When a Kolkata-based businessman, Prakash Arora, decided to shift from his old home in Hazra and get a new apartment for his family, he wanted nothing but the best. While driving back home from his ‘posh’ South Kolkata office one day, he saw an advertising hoarding for a premium residential project coming up along the EM Bypass. He enquired and was pleasantly surprised to find out about the luxury features that the project offered. Even better — on exploring further, he realised this wasn’t the only one; there was a slew of premium residential segment projects with high-end features being developed in the city. Interestingly, a majority of them are coming up along the EM Bypass.
In spite of the brief slip in the last quarter of 2016, the sale of premium residential spaces in Kolkata saw an increase in 2016, along with a rise of 10% in the supply. This upbeat trend is expected to continue and sustain throughout 2017, and beyond, with property purchase gently increasing with more new property offerings in the premium segment.
In almost all asset markets, the informed investors understand the market dynamics and get to know the evolving opportunities quite early. Is there something similar happening in Kolkata which is not so apparent. Let’s find out.
Traditional Premium Locations Can Hardly Offer Large Parcels of Land Anymore
Traditionally, the areas in and around Ballygunge, Jodhpur Park, and Alipore are considered ‘posh’ locations offering premium housing. Apart from housing complexes, there are a lot of individual homes of the well to do citizens in these areas.
People who are ready to invest a lot of money in buying premium homes in upscale locations have certain choices and they want to enjoy certain privileges.
As these areas have developed as homes of the rich of the city, the adjoining infrastructure grew up to meet the needs of such residents.
You will easily find premium schools, shopping malls, hotels or hospitals in and around these areas. The connectivity with the airport, though, was not very good earlier but the A J C Bose Road and Maa flyover duo help to address this issue.
There has been a substantial growth of purchasing power in the last few years in India and premium products, services and homes are no longer within the means of a select few. In fact, there is a large higher middle class who desires to be in the premium league now. The robust sales of high-end cars, crowded stores of premium international brands, increased sales of the designer outfits are all pointers to this changed reality.
Kolkata is no exception.
Building premium residential complexes with premium amenities needs large land parcels which is extremely rare in Ballygunge, Jodhpur Park or Alipore.
EM Bypass is Fast Emerging as a Premium Home Location
As spaces for new projects with luxury amenities shrink in mainland Kolkata, new locations around the Bypass are quickly emerging as the nerve centre of Kolkata’s premium real estate development. Upcoming addresses in stretches like Ruby to Science city, Science city to Hyatt, and Science city to Park Circus connector, are rapidly coming up as lucrative investment destinations. These new locations — essentially developing around Science City and EM Bypass — have already grabbed the attention of seasoned buyers.
EM Bypass is now not only a hotspot for new residential complexes, but premium hotels, restaurants, shopping malls, and schools have already come up (and new ones are being added to the list). The location is now very much within the most happening zone of Kolkata and speedy connectivity is offered by new flyovers and wide roads now. The airport is also much easier to reach from this location.
As these areas get filled up, the visionary investors expect an excellent return on their investment. The area is well liveable with almost all infrastructures in place right now. This is going to improve further as a large population of consumer group with deep pockets will encourage the growth of premium goods and services availability.
Real estate investors envisage a tremendous potential in these upcoming pockets, forecasting a growth rate of 15% in the next 2 years, which can easily increase by many folds in the long run. This trend is being driven by prominent real estate developers like Ambuja, Space Group, JC Infratech, Salarpuria Group, Alcove, Siddha Group, Srijan Realty, PS Group, TRPL, Onex Group, etc., as well as many new players, who are foraying into premium residential developments and strengthening the supply line of luxury spaces in these areas.
Here’s a glimpse of the estimated ongoing property rates for these premium & ultra-premium residences:
➔Ruby to Science city – 8k-10k/sq ft (approx.)
➔Science City to Hyatt – 13k-14k/sq ft (approx.)
➔Topsia – 6k-8k/sq ft (approx.)
The pace of the increase in property prices is far less than the pace in which the income of people has increased. It is well known that Kolkata has not witnessed a major growth in terms of industries, corporate presence, etc. for a considerable amount of time. On the other hand, the trading segment, primarily hosiery, readymade garments, textiles, etc. have seen a spike in the business volume in the last 5 years. Consequently, the number of buyers in the premium segment has shot up from a handful to a bigger group.
Premium Residential Segment Growth is Expected to Accelerate
While the implementation of RERA is sure to massively increase transparency and delivery timeliness in the property market, the premium housing segment is expected to grow faster as each transaction is of large value here. Furthermore, we are entering an era of the low-interest rate regime. This directly helps the real estate sector and indirectly helps the buyers as interest outgo on business loans also gets reduced with more money at the hands of the consumers.
There are also other green shoots in the industrial scenario of West Bengal. As widely reported, IT flagship company Infosys is slated to soon build its campus after early resolution of the outstanding issues. Other large companies have recently shown interest to invest in West Bengal considering the better quality of human resource, peaceful industrial climate and stable law and order situation.
All of these factors are likely to improve the investment sentiment in Kolkata further.
Another factor driving up the demand for premium housing is the rapidly changing purview of luxury. For instance, with an increase in high disposal income, lifestyle standards and accessibility and availability of luxury brands, there is now a larger consumer base, which has the money to splurge but demands a real value proposition. Thanks to these factors, the premium residential segment in Kolkata will continue to witness decent growth.