Property in newer IT destinations selling briskly

The IT sector in India fuelled the first round of residential real estate boom. Growing salaries, leading to larger disposable incomes and the search for a new lifestyle befitting the new work culture created a boom in the residential real estate sector. But as the products become more and more opulent and expensive, developers are realising that the IT segment leads the boom and contributes to about 30% of sales. But for long-term sustainability, the market cannot outprice itself and expect to survive on premium sales alone. Bangalore, Hyderabad and Gurgaon are facing a slowdown while newer IT destinations such as Kolkata and Chennai are still selling briskly.

Kolkata real estate has witnessed manifold increase in residential capital values in the last couple of years, The areas witnessing maximum volumes of transactions include South Central Kolkata, EM Bypass, Kankurgachi, Phoolbagan, Beliaghata, Garia-Narendrapur in the Southeast, Behala-Joka in the south west, Rajarhat in the northeast, BT Road in the northwest and Howrah in the west, industry sources say. About 30% of this demand is driven by the IT and related sectors.

Rising demand means rising prices. The mid-end residential property segment which was available in a range of Rs 8-15 lakh a year back is now available for Rs 20-25 lakh. The premium budget apartments available in the bracket of Rs 25-35 lakh one year back have gone up to Rs 45-75 lakh.

According to real estate consultant Sandip Sen of Calcutta Skyline, “The middle segment has been hit a little as the remuneration pattern has not been able to match up to the real estate price hike. In Kolkata, the average demand is still in and around Rs 20 lakh but there isn’t enough supply in this segment.” The average size sought after in the middle segment is around 1,000 sq ft for around 18-20 lakh and for the premium segment it is around 1,700-2,500 for Rs 50-70 lakh.

Chennai’s commercial property market has been driven by strong demand from multinational companies, banking and financial sectors, and commercial rental values in the Central Business District (CBD) of Chennai have increased in 12 months. This kind of demand is reflected in the residential sector as well. Properties around the south-west part of the city are likely to witness a northward rally in the next couple of years. The business opportunities created by the modernisation of the airport is another trigger for development of new residential areas.