“Residential sales in Kolkata are set to witness robust growth in 2021 and most of 2022, similar to other cities. The higher volumes were a combination of the return of normalcy, customer-friendly buying terms offered by developers and a pick-up in the economy. But as the market is end-user driven, volumes have been rationalized due to a steady increase in home loan interest rates in 2022,” said Abhijit Das, senior director (east) at real estate consultancy firm Knight Frank India. He added that he expects favorable volumes to continue in Kolkata in 2023 as well, if the policy rates are not hiked beyond the budgeted amount.
Kolkata to record a 4% increase in average residential prices in the second half of 2022, owing to prolonged demand and higher input costs. Unsold inventory declined, which now stands at 20,686 units, a decline of 3%. The decline in Kolkata’s unsold inventory has brought down the quarter-to-sales (QTS) for the city from 7.3 in H2 2021 to 6.1 in H2 2022.
In the last year and a half, there was an increase in new launches due to the constant demand. Average residential prices increased by 4% due to higher input costs as well as sustained demand from home buyers. While sales picked up due to the benefit of 2% stamp duty exemption in 2021 and the first half of 2022, it fell short of the higher repo rate governance which led to an increase in the cost of home loans. Sales velocity moderated in the second half of the year, especially in rate-sensitive affordable and mid-segment residential products. A total of 5,819 housing units were sold in the second half of 2022, registering a year-on-year deceleration of 37%. The momentum was particularly affected in the third quarter of 2022, with sales slowing down due to Durga Puja. But the fourth quarter saw a healthy uptick. In H2 2022, new launches registered a 6% YoY growth over H2 2021 (5,644 housing units).
Rajarhat and South Zone constituted 45% and 36% of the total units launched. Rajarhat’s connectivity to other parts of Kolkata and advanced infrastructure have been supportive of demand there. Overall sales in the residential sector declined from 36% in H2 2021 to 33% in H2 2022. The South region will contribute one-third of the total sales in the second half of 2022. North Kolkata’s share declined from 27% in H2 2021 to 20% in H2 2022, making it the second best performing micro-market in the city. Rajarhat’s share increased from 18% to 25% in the same period.
“The year 2022 was meant to be the resurgence of the real estate sector in India. The sector grew on the back of strong demand from the domestic sector, despite global inflation and geopolitical tensions, rising property prices and interest rate hikes. Kolkata’s 2022 real estate market was no different, with the residential market alone witnessing a 17% increase in new launches in 2022, from 13,746 units in 2021 to 16,088 units. The hike in low home loan rates was supported in May last year. The extension of stamp duty and circle rate exemptions gave impetus to this growth. The office market also registered transactions of 1.1 million sq m in Kolkata. New players coming to town will drive the growth of the office market. The demand for retail space has also increased considerably. At Merlin we expanded our brand Acropolis and started development of Acropolis (South) Sushil MohtaPresident, CREDAI-Bengal.
He added that he believes the demand for quality home will increase despite the hike in interest rates as buyers seem to have taken home loans in their stride. “There will be more traction for office space as more firms are coming here and people are returning to offices. Merlin has seen record growth in 2022 since its inception. We are looking at commercial and storage projects.