Kolkata real estate players project 40% growth by April

Written by Rohit Khanna | ROHIT KHANNA | Monalisa Roy | Kolkata | Updated: Jan 13 2009, 05:26am hrs
The real estate market in Kolkata is likely to pick up from April after bookings for residential properties went down by as much as 80% in some areas in the last couple of months owing to financial crisis coupled with hard interest rates and increase in real estate prices.

According to realtors, sales in the city are likely to witness a growth of 40% in next three-four months. While, Real Estate Bank of India (REBI) president & chief executive officer Lakshmi Narayanan feels the Kolkata market is anticipated to pick up sales from April.

Raminder Grover, chief executive officer Homebay Residentiala wholly-owned subsidiary of Jones Lang LaSalle Meghraj, said, The correction should be over by June, after which a one-year period of stabilisation will follow. We expect growth to happen gradually after this.

Credai (Confederation of Real Estate Developers Association of India) Bengal president Pradip Sureka considers rates are stable now and sales are expected to go up by at least 40% due to lower interest rates on home loans. Betting on softening the interest rate, Kolkata-based PS Group Realty managing director Pradip Chopra said, Sales would increase and double in the coming three months as interest rates have gone down now.

NK Realtors director Pawan Agarwala said, We are targeting to sell 3,000 apartments in 2009 as sales are expected to go up by 30%. In 2008, we could only sell 2,400 apartments.

Meanwhile, the slump in the Kolkata market has reached an extent where less than five apartments are being sold a month compared with 25-30 sold before the slowdown. Buyers are waiting for the market to go down drastically and then start buying at 25-30% below the market levels, said Narayanan.

A lot of commercial spaces which were supposed to be delivered have slowed down or even stopped on site, and many LOIs (letters of intent) for office space that had been signed are now being withdrawn, said Grover.

The situation has led developers to not even take delivery of building plans, sanctioned by the Kolkata Municipal Corporation, as they are unable to meet the sanctioned fee, which in case of big projects could amount to a few crore, said Narayanan. According to him, the flats, which were in the range of Rs 4,000 per sqft are now being sold at around Rs 2,700 per sqft.

Rajarhat, a hotspot for non-resident Indians, has so far been a thriving market for realty majors, but there is a drop in prices by at least 25%, said Grover. Merlin Group could sell around 20 flats each month against a target of 30, mostly in south and central Kolkata in October and November. Merlin Group managing director Sushil Mohta said, December was good as we could achieve our target.

It is also seen that the NRIs who invested are willing to dispose of their property at 15-20% lower than the actual price, said Narayanan.

Re-sale or secondary sales have picked up by as much as 30% with investors selling at prices 20% lower than developer prices.

According to Jones Lang LaSalle Meghraj observations, there are indications of a far higher potential in the mid-to-low-end property segment. The citys potential is not in high margins but in high volumes.