westside also searching for commercial spaces in numerous parts of the prime city.

The Cushman & Wakefield retail report states that Kolkata has been proudly boasting the minimum vacancy in the mall space. While only 5% out of the total 0.3 million square feet of the new inventories in the mall space is lying unoccupied. The rate of vacancies varies from 9% to 33% in areas like Ahmedabad, Delhi NCR, Chennai, Bengaluru, Pune, and Mumbai.

According to the Managing director of Cushman & Wakefield, Indian retail market has been scratching out of its shell and is expected to grow in the coming years. The aspects like large market potential and positive economic outlook continues to fascinate the retailers to India, with Kolkata playing the role of a major contributor.

However stagnant the last quarter was for Kolkata real estate, it ended with the hopes of a better future ahead. Both the residential and commercial market, including buying and renting, are operating with the concrete plan for their respective growth. Going by the trend and the plans that the city has for itself, Kolkata is all set to offer a constant and reliable office and residential space to the nation.

By Guest

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