KOLKATA MARKET REPORT
MID YEAR 2010
Values trends & opportunities in the Kolkata real estate market
OFFICE
RETAIL
RESIDENTIAL
LAND
WAREHOUSE
2010 Mid Year Market Review
DEAR FRIENDS, Indian economy grew by 7.4 percent for the fiscal 2009-10. Our economic outlook looks more stable than some other major economies in the world. The improving consumer sentiments due to continued growth in economy have helped the real estate market to gain its momentum. As market confidence strengthened in tandem with the overall economic growth, demand of office, retail and residential space has started to pick up in the Kolkata market. The residential market continued the upward momentum seen at end of last year, giving rise to remarkable sales and new launches in the past couple of months of H1, 2010. The combination of low interest rates, affordable housing values, rebounding consumer confidence and greater supply has all led to the robust performance of the real estate market. The positive factors would continue to support the upswing seen in the market since 2nd half of 2009, and the outlook of the property market is expected to look positive in the near term. Best wishes, TEAM NK .
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CORPORATE SERVICES
2010 Mid Year Market Review
Kolkata office market With the increased demand from IT, telecom, education, banking, finance, insurance and engineering sectors, Kolkata office market has witnessed a revival in sale and lease transactions over the 1st two quarters of 2010.
Sector-V in Salt Lake and New Town in Rajarhat has seen most of the office sales and leasing transactions in the first two quarters of 2010. Sector-V has witnessed the maximum space absorptions with around 0.35-0.4 million square feet sale and lease transactions at mid year of 2010. Around 0.45-0.5 million square feet of office space was transacted across the Kolkata market over the first half of 2010. With the heightened demand and low mortgage rate, investors have outpaced the end users in office space purchase in Kolkata during the first two quarters of 2010. Investors are mainly looking at under construction large floor plate properties at Sector-V and New Town. As office sector is looking up in New Town and Sector-V, developers who had deferred their projects due to economic slowdown and had been waiting for the office market revival are now coming back with new as well as deferred projects. Shapoorji & Pallonji is likely to start their IT SEZ project SP Infocity at New Town action Area-III by the end of this year which was on hold due to economic slow down. Two renowned Kolkata based real estate developers PS Group and Srijan Group who have jointly developed PS Srijan Tech Park at Salt Lake sector-V, recently have acquired a prime 2.77 acre land in the same area to develop another mega IT & ITeS project jointly. The project will start next year. Riding on the success of leasing and sale in Eco Space (phase-I) business park at New Town, Ambuja Realty plans to develop around 0.77 million sq.ft. of office space in Salt Lake Sector-V and New Town in Rajarhat.
VACANCY Overall vacancy rate in Grade-A and Grade-B office in the CBD area estimated at around 4% at the end of 2nd quarter of current year. In Topsia the overall vacancy rate in Grade-A property was around 14% and in Kasba Connector it was 20% at mid year of 2010. Continued completion of office space in New Town has resulted in a increase in vacancy rate. The average Grade-A vacancy rate stood at around 43% at the end of 2nd quarter of 2010. Currently New Town has no Grade-B supply. Salt Lake Sector-V experienced average vacancy rate in Grade-A and Grade-B supply at around 30% at the end of mid year of 2010.
Salt Lake Sector-V and Rajarhat has witnessed robust office space construction activities over the last couple of years and pan India developers such as DLF, Unitech, Shapoorji & Pallonji, RMZ, Godrej Videocon, along with the other renowned local developers such as Ambuja, South City, Srijan have been creating huge commercial spaces. With the planned completion of three large business parks such as Godrej Waterside (Tower 2), Ecospace (Phase 2) and Infospace (Phase 2), Sector-V and New Town will likely witness around 2 to 2.5 million square feet of ready office space supply by the end of 2011.
Current Grade-A and Grade-B Office Vacancy Rate Grade-A Office Vacancy
Grade-B Office Vacancy
60%
43% Vacancy
A
s market confidence strengthened in tandem with the overall economic growth, demand of office space has started to pick up.
36%
2 4% 20%
20% 10%
20 %
8%
3.5% 4.5%
0% CBD
Topsia Road
Kasba Connector
Sector-V
New Town
Key Office Transactions in 1st half of 2010 Lessee/Buyer
Property
Location
Size
Tech Mahindra
DLF IT SEZ Ambuja Ecospace
New Town
1,1 0,000
Bajaj Alianj
New Town
50,000
All Mineral Asia
Ambuja Ecospace
New Town
40,000
Telenor/Uninor
South City Pinnacle
Sector-V
40,000
SRMB Steel
Godrej Waterside
Sector-V
32,000
ZTE India Telecom Pvt. Ltd.
Godrej Waterside
Sector-V
30,000
Ratnabali Capitals
Ambuja Ecospace
New Town
30,000
Voith Paper
Ambuja Ecospace
New Town
30,000
Calcom Cement
Ambuja Ecospace
New Town
25,000
Aditya Birla Minacs
Ashram Building
Sector-V
23,000
Arcelor Mittal
South City Pinnacle
Sector-V
16,000
Source: NAI NK Realtors Research
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CORPORATE SERVICES
Rentals of Grade-A office space in SectorV and New Town are by far the lowest in Kolkata and about three to four times lower than that of the CBD. As these two locations are offering large office spaces at cheaper rates, companies those are expanding are increasingly opting for bigger space in Sector-V or New Town as their new office location. There were no changes recorded in average Grade-A office rentals in the CBD area over the 1st half of 2010. Rentals in the CBD area office buildings are much higher compared to the new office buildings coming up in Salt Lake, Sector-v and New Town. The average rent for prime Grade-A office space in the CBD area such as Park Street was around Rs. 130 per square feet per month, where as the average rent for the same quality office building in sector-v and New Town area were Rs. 45 and Rs. 32 respectively at mid-year.
GRADE - A, Office Rental Values Park Street
A.J.C. Bose Road
Kasba
Topsia
Rate-Rs. per sq.ft. per month
120 100 80 60 40 20 0 Q1
Q2
Q3
Q4
Q1
Q2
2007
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2009
2008
Q2
2010
GRADE - B, Office Rental Rates Park Street
A.J.C. Bose Road
Camac Street
Dalhousie
Topsia
Salt Lake
120 100 80 60 40 20 0 Q1
Q2
Q3
Q4
Q1
Q2
2007
Q3
Q4
Q1
Office Capital Values (as on June, 2010) Range (Rs/Sq.ft.)
Park Street
12,000-14,000
Camac Street
12,000-14,000
AJC Bose Road
10,000-14,000
Dalhousie
6,000 - 9,000
Topsia
6,500 - 7,500
Kasba Xing
6,500 - 7,000
Salt Lake, Sector-V
4,000 - 5,000
Rajarhat, New Town
3,000 - 4,000
Q2
Q3
2009
2008
Source: NAI NK Realtors Research
4
Rajarhat
Salt Lake
140
Location The average Grade-B rental rates per square feet in the CBD were Rs. 87.5 (Park Street, Camac Street, AJC Bose Road and Dalhousie) at the end of 2nd quarter, up 6 percent from 1st quarter’s Rs. 82.5 of current year and 21 percent higher than the prior quarter. The over all q-o-q price growth in Grade-B properties at Topsia was 8.3% from 1st quarter’s Rs. 60 per square feet per month, while Grade-B offices at Sector-V in Salt Lake had no q-oq price growth at the end of June, 2010.
Camac Street
160
Rate-Rs. per sq.ft. per month
The office market in 2009 saw a sharp decline of almost 17-20% in average prime office rental rates in the first three quarters stemming from the economic downturn and picked up toward the end of the year. With moderate transactions and significant amount of newly added vacant space in suburban office locations such as Topsia, Kasba Bypass, Salt Lake Sector-v and New Town IT corridor, the overall rental and capital values for Grade-A office space remained stable except Topsia in the first two quarters of 2010. Topsia area had the only positive growth in average Grade-A property rental rate at the end of mid year and witnessed 7.15 percent q-o-q rise from the first quarter’s Rs.70 per square feet rate. In view of rising availability and moderate demand, rental stabilisation across the market in Q2 came as no surprise.
2010 Mid Year Market Review
Q4
Q1
Q2
2010
FORECAST The present upswing seen in the market since the end of 2009 is expected to be continued in the near term. Grade-A office rental rate in the CBD area is likely to rise due to shortage of new supply. Companies looking for large space would shift to the suburban office locations in more numbers in the coming quarters. Outright as well as rental rates are likely to go up by 4-5% across the micro markets in the near term.
RETAIL SERVICES
2010 Mid Year Market Review
Kolkata retail market Large domestic retail chains such as Future Group, Aditya Birla Retail, Reliance Retail, Spencer’s and the global players such as Metro, all are eyeing Kolkata market once again.
The retail industry went through a phase of unprecedented growth and expansion before the industry was stricken by the recession in 2009. Expansion of stores by most of the retailers were almost stalled during the recession. As market sentiment improved, retailers were backin expansion mode once again. Large domestic retail chains such as Future Group, Aditya Birla Retail, Reliance Retail and Spencer’s and the global players like Metro Group, WalMart, Carrefour all are eyeing Kolkata market once again with renewed interest which has resultant in the demand of large format retail space. High occupancy cost in the prime area malls and key high street stores in the mature urban markets together with the supply constraint are forcing retailers to move into cost effective suburban locations. Retailers are increasingly looking at properties in the cost effective suburban areas like Garia, Narendrapur, Kasba Connector in the south, Dunlop, Sinthirmore, Barrackpur, Sodepur, Barast in the north and Uttarpara in Howrah. At present retail brands such as Bata, Turtle, Titan Eye, Himalaya etc. all are in very aggressive mode to open stores in these locations. Now developers are aggressively looking at sub urban locations and other smaller towns. Over the past couple of years, a slew of new urban retail centres came on stream in the suburban areas like Salt Lake, Birati, Baguihati, Baghjatin, Howrah etc. and in the smaller towns like Haldia, Durgapur, Asansol and Siliguri, signalling a change in the way that retail developers are thinking about their markets. MALL VACANCY RATE There was no significant change in q-o-q average vacancy rate in the operational malls in Kolkata at the end of mid 2010.
Significant Transactions
There were no new mall developments completed in the second quarter apart from the 3,50,000 square feet Axis mall developed by Peerless Group at New Town. However, the new mall though ready for fit out but retailers are not willing to move into the mall because the part of the upcoming township where the mall has come up is yet to be developed and lacking sufficient potential catchments. Kolkata will likely see the opening of around 2,50,000 square feet Lake Mall at Lake Market at the end of this year. Court yard, the Forum Mall extension will open its door in August this year.
Tenant
Mall / High Street
Mercedes MPS Group Bata (Local retailer) Gini & Jony Global Desi
Topsia New Alipore Axis, Barasat Elgin Road Mani Square Mall Forum Mall
Sq.ft. 6,000 (app.) 4 ,000 ” 3,500 ” 3, 000 ” 1,500 ” 1,000 ”
Kolkata retail market has witnessed an increased leasing and selling activity during the 1st and 2nd quarters of 2010, however, those are happening mostly in smaller format high street properties. Recently four new premium apparel and accessories brands such as Jack & Jones, Vero Moda, Only and Pieces has taken spaces to open shops in the South City Mall. Timberland and Esprit another two global high end footwear, apparel and accessories brands are likely to open shops in the mall at the end of 3rd quarter of 2010.
Currently most of the mature urban areas like Park Street, Nager Bazaar, Gariahat, Alipore, Behala had a few key high street retail developments. Suburban retail continues to outperform urban retail, however, this is largely just a reflection of the impact of supply constraints in mature urban areas.
Future Mall Supply Mall
Location
Developer
Sq.ft.
Operational By
Lake Mall
Lake Market
Space Group
2,50,000
2010
North City
Lake Town
Diamond Group
3,00,000
2011
Avani Riverside
Howrah
Avani Group
3,00,000
2011
Sishir Kunj
Madhyamgram
Bengal Shelter
3,00,000
2011
Acropolis
Kasba
Merlin Group
3,50,000
2012
Forum Arcadia
Belur, Howrah
Sansum Properties
3,00,000
2012
RPG Mall
Park Circus
RPG Group
4,00,000
2012
Operational Mall Vacancy Rate Q4, 2009
Q1, 2010
Q2, 2010
5%
Vacancy Rate
I
ndian economy grew by 7.4 percent for the fiscal 2009-10. With the improving consumer sentiments due to continued growth in economy have helped the retail market to gain its momentum in recent times.
4% 3% 2% 1% 0%
No Vacancy in City Centre-I
City Centre-II City Centre-I
Metropolis
Mani Square
South City
Forum
Home Land
Source: NAI NK Realtors Research
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5
RETAIL SERVICES
MALL LEASE RATES
2010 Mid Year Market Review
Mall Rental Values
Operational malls in Kolkata have not witnessed any average quarter on quarter rental or capital value growth over the first two quarters of 2010.
Rental values in the malls at E.M Bypas were in the range between Rs. 60 and Rs. 175 per square feet per month.
E M Bypass
250 200 150 100 50
0
Q1
Q2
Q3
Q4
Q1
Q2
CBD Salt Lake
CBD area like Park Street, Camac Street, Elgin Road has witnessed around 9% average quarter on quarter price growth in the second quarters of 2010 from the 1st quarter’s Rs.160 per square feet per month. Top rents of high street shops in Park Street increased nearly 15% in the first quarter, from Rs. 220 per square feet per month to Rs. 250 per square feet per month and 20% in the second quarter from Rs. 250 per square feet per month to Rs.300 per square feet per month. Average rentals in the micro markets such as E. M. Bypass, Salt Lake, Ballygunge Circular Road, Alipore, Behala, Garia, Gariahat, Jessore Road, VIP Road, B.T. Road and Shyam Bazaar remained unchanged at the end of June 2010 and stood at December 2009 level. The increase of rents in downtown area and stabilization of rents in the micro markets are primarily due to the shortage of quality retail supply. Average rentals in North Kolkata, E. M. Bypass and Salt Lake were Rs. 55, 75 and100 per square feet per month respectively at the end of mid 2010.
6
Q4
Q1
Q2
2008
Q3
2009
Q4
Q1
Q2
2010
South Central Kolkata E M Bypass
South West Kolkata North Kolkata
South Kolkata New Town
200 180
Rate-Rs. per sq.ft. per month
High Street Rentals in the Kolkata market remained relatively stable over the first half of 2010.
Q3
High Street Rental Values
In South Kolkata, rental values in the malls were between Rs. 60 per square feet per month and Rs. 200 per square feet per month. HIGH STREET LEASE RATES
New Town
300
2007
Rental values in the Salt Lake area malls were between Rs. 55 per square feet per month and Rs. 185 per square feet per month.
Salt Lake
350
Rate-Rs. per sq.ft. per month
Since December 2009, the average asking rental values in the CBD area malls have been hovering between Rs. 150 and Rs. 225 per square feet per month and in the New Town area malls have been hovering between Rs. 60 and Rs. 130 per square feet per month.
South Kolkata
CBD
160 140 120 100 80 60 40 20
December 2009
March 2010
June 2010
Source: NAI NK Realtors Research
FORECAST Demand of space for all type of retailing formats continues to rise throughout the Kolkata market as the retailers aggressively planning to roll-out more stores which was stalled during the recession period. Competition for quality retail space in Kolkata would be more in the coming months because some of the big retail houses such as Tata, Reliance, Geetanjali etc. are aggressively on the look out for retail space for their speciality formats mainly for fashion and lifestyle accessories like Jewellery, electronics, footwear, garments etc. Various formats of retail developments would be seen in the high growth residential zones like Narendrapur, B.T. Road etc.
Growth of discount retail formats will be continued in the Kolkata market as consumers here are much more price sensitive compared to other metro cities in India. Mall rentals are expected to follow a moderately upward trajectory in the medium to long term due to the shortage of new supply. Less supply of retail space would spurt the key high street retail demand in the matured prime urban location in future. High Street retail rents will remain on the uptrend in the coming quarters against a limited supply situation.
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RESIDENTIAL SERVICES
2010 Mid Year Market Review
Kolkata residential market Most of the old and new residential projects across the market have experienced higher volume of sales transaction in the past three months.
The pent-up demand came from the end users as well as investors who had tightened their belt during the economic slowdown. As sentiment improved so did turnover. With more than 95% of the ongoing projects, affordable housing sector is still driving the Kolkata residential market. The most affordable price in this segment is in the range between Rs. 1600 to Rs. 2300 per square feet. Around 20 to 25 medium to large affordable housing projects such as Srijan Midlands in Jessore Road, Parvati Garden in Birati, Garden Enclave in Baguihati, Diamond City-West, Purti Colours in Behala, Green Field City in Shibrampur near Behala, Purti Flowers, Eden City in Maheshtala, Devaloke De Casa, Rajat Flora, P.S. Srijan Sonargaon, Sugam Shabuj in Narendrapur and Sonarpur, Kolkata South Universal City in Baruipur, Kolkata West Heights in Howrah and so on are currently under various stages of construction in the Kolkata market. The modern day amenities such as club, auditorium, children’s play area, jogging track, landscaped garden, gymnasium and swimming pool etc. are being provided at an affordable price with almost all the projects. Most of the old and new residential projects across all segments have experienced higher volume of sales transactions over the 1st two quarters of 2010. The increase in sales volume have helped fuel pretty significant gains in average property prices. However, the price growth was not uniform across the market. In Kolkata, the average quarter on quarter residential price growth was around 6.33 percent at the end of second quarter of 2010.
Kolkata residential market divided between regions such as East, Central and New Town have experienced price growth above the Kolkata average and those with lower than Kolkata’s average price growth, including North, South, South Central, South East, South West and Howrah. Areas like EM Bypass (22.00%), Ballygunge Circular Road (15%), New Town (21.82%), Loudon Street, Theatre
Road, Elgin Road (10.75%) saw the strongest quarter on quarter price growth. While areas to the South West and South of the region such as Alipur, Behala, Batanagar and Jadavpur had seen no quarter on quarter price growth. Areas to the North, South East, South Central and Howrah witnessed marginal growth in average price from the 1st quarter to the 2nd quarter of 2010.
Zone wise Average Residential Sale Rate Trend in Kolkata Central
South West
South Central
East
New Town
South Howrah
North
South East
12000
Rate-Rs. per sq.ft.
K
olkata residential market continued the upward momentum seen at end of last year, giving rise to remarkable sales and new launches in the past couple of months. The combination of low interest rates, affordable housing values, rebounding consumer confidence and greater supply has all led to the solid performance of the market.
10000 8000 6000 4000 2000 0 Q1
Q2
Q3
Q4
Q1
Q2
2007
Q3
Q4
Q1
Q2
Q3
Q4
2009
2008
Q1
Q2
2010
Residential Sale Rates (as on june, 2010) Location
Rs./Sq.ft.
KOLKATA
Jessore Road VIP Road Madhyamgram Shyambazar B. T. Road
1900 - 3550 2600 - 4200 1700 - 2100 2300 - 3000 1600 - 2150
Park Street Loudon Street Theatre Road
9000-12000 9000-12000 9000-12000
Salt Lake Beleghata Kankurgachi E.M. Bypass (central) New Town
3000 - 4500 2500 - 3000 4500 - 6000 3200 - 7500 2200 - 4100
Garia Narendrapur Rashbehari Connector
2200 - 3200 1800 - 2500 4100 - 4600
South-East
Dobson Road G.T. Road (south)
2500 - 3300 2500 - 3200
Howrah
North
Central
East
Location
Rs./Sq.ft.
Queens Park Sunny Park Ballygunge Cir. Road Ballyguge Park Road Bullygunge Place Mayfair Road Goal Park Gariahat Rashbehari
8000-13000 8000-13000 9000-14000 8000-12000 South-Central 5000 - 6000 7000-10000 5000 - 7000 5000 - 8000 5000 - 6000
9000-13000 Alipore 1750 - 2200 Behala Batanagar & Maheshtala 1500 - 2800 Lansdowne Road Bhawanipore P.A. Shah Road Jadavpur Tollygunge
KOLKATA
6000 - 8000 6000 - 7000 3500 - 6500 3000 - 3500 3600 - 4100
South-West
South
Source: NAI NK Realtors Research
7
RESIDENTIAL SERVICES
2010 Mid Year Market Review
Kolkata’s high growth residential zones Of the total seven most active residential markets in Kolkata, Rajpur-Sonarpur area and B.T. Road stretch has been able to attract huge interest from buyers as well as developers on the back of improved infrastructure. witnessed unprecedented construction activities in recent times. Some of the key residential projects include Club Town Heights, Club Town Residency, Orbit Sky View, Godrej Prakriti, Genex Barrackpur etc. are currently under construction in this Stretch.
Madhyamgram Area 3
4
B.T. Road Stretch Rajarhat Area
Howrah Area
7
Batanagar-Maheshtala Area
E. M .Bypa
KOLKATA 5
NEW TOWN
s
8 HOWRAH
s
1. Rajpur-Sonarpur Area: After the commissioning of the Metro rail up to Garia in 1991 and the extension of Eastern Metropolitan Bypass up to Kamalgazi near Narendrapur, the entire area between Peerless Hospital and Rajpur along the E. M. Bypass, NSC Bose Road and Sonarpur Station Road witnessed a spurt of residential activities. Furthermore, following the September 2009 inauguration of the Metro has intensified the construction activities in the areas like Chawk Garia, Nayabad, Patuli, Fartabad, Narendrapur, Rajpur and Sonarpur. Projects such as Rajat Flora, DevalokeDe-Casa, Sonargaon, Dream Arcadia, Mayfair Green etc. located in these neighbourhoods are currently on offer. 2. Baruipur Area: With the extended connectivity along the E. M. Bypass from Kamalgazi to Baruipur which further connects Amtala on the D. H. Road, a new residential zone in Baruipur is in the making. Furthermore, proposed sea port at Kulpi coupled with the availability of land parcel will open up the new possibilities in the LIG and MIG housing markets. Universal Success,the developer of Kolkata West Heights at Kona has launched a large MIG project “Kolkata South Universal City” In Baruipur with around 4000 housing units in April 2010. 3. B.T. Road Stretch: B.T. Road In the north is other area currently attracting developers and occupiers, As metro rail extension till Baranagar is opening up its Untapped potential. The entire area between Dunlop and Barrackpur along the B.T. Road has
6
Rajpur-Sonarpur Area 1
Baruipur Area 2
Supply in the next Six Months Project
Segment
Units
Location
Developer
Silver Oak Estate
HIG
500+ (Approx)
Rajarhat
Simplex & Salarpuria
Ideal Grand
HIG
600
”
Howrah
Ideal Group
Idea Niketan
HIG
200
”
EM Bypass
Ideal Group
PS Magnum
HIG
198
”
VIP Road
PS Group
Club Town Garden
MIG(Upper)
411
”
BT Road
Space Group
Eden City Lakeside
HIG & MIG
2200
”
BT Road
Eden Group
Purti Star
MIG
200
”
Rajarhat
Pansari Group
4. Madhyamgram Area: Located in the north east of Kolkata, this area has witnessed a rapid residential development in recent times. Proximity to Kolkata CBD, Airport and Sector-V is the key factor that has been attracting people from the surrounding areas. Srijan Midlands (MIG) by Srijan Group is the key under construction residential project over here. 5. Batanagar-Maheshtala Area: With the strengthening of infrastructure in Batanagar-Maheshtala neighbourhood in the form of planned Joka-BBD Bag (via Majherhat) metro rail, Taratala-Budge Budge monorail, the area has become one of the most sought after residential areas of Kolkata. Greenfield City by Srijan and Greenfield, Eden City by Eden Group and Calcutta Riverside by Riverbank Holdings located in this area has gained substantial attention from the house buyers. 6. E.M. Bypass Stretch: With the modern shopping malls, well equipped modern hospitals, international schools, five star hotels, good residential projects in its vicinity, the Eastern Metropolitan Bypass, connecting Kolkata Airport in the north and Baruipur in the south is now the most happening stretch of Kolkata. On this stretch some notable projects such as URBANA, UPOHAR and Shrachi Dakshin, Active Acres have received significant attention from the buyers in recent times. 7. Rajarhat Area: The upcoming township on the north-eastern fringe of Kolkata with around 25 plus ongoing medium to large residential projects has witnessed a revival in demand in the past two quarters of 2010. Some of the newly launched projects in this township are Restello, Greenwood Nest by Bengal Shrachi, Eden Court Primo by TATA Housing etc. Priviously launched projects such as Sankalpa, Elita garden Vista, Sunny Fort, Green Field Ambition, has received moderate response in the last six months. 8. Howrah Area: With the three large residential projects such as 7 Kolkata West International City, Kolkata West Heights and Uni Homes in the west of Howrah, Kona has become the hotspot for real estate destinations. Recently, Forum Group has launched a premium project Forum Pravesh at Belur in Howrah.
Source: NAI NK Realtors Research
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7
RESIDENTIAL SERVICES
2010 Mid Year Market Review
Kolkata’s prime residential market Prime residential properties in some pockets have seen stronger rebound in transaction levels over the past couple of months.
K
olkata’s prime residential market has been able to maintain a moderate growth across the micro markets such as Alipore, Central Kolkata, Ballygunge and Rajarhat. However, some pockets on the EM Bypass and VIP Road showed the strongest growth in sale transactions over the 1st two quarters of 2010.
However, other established prime locations like Loudon Street, Theatre Road, Mayfair Road, Ballygunge circular Road etc.saw price growth in the 2nd quarter of 2010. This is because of proximity to the CBD. Prime properties in New Town witnessed around 14.55 % quarter on quarter price growth at the end of second quarter of 2010.
The growth was more visible in the projects which are strategically located and have been designed to provide amenities like fitness clubs luxurious furniture and fittings, household appliances and high quality building management which are of the same standard as four-and five-star hotels.
Prime supply in the next six months
One such project URBANA in Anandpur near Kasba had been a star performer in the last two quarters. In the last four months of H1, 2010, the project had garnered around 61% of the total sale transactions. The project was launched in August, 2008.
Company
Location
Time
Ideal Group
Ironside Road
Dec’2010
Orbit
Ballygunge Place
Oct’ 2010
Mani Group
On E.M. Bypass
Aug’2010
Diamond Group
V.I.P Road
Sep’2010
Avani Group
Ballygunge Cir. Road
Dec’2010
6
Hot pockets will continue flourish in new areas due to the space crunch in the established prime locations. Expect a hike in home loan rates in the 4th quarter of 2010. With the imposition of new service tax in under construction residential properties, home buyers are likely to pay an additional 2.5 percent on the total value of the purchased property from now.
Aug’08 - Feb’10
March’10 - June’10
49%
61%
Prime Residential Average Price Growth Trend (from 1st quarter to 2nd quarter, 2010) Q1-2010 12,000
Q2-2010 15%
10.52%
Rate-Rs. per sq.ft.
Established market like Alipore has not witnessed any new development during the 2nd quarter of 2010. Residential sale rates have been stabilized. Transactions in the ongoing projects are also very slow compare to other prime locations like Ballygunge Circular Road, Ballygunge Park Road, EM Bypass, VIP Road and New Town. Buyers have become more cautious. A striking difference in property value between the established prime location and newly grown market is also responsible for the low transaction.
Well-priced and well-located prime projects, listed between Rs.3000 and Rs.7000 are likely to move faster in the Kolkata market.
Transaction Growth in URBANA
Project at Lake town on Jessore Road like Avani Oxford has also witnessed a upturn. Avani Oxford phase-II has registered around 8% price growth from the end of February when the project was launched. With prices and sales rising from the end of 2009, developers have lined up a slew of fresh launches to cash in on the revival. A number of high-end residential projects have been planned in the existing prime residential locations like Ballygunge, Alipore, as well as in some new pockets like Lake Town, EM Bypass, New Town etc.
FORECAST With a better economic outlook and improved market sentiments the demand for housing is likely to be on the upswing.
5%
0%
10,000 6.25%
8,000 6,000 4,000
22% 4.62%
14.55%
2,000 Lake Town
Loudon Street
Ballygunge Circular Rd.
Mayfair Road
Gurusaday Road
Alipore
EM Bypass New Town (Central)
Source: NAI NK Realtors Research
9
LAND SERVICES
2010 Mid Year Market Review
Kolkata Land market Land market activity in the Kolkata market continued to gain momentum backed by steady performance of the residential market.
S
ignificant growth in the residential market in Kolkata has fuelled the residential land demand across Kolkata market over the past six months. Competition for raw land among the developers has returned again in the Kolkata land market on the back of growing housing demand. Developers are mainly looking at large chunk of raw lands for the development of large multifamily apartment projects in the high-growth locations.
Company Ideal Group PS Srijan Srijan Arya Group LUX
Land Sale Rates
Location
Competition for land will continue pushing price upward. Land owners who have been forced to be patient due to the slowdown, may see increased opportunities in the coming quarters.
Area
Rates (Rs./Cottah)
Alipore (prime areas)
7. 00 -10.00 million
Ballygunge (prime areas)
9. 00 - 10.25
"
Ballygunge (other areas)
5.00 - 70 . 0
"
Park Street, Theatre Road
10.00 -10.25
"
Gariahat, Rashbehari
5.00 - 7. 50
"
Shyambazar
2.50 - 4.50
"
V.I.P Road
2. 50 - 3.5 0
"
Salt Lake
1.0 0 - 3.2 5
"
Jodhpur Park, Jadavpur
1. 50 - 5.00
"
Tollygunge, Behala
1.00 - 2. 50
"
Garia, Narandrapur, Kona
0.60 - 1. 00
"
Joka, Pailan
0.20 - 0.6 0
"
Jessore Road, B.T. Road
0.30 - 2.00
"
Madhyam Gram
0.40 - 0.70
"
Developable land in fringe areas 0 .10 - 0. 3 0
“
Distribution of Active Industrial Land Markets and Industrial Land Sale Rates
NH2 Potential Industrial Locations R PU GA AY SW ES PR EX
10
11.66 Acre 2.77 ” 2.33 ” 3.33 ” 6 .00 ”
FORECAST Land market activity appears to be getting more competitive in the coming quarters due to increased demand in the housing sector.
PS Group and Srijan Group, two large local real estate firms jointly have acquired 2.77 acre land at Sector-V with a record price of Rs. 50 crore at the end of June this year. The location of major industrial regions in the neighbourhood of Kolkata is based on the main traffic routes such as NH6, NH2, Durgapur Expressway etc. Privately managed industries and warehouses are located in the locations such as Kona, Dhulagarh, Uluberia and Kolaghat on NH6, Dankuni on NH2 and Durgapur Expressway, Srirampur and Kalyani on state highways connected to NH2 and NH34 respectively. These are the potential industrial locations where land transactions are taking place. However, the number of transactions are very low and Kolkata has not witnessed any major industrial land transactions in the past six months.
Size
Tollygunge Salt Lake, sector-V Manikpur Kodalia Durgapur Express Way
R DU
Over the years, Kolkata has become one of the major IT destinations in the country. Sector-V in Salt Lake and New Town in Rajarhat are already home to some of India’s as well as world’s major IT & ITeS companies such as TCS, IBM, WIPRO, SIEMENS, Tech Mahindra, Capgemini, Cognizant etc. Both the areas are facing a shortage of land for large scale office developments. IT sector is slowly returning to the growth path as the global economy improves, so does the demand. Land prices in these areas grew at an unprecedented rate supported by strong demand from the local developers.
Key Transactions
NH2
NH34
NH35
Industrial Land Rates
NH6
NH41
Location
Rs./Cottah
Kona Express way to Dhulagar Tole Plaza
0.03-0.05 Million
DhulagarhTole Plaza to Uluberia
0.02-0.03
”
Uluberia to Kolaghat
0.008-0.12
”
Dankuni to Srirampur (On Delhi Road)
0.02-0.04
”
Dankuni to Singur(On Durgapur Express way)
0.008-0.25
”
Chandannagar
0.01-0.02
”
Kalyani
0.01-0.02
”
Srirampur to
Source: NAI NK Realtors Research
11 7
2010 Mid Year Market Review
WAREHOUSE SERVICES
Kolkata warehouse market The advent of quality developments in the micro markets were instrumental in stabilising the price in the Kolkata warehousing market over the past two quarters.
K
olkata warehouse market has witnessed a moderate transactions and extensive developers activity in the past six months. WAREHOUSE SUPPLY As per estimates there is approximately 3.5 million square feet of warehouse supply (all grades of quality) in Kolkata and it’s neighbouring areas. The warehouse supply in Taratala and Hide Road area which is considered as an old and established warehousing zone constitutes around 50% of the total supply is of low grade quality. Kolkata has no modern state-of-the-art logistics hub. However, there are some good quality modern warehouses that has emerged in the past couple of years in the areas such as NH6, NH2 and Barasat Road etc. The local developers are the major market players. Growing demand and lack of quality supply are allowing large national and multinational players like Real Term, AFL Logistics, TATA, Unitech and Prologis to come into the market. Most of them has already acquired land at various locations and waiting for the right time. Around 5,40,000 square feet of new supply has added into the micro market in the past six months and around 11,00,000 sq.ft. new supply will be added at the end of this year and the construction of two new warehouses space around 7,00,000 sq.ft. which is currently at an early stage will likely be ready by the end of the next year.
DEMAND The main tenants in the kolkata Warehousing market are logistics operators, courier companies, distributors of fast-moving consumer goods, food and pharmaceutical products. Other active tenants include retail chains, telecom, automotive, engineering and consumer electronic companies. Demand for car service station in Kolkata has increased considerably over the past couple of years. New as well as existing passenger car dealers are aggressively on the look out for large spaces in the areas like Taratala and E.M. Bypass. Recently two deals have been closed on the E.M. Bypas to set up service stations for Ford and Skoda Cars.
Key transactions in the past six months Tenant Future Group Tata Group Honda
VACANCY The overall vacancy rates in the Kolkata market have increased marginally due to the completion of some new warehouses across the micro markets, reaching13% at the end of June, 2010. The average vacancy rates in the NH2 area remained same at around 10% despite some new completion. Because newly constructed properties were fully leased out after immediate completion.
18 Sq.Ft. 2,00,000 1 ,00,000 2,00,000 40,000
Supply in the next Eighteen months Merryl Infrastructure Meeri Chai Co. Unitech Group
Dhulagarh (NH6) B B T Road Kona
CCI Logistics Chamrail (NH6) South City Anmol Pjct. Jagadishpur (NH6)
3,00,000 3,00,000 2,00,000 5,00,000 5,00,000
Over the last six months, the average rents have risen by around 7% in NH6 area and were stagnant in other areas.
Warehouse Rental Rates Sub Market
Rs./sq.ft./month
1 NH-6
12-16
2 NH-2
10 -14
3 Taratala, Hide Road
15-18
4 Budge Budge Trunk Road
14-18
5 B.T. Road
10 -14
6 Barasat-Madhyamgram
12 -14
FORECAST With continued demand for warehouse space and growing land prices, a growth trend in rents should also be expected in the long term. The vacancy rate will likely to go down further due to the completion of some new warehouses at Dhulagarh, Jagadishpur and Budge Budge Trunk Road at the end of 2010.
June 2009
June 2009
December 2009
16 14
Rs. / sq.ft. / month
Location Barasat Road Dankuni (NH2) Dankuni (NH2) Sankrail Indl.Park
New completion and moderate demand were mostly responsible for stabilising the rents.
Price (median) Growth in the Kolkata Warehouse Market
Supply in the past six months Developer Keventer Agro Maa Ambe Swaika Group Nangalia Hydrocarbon
Location Sq. Ft. Barasat Road 1,00,000 Sankrail Indl. Park (NH6) 80,000 Dhulagarh Poly Park 25,000
RENTS Rental rates have stabilised in most of the Kolkata micro markets except NH6 area over the past six months.
12 10 8 6 4 2 0 NH6
NH2
Taratala-Hide Road
Budge Budge Trunk Road Road
BT Road
Barasat-Madhyamgram
Source: NAI NK Realtors Research
11
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