Industry
Kolkata rising: How India’s cheapest property market is changing
Summary
- Kolkata is finally seeing its property market come of age. Long the epicentre of affordable homes, it is now witnessing a spurt in premium housing starts by developers such as Godrej Properties Ltd, Merlin Group, and Primarc Group. Mint trekked across the city to see how the ground has shifted.
Kolkata: In December, the iconic Howrah Bridge in Kolkata turned blue, as did the city’s famous clock tower, a replica of London's Big Ben. The South City and Acropolis shopping malls got the same treatment, as did the conveyor belts at Netaji Subhas Chandra Bose airport.
The city hadn’t turned blue because its denizens had a sudden hankering for the utopian world depicted in James Cameron’s film Avatar; the eye-catching sights were simply part of a marketing campaign by Godrej Properties Ltd (GPL) for ‘Godrej Blue’, its newest project in Kolkata. Last month, India’s best-selling developer launched the premium project, built around a pond in the New Alipore area, with three- and four-bedroom residences. The 482 apartments, across seven towers, have a price range that would have been inconceivable a few years ago: ₹2.3-5 crore.
“The response to ‘Godrej Blue’ has been brilliant in terms of sales. It is mostly locals who are buying," said Subhasish Pattnaik, chief executive officer, west and east zone, at Godrej Properties. “The appetite for premium projects is strong in Kolkata. We want to do more, including both premium and plotted projects."
In November, GPL acquired 53 acres in suburban Joka, where it will launch a plotted development project this year.
Mumbai-headquartered GPL is one of the few national developers operating in Kolkata. The others include DLF Ltd, Shapoorji Pallonji Real Estate, Tata Realty, Phoenix Mills Ltd and Shriram Properties Ltd. But more may make a beeline for the eastern metropolis given how its property market is heating up.
Coming of age
Calcutta, which was the capital of India for more than a century under the British, is a city steeped in old-world nostalgia. However, it no longer enjoys the prestige it did in its heyday. Despite the fact that it has a large labour force, other cities have left it far behind as a centre for business. That perhaps is one of the reasons why the cost of living in Kolkata has always been low, whether it involves transportation, food, or most importantly, a roof over the head.
The city, with its affordable housing focus, is the cheapest of India’s top property markets, behind the Delhi-National Capital Region, Mumbai Metropolitan Region, Pune, Hyderabad, Bengaluru and Chennai. When those cities embraced premium and luxury homes, price-sensitive and conservative market Kolkata bucked those boom cycles and stuck to its budget and mid-market housing focus. But that is changing.
Today, the ‘Gateway to the East’ has expanded in size as a real estate market, both in sales and launches. Aspiring young professionals, a thriving community of small and medium businesses, and non-resident Indians have shown an appetite for premium and luxury homes.
Tapping that growing demand, developers such as Godrej Properties Ltd, Merlin Group, Primarc Group, and Ambuja Neotia Group are bringing in contemporary, premium homes, opening up new real estate frontiers in the city.
The numbers bear witness to this tectonic shift. Between 2020 and 2024, average property prices rose around 33% in Kolkata as developers launched larger and more premium homes targeted at business families, young professionals, first-generation entrepreneurs, non-resident Indians (NRIs) and people belonging to the city but settled elsewhere in India. Residential rental values, too, have shot up.
In 2023, Kolkata sold 23,030 units, overtaking Chennai, which sold 21,630 units. Sales of affordable homes—those priced at ₹40 lakh or less—dropped from 62% in 2020 to 45% in 2024, as per estimates by Anarock Property Consultants.
On real estate site 99acres.com, new bookings in projects have three-and-four bedroom residences priced above ₹80 lakh and going up to ₹5 crore. There are several five-bedroom projects, along with villas and row houses.
“A little over a decade ago, Bhopal was a bigger property market than Kolkata. The fact that it is the third-most populated metropolitan region is a big driver for real estate. The city has its own issues in terms of economic activity, but it was a market due for growth," said Pankaj Kapoor, managing director, Liases Foras, a research and advisory firm.
Simply put, Kolkata, a city that traces its origins back to 1690, is finally coming of age as a real estate market.
Premium in, affordable out
Park Street, which apparently got its name from a deer park around the home of Sir Elijah Impey, the chief justice of the Supreme Court of Calcutta, is one of the city’s best-known locales. The downtown area, a hub of culture and entertainment, is dotted with bakeries, pubs, restaurants and cafes. Soon, the area will also feature a housing project by the Merlin Group. The homes in the yet-to-be-named super-luxury project will be priced at an eyepopping ₹17-18 crore.
The developer already has a luxury project, ‘Merlin Azure’, under construction in the upscale Ho Chi Minh Sarani neighbourhood. The four-bedroom residences in that project will be priced at over ₹10 crore.
“The demand for spacious and luxury units has increased significantly. In recent years, we have observed a demand surge in prime locations such as Park Street, Loudon Street, Shakespeare Sarani, Chowringhee, Ballygunge, and the Bypass area. This growth has been driven by strong interest and enthusiasm from the HNI segment, which has played a pivotal role in shaping this trend," said Sushil Mohta, chairman, Merlin Group.
There is no dearth of buying power in the city, say developers and property analysts. As per the Hurun Rich List 2024, Mumbai has 386 billionaires, the highest in the country. Kolkata has 69, far fewer, but more than Ahmedabad, Pune, Surat and Gurugram.
Price was a very important factor for homebuyers, but that has started to change, said Keshav Agarwal, director, Srijan Realty. “There is improved affordability, and also a lifestyle upliftment element in play, where the mindset of saving rather than spending has reversed. 2BHKs are not preferred anymore in Kolkata not just in the premium segment, but even in the mid-segment," Agarwal said.
Billboards of projects splashed across the city clearly indicate that: 3,4,5 BHKs, air-conditioned homes, rooftop swimming pools, villas and duplexes are everywhere.
The shift from affordable to premium is evident across projects in Kolkata. In 2021-22, the entry price for homes in Merlin Group’s projects was ₹40 lakh. Today, it is around ₹60 lakh.
Srijan’s ‘The Royal Ganges’, a project by the Ganges in the mid-market Batanagar locality, was launched in 2023 with homes priced a little over ₹50 lakh. The per sq ft price has since risen by 20-25% thanks to demand.But even after their significant rise since the covid-19 pandemic, Kolkata’s price points are still lower than those of other cities. That could change now, at least on the premium front. The demand for such housing has made developers confident about launching larger, more expensive homes.
In its luxury project ‘The V’ in New Town, a planned satellite city on the eastern fringes, Shristi Infrastructure Development Corporation Ltd sold the apartments in the lower floors for ₹3.5-4 crore. Last year, itstarted selling the four-bedroom homes from the 20th to 26th floor for ₹5 crore.
A shift in mindset
It wasn’t easy for Paloma Sengupta to convince her parents to move out of their ancestral, joint family home in north Kolkata’s Shyambazar neighbourhood, close to the now infamous RG Kar Medical College. The building was up for redevelopment, and Sengupta’s parents could either opt for a two-bedroom apartment or a financial compensation as their share. Sengupta, 45, suggested that they buy an apartment in a new locality instead.
Last November, she flew down from Singapore, where she works as a marketing vice-president, to register the property—a three-bedroom residence in a gated community in Kasba, south Kolkata, that cost around ₹1.2 crore.
Kolkata has the highest population of people over 60 years among all the cities, many of them living in decades-old family homes all their lives, as the youth migrated to cities such as Bengaluru and Mumbai for better jobs. The next generation now wants to buy a modern home in gated communities for their parents or to invest in a city they may return to someday.
“In terms of options, we were spoilt for choice when we were searching for apartments, but most were beyond our budget, which was ₹80-90 lakh.But there was nothing below ₹1 crore.We then had to stretch our budget to get something we liked,"said Sengupta.
Developers have been eyeing the Rajarhat-New Town area, which has seen huge demand from young professionals, as a new frontier for the city’s real estate market.
Anirudh Bhowmick returned to Kolkata in 2022 with his wife Anjana and five-year-old son, after working in Bengaluru for over a decade. He had lost his father to covid and wanted to live close to his mother. Bhowmick, 41, a data consultant at a US-based tech firm, bought a three-bedroom apartment in New Town for ₹78 lakh. Since then its value has appreciated by 20%.
“Honestly, my wife was quite apprehensive about moving back, but the experience has been good so far. The roads and infrastructure in New Town are far better than in Bengaluru. I don’t spend half my time commuting as I did there, and the harsh summer aside, the quality of life is much better," said Bhowmick.
The business end of things
For decades, West Bengal has been perceived to be a state that is not business friendly. One of the consequences of this less-than-desired image is that Kolkata’s retail and office markets have a lot of scope for growth. Some business groups are now moving to tap that potential.
For instance, Mumbai’s Phoenix Mills Ltd is currently building a million sq. ft mall, the largest in Kolkata, in the upscale Alipore area. The hospitality sector, too, is booming. In 2024, Ambuja Neotia Group opened four hotels in West Bengal with Indian Hotels Company Ltd as the managing partner, of which three were in Kolkata. It is also planning to develop a mall in New Town as well as a second-home project in Raichak.
“We will do a second-home project with customizable private villas with lawns near the upcoming Taj Resort and Hotel in Raichak. We will also launch two projects catering to ultra-luxury clientele in 2025, with homes priced at ₹5-7 crore in the prime locations of Ballygunge and EM Bypass," said Harshvardhan Neotia, chairman of Ambuja Neotia Group.
What could potentially help the housing market thrive is the large industrial real estate base in Kolkata’s peripheral areas and districts. The city today has about 10% of the warehousing stock among the top eight tier-1 cities in India, roughly 37 million sq. ft, as per property advisory JLL India estimates.
Bengaluru’s Shriram Properties Ltd is developing a township in Uttarpara, in Hooghly district, on part of the 314 acres where the erstwhile Hindustan Motors Ltd factory was located. The company is looking to tie up with another developer to build a warehousing facility on 100 acres of that land.
“Uttarpara is an affordable location, but also one of the largest trader bases, where spending power is very good. After launching affordable homes, we will now launch villas at ₹1 crore. There is also huge demand for warehousing," said chairman and managing director M. Murali.
Bijay Agarwal, managing director, Sattva Group said it is also important to have a thriving commercial office market for the residential market to grow. “Growth of the office sector, particularly IT-led businesses, is crucial," he said.
In December, chief minister Mamata Banerjee inaugurated Infosys Ltd’s software development centre in New Town. Infosys is expected to employ around 4,000 people on the campus. Banerjee said the centre would help other IT companies to come to West Bengal. A new Silicon Valley is also coming to New Town and could potentially create 75,000 jobs with an investment of ₹27,000 crore, she added.
But the state government needs to do much more. For starters, it needs to follow through on the promise in its Budget last February to revisit two major land acquisition bottlenecks—the archaic Urban Land Ceiling Act and West Bengal Land Reforms Act. A year since that announcement, not much has changed.
“When developers want to build a shopping mall or a large project, which requires land above the ceiling of 500 sq metres, they have to form multiple companies to buy land. That creates complexities over titles," said Confederation of Real Estate Developers Association of India Bengal president Sidharth Pansari,who is also managing director of the Primarc Group. “To do a project on government land means every transaction of sale or resale needs approval, which takes months."
The ball is in Banerjee’s court.
