Poised to GROW

With the demand for residential and commercial real estate space rising in the post-Covid scenario, the real estate market in Eastern region is poised to grow in the coming years.

The real estate market in the eastern part of India largely centred around the city of Kolkata and its outskirts. Being the third most populous metropolitan area in the country after Mumbai and Delhi, Kolkata plays a key role in the real estate market growth of India's eastern region. After a period of prolonged slump following the Covid pandemic, demand for residential real estate has been reviving. Investor sentiment towards the sector is turning upbeat aided by record low interest rates, better affordability, and moderation in property prices. Kolkata residential property market has sustained its growth momentum as homebuyers continued to acquire properties on the back of record-low interest rates and offer from reality developers.

Prevailing trends

According to the recent Cushman & Wakefield Market Beat reports, in the office segment, Kolkata has gained a steady momentum in 2022. Fresh leases comprised all transaction volume in the first quarter which is an encouraging sign. Flex spaces has led the growth by contributing about 37% of gross leasing volume followed by IT-BPM and engineering & manufacturing.

The first quarter of 2022 revealed a promise for the Kolkata residential market, with 7.3% growth over the previous quarter and a robust 126% expansion from the same time last year. Residential launches remained strong with 3,108 units and sales were strong on the back of affordability and continuation of policy initiatives.

Leasing activity is seeing a turnaround in Kolkata from the disruption it faced in the early parts of Q1 2022, the report says. Higher leasing activity was seen in main streets, while it remained negligible in malls. A healthy recovery of footfalls can be seen from mid-February, after a sharp decline due to the 3rdCOVID wave. Over 55,000 sf was leased by apparel chains - national consumer electronics, F&B, hypermarkets, and accessory brands are looking for space marking a healthy and sustained recovery.

“The state government has greatly helped in boosting demand and unprecedented optimism among home buyers. So, as far as assessing the market trend goes it does seem to show a boost for real estate and that is something we always look forward to in the real estate industry,” says Rishi Jain, Managing Director, Jain Group.

On the demand trend, he adds, “Residential sales are primarily driving growth, whereas for office absorption is still to recover, since hybrid work place model is prevalent and is being adopted on a larger scale. Eastern region has seen more project launches in the past three-fourth than in the past four years. That itself is proof of the sentiments in the scenario. Definitely demand is always something that has been on the rise for a long period with a balanced supply catering to the different requirements of society.”

Evolving trends

According to Rishi Jain, though we are more residential project centric there's no doubt in the fact that commercial project developments are anyway behind.Both residential and commercial projects stand high in their respects. We have always targeted areas where structural infrastructure improvement is taking place, so at the moment our upcoming projects are planned in two locations of Pilan and Madyamgram.

Abhishek Bhardwaj, Chief Marketing Officer, Shristi Infrastructure shares the upcoming trend, “For a year or so, the real estate industry has been upbeat in the country. In the eastern region, there have been welcome steps taken by the government to boost the real estate industry. Recently, RBI has also doubled the home loan disbursement limits for cooperative banks and allowed rural cooperative banks to disburse home loans. This is definitely a welcome step that will help the customer and give a boost to the affordable housing sector. Also, affordable sector will be further benefited by the extensive outreach that the cooperative banks have in terms of new customer generation.”

Aayushman Jain, Director, Siddha Group, adds,“The residential and commercial segments have been growing steadily in the Eastern region, with residential projects leading the trend. The demand has been quite good and hence the real estate developers are upbeat.Demand for residential projects have really picked up with gated townships leading the way. Commercial projects too have started to see good demand now. We expect this to continue for some time now.”

Post Covid scenario

The three waves of Covid pandemic have had a severe impact on the realty market across the country, which was evident in the eastern India also. The recent reports indicate that the market is reviving after the Covid impact is melting down slowly. Nakul Himatsingka, Managing Director, Ideal Group, is of the view, “Demand was there during the pandemic also, when the need to bigger space triggered by higher disposable income maintained the demand for new houses/flats. The situation is on positive note with a higher demand in real estate sales, which is evident with new launches and increased handovers of existing projects.”

Aayushman Jain explains, “The real estate market has slowly stabilized post Covid-19 and the demand has been quite strong. There have been a few interesting measures taken by the government such as rebate in stamp duty which in turn will help the housing sector to consolidate and grow in the long run.”

Challenges

When it comes to real estate market, there are varied challenges of growing material cost, labour cost, and transportation cost. During Covid, there was scarcity of labour as the most challenging factor. According to Himatsingka, increase in raw material cost and labour shortage are the two major reasons, which had affected the pace of development.

Rishi Jain adds, “The biggest challenge is not availability but logistics adding unnecessary loading on the various building materials. It's ironic because everybody is looking for affordable housing yet all raw materials towards affordable housing like land, building material, labour etc., are at a steep upward trend. Both these aspects cannot coexist. So, as per challenges this is one aspect that does come as a hindrance in real estate.”

Bhardwaj highlights dearth of labour a key challenge as he says, “Due to the unprecedented covid pandemic many workers were compelled to return to their native places and have found employment there. There is, hence, a dearth of labour in many cases. In our case, however, we have not faced such issues till date.”

Aayushman Jain points out, “The construction industry lost over a million jobs from March 2020 to March 2021 due to the COVID-19 pandemic. Many workers either retired or were laid off and found employment in other industries. As the recovery continued, it was clear that these workers, now in new careers, were not coming back from their native place. Sub-contractors are having trouble finding unskilled and skilled labours in quantum. Unlike other industries, construction has seen little to no improvement in productivity over the past ten years. Considering global scenario of post pandemic and war, a continuous rise in fuel price has led to the rise of raw material price unprecedently. The high prices have had an impact on the overall cost of flats. The average construction cost has gone up by Rs 300 to 400 per square feet.”

Materials and technology trends

The real estate market has seen revolutionary changes in the recent past in adopting advanced materials and technologies in construction. According to Himatsingka, the use of Mivan technology can address the issue of labour shortage, cost and time. Also, the use of ACC blocks could save on cost.

Rishi Jain says,“New concepts in construction materials and technologies have definitely hit the traditional methods and are competing levels prefabrication, 3D printing, Cloud-based collaboration tools, and Virtual Reality just to name a few. These have minimised the dependence on traditional methods of construction, and dependence on traditional construction material like TMT and INSITU construction will reduce in the medium to long term.”

Aayushman Jain is observing the changing trends, “For last 10 years, we have been observing an overwhelming change in construction industry, so far as the materials and technologies are concerned. Now the industry has turned from primitive phase to matured phase.”

Pre-engineered buildings (PEBs) and Precast technologies have evolved in Indian building construction industry over the years. According to Himatsingka, eastern region is still on hybrid mode and will continue so, till it arrives to a full boom period. Rishi Jain says,“Most large-scale townships and mass housing projects have already started using precast technology.However, some issues still need to be ironed out. So, I would say they have been gaining traction at a rather good pace in the eastern region.”

The PEB structures are mostly being used in the eastern region in industrial structure in a large scale. In the building sector, the pre-cast materials are being used in façade work, and temporary site office. We hope it will be implemented rapidly in other corners also.”

Upcoming projects

The real estate market in the east is gaining momentum with many new projects are coming up. While certain players are focusing on completing the existing ongoing projects, many others are planning new projects in the coming years.

Himatsingka says, “Presently, we are focusing on handovers and upcoming phases of existing projects.Also, in the commercial projects segment, we are doing a project known as Ideal Unique Centre.

Rishi Jain adds,“We have always been bullish in Rajarhat and areas where structural infrastructure improvement is taking place, with the advent of new Metro lines, Pilan and Madyamgram are two locations where we have projects planned.

Bhardwaj explains,“Presently, we are developing Guwahati’s first integrated Township over acres of land namely Shristinagar, Guwahati. It is a phase wise development comprisingresidential, commercial, retail, club, hotel, hospital, andschool. The township has been designed amidst nature and tranquility.

Aayushman Jain elaborates, “Currently, we have nearly 13 ongoing projects in Kolkata, Mumbai and Jaipur and 9 in Kolkata.We have plans for 4-5 large real estate projects in the eastern region in the near future.

Looking forward

There is an increase in sales of residential units as the work and business is getting back on track, according to Himatsingka. “The commercial sale is also picking up with the opening up of offices and work places,” he adds.

Rishi Jain is bullish about the future as he says, “The region is self-sufficient in terms of demand and optimism which according to me is the biggest of the drive-in demand. The pandemic induced pent-up demand has not been fulfilled by even half. The genuine demand is there although the urgency does look to have cooled a bit.”

According to Bhardwaj,both residential and commercial segments have been growing steadily in the eastern region.

Aayushman Jain adds, “Favourable government policies will continue to boost demand for real estate in the region. Planned townships with good amenities and facilities will continue to be in good demand. We have always focused on the same and will continue to do so.”

With more developments bound to happen in the coming years, the real estate players are expected to have a great time ahead.

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