The Centre’s demonetisation drive has hit the real estate sector in Kolkata very hard, which was considered to be a booming area for investment.
A recent survey conducted by a global property consultancy showed, the announcement of demonetisation on November 8 changed the market scenario in fourth quarter (Q4) of 2016 and led the developers and buyers to refrain from making any property related decisions. However, the report also showed that the market was relatively stable in January to June (H1), but scenario changed in between July to December (H2), specifically in the Q4 of 2016.
The researchers confirmed that the decline in sale volume was primarily brought about in the second half of the year post this announcement. The decline in number of newly-launched projects in H2 2016 was only 15 per cent in Kolkata and the sale saw a dip of 20 per cent, as compared to H2 2015.
“It is clear that demonetisation reflected a negative impact on Kolkata’s residential market. Demonetisation may have many positive sides, but it proved to be a wrong decision for Kolkata’s residential market,” said Samantak Das, Chief Economist and National Director – Research, Knight Frank India, the organisation which brought out its sixth edition of report – India Real Estate on Wednesday for Kolkata.
There are many key takeaways in the report. It said that Kolkata’s residential market remained subdued with 8 per cent decline in newly launched projects in 2016 compared to 2015 in Year-Over-Year (Y-O-Y), the sale volumes also witnessed a steeper fall with 14 per cent decline in Y-O-Y.
However, volume-weighted average price (VWAP) remained stagnant in H2 2016, depicting the fact that the market was almost at a standstill in between July to December, despite the decrease in newly launched projects and sale ratio.
Rajarhat-New Town emerged as the region with the highest number of residential units launched in H2 2016 in Kolkata. There are 40 per cent of the newly launched projects in Kolkata, which were erected in Rajarhat-New Town in this period of time. It accounted for 35 per cent of the sale volume from total sales in Kolkata in H2 2016.
“In terms of micro markets, we expect Rajarhat to maintain positivity regarding the housing demand in the forthcoming years, considering the quantum of office-sector development and infrastructure underway in the region,” said Das.
“Presently we can see a rapid expansion of infrastructure and facilities in Rajarhat to support growth of Information Technology and related services,” Das added.
South Kolkata however recorded a 34 per cent growth in newly launched projects in H2 2016, in compared to 27 per cent in H2 2015.
But North Kolkata recorded a decrease in newly lunched projects and sale in H2 2016. It is 15 per cent and 18 per cent in H1 2016, in compared to 20 per cent and 21 per cent respectively in H2 2015.
East Kolkata, comprising locations such as Salt Lake and Kankurgachi saw newly lunched project remained almost constant at 10 per cent and sales increased to 11 per cent in H2 2016 from 7 per cent in H2 2015.