It has been almost a month since the government’s decision to demonetize currency rattled the country. India’s real estate markets are coming to terms with the ground realities and Kolkata’s property market, albeit quiet and slow is no exception.
A predominantly investor-driven market, it used to draw more than 50% of its buyers (read investors) from the neighbouring states of Bihar, Chattisgarh and North Eastern states of Manipur and Assam. Lack of major employment hubs and industries are the main reasons for low end-user demand for homes in Kolkata.
Cash-crunched investors are now out of the market and if one goes by PropEquity’s report on demonetization, a 10-20% drop in property prices is inevitable in all property markets including Kolkata.
Anup Dalmia, Head-East Zone, National Association of Realtors, believes that luxury properties in the city will take a shaving of 20-25% while the largely white money driven affordable and mid-segment category will see prices dropping by 5-10%. He adds that big developers like Godrej have already reduced the prices of their luxury project by 20%.
‘Yes, transactions have dried up. There are enquiries but buyers have taken the wait and watch approach. We believe this is a temporary phase and will not last for more than 6 months’ says Nandu Belani, President- Bengal Chapter of CREDAI.’
He also asserts that the prices in the budget category trading at Rs 3,000- 4,500 per sq ft have no room to come down further. In fact, he is sure that with interest rates coming down, budget and mid-segment homes will see a huge surge in demand in the next 6 months.
Brokers who have till now enjoyed huge profits in Kolkata’s highly unorganized market are now realigning their expectations from future business. ‘Yes, profits and volumes will take a hit but we cannot undo anything. We will now concentrate on affordable and mid-segment category’, says Anup Dalmia.
With the trio of Demonetization, RERA and GST compelling real estate sector to undergo an image makeover. Realtors and developers everywhere including Kolkata have no option but to become professional and organized to survive.