CBRE South Asia, an Indian real estate consulting firm, unveiled a collaborative study titled ‘West Bengal: Leading the Eastern Growth Story’ in partnership with CREDAI at the Statecon 2023 event held in Kolkata. The report highlights the conducive policy ecosystem, advancements in infrastructure, and a promising business milieu in West Bengal, collectively fostering enhanced prospects for investments across diverse realms within the real estate domain.
According to the report, West Bengal ranks third in India in terms of mineral production, accounting for about one-fifth of the country’s total production. The state also makes up 11% of the country’s total coal reserves.
It is the sixth largest state in India by economic size and is projected to have a GSDP of Rs 17.13 trillion ($221.39 billion) in FY 2022-23. This represents a compound annual growth rate (CAGR) of 11.54% from FY 2015-16 to FY 2022-23.
The state’s growth can be attributed to the services sector, which contributed almost 52%, followed by the industry sector (over 30%). West Bengal also houses more than 900 IT companies, employing more than 145,000 people directly/indirectly.
Owing to its advantageous positioning and exceptional accessibility, Kolkata maintains its status as a pivotal business and financial hub in the Eastern region of India, establishing itself as the epicentre of commercial real estate operations in West Bengal. Its proximity to industrial zones and ports has positioned the city as a prominent trading centre as well.
In April-June 2023, Kolkata is one of the major players in industrial and logistics leasing in India, accounting for 8-12% of the activity. This reflects significant sector growth, establishing Kolkata as a key hub for businesses and investors. This trend is expected to boost the local economy through job opportunities and increased economic activity.
The city’s strategic location, transportation infrastructure, economic trends, and demand for warehousing contribute to this leasing trend. The entry of international stakeholders has propelled globalisation in the sector, encompassing local real estate developers.
While Kolkata retains its position as the primary real estate market in the state, the impetus on infrastructure development, highlighted by projects like the Andal airport and the Silicon project, combined with favourable policies, has driven real estate growth towards tier-II cities like Durgapur, Siliguri, and Darjeeling. These cities have consistently garnered investor attention, marking a promising expansion beyond the capital.
Kolkata’s Upward Real Estate Trajectory
Presently, the city boasts an office space stock exceeding 34 million square feet Moreover, approximately 2.4 million square feet of investment-grade space, including projects like Ideal Unique Center (approximately 756,000 square feet), The Summit (approximately 350,000 square feet), and Imagine Tech Park (approx. 350,000 square feet) in PBD, are set to conclude construction by the end of 2024.
Furthermore, the Peripheral Business District (PBD) was at the forefront of the expansion, contributing 70% of the office stock share, trailed by the Central Business District (CBD) with a 24% share and the Secondary Business District (SBD) with a 6% share. Total estimated leasing by the end of CY 2023 is likely to be around 1 – 1.2 million square feet, while new supply is estimated to be 0.9 – 1.1 million square feet by end of CY 2023.
During January-June 2023, corporate occupancy reached 0.6 million square feet, predominantly favouring compact to mid-sized configurations. During January-June 2023, the Central Business District (CBD) observed an office rental value of Rs 95 / square feet / month, while the Secondary Business District (SBD) saw Rs 75 /square feet / month, and the Peripheral Business District (PBD) recorded Rs 45 / square feet / month in Kolkata.
During January-June 2023, East Kolkata accounted for 31% of the residential supply, followed by North at 19% and South at 16%. Additionally, within the housing sector, affordable housing took the lead with a significant 45% share, followed closely by mid-range housing at 39%. High-end housing comprised 10% of the market, while premium and luxury housing segments contributed 6% collectively during the same period.
South Kolkata Takes Center Stage In The Rental Scene
Currently, Kolkata boasts over 8 million square feet of organized retail area. The city’s expanding boundaries, and favourable demographic trends indicate substantial prospects for retail sector expansion. Till H1 2023, organized retail supply distribution in Kolkata favoured South Kolkata with a 31% share, trailed by East Kolkata at 24%, West Kolkata at 17%, North Kolkata at 15%, and Central Kolkata at 14%.
Regarding rental values of organized retail spaces, South Kolkata dominated the past six months with a substantial Rs 375 / square feet / month, trailed by Central and East Kolkata at Rs 350/square feet/month each, while North Kolkata recorded Rs 175 / square feet /month. It is estimated that rentals for both High Streets and Malls are expected to grow by 5-10% by year-end.
Kolkata: A Major Industrial And Logistics Market In India
Amid global challenges and an e-commerce leasing slowdown, Kolkata’s industrial and logistics (I&L) space demonstrated resilience in the first half of the year (January-June 2023). Record supply additions occurred due to pending project completions.
The state’s infrastructure enhancement, including roads and ports, is set to bolster the logistics sector. Kolkata recorded a significant 8-12% share in leasing activity in Apr-Jun 2023.
Presently, the city has a stock of nearly 10 million square feet of Grade A logistics developments situated along NH-2, NH-6, Taratala, and other micro markets. Notably, NH-6 accounted for most of the supply at 57%, followed by NH-2 at 37%, Taratala at 4%, and other micro markets with a 2% supply share.
Taratala recorded a significant rental value of Rs 23 / square feet / month in the past six months, followed closely by NH-2 with Rs 21.5 / square feet / month and NH-6 with Rs 20.5 / square feet / month.
Commenting on the occasion, Ram Chandnani, managing director, advisory and transactions services, India, CBRE, emphasised, “West Bengal shines as a growth leader in Eastern India, bolstered by a strong talent pool, transparent governance, and enhanced infrastructure. The real estate dynamics in the state, especially in Kolkata, is at a stage wherein the addition of quality supply is boosting absorption, further enabling the state’s real estate growth trajectory. In fact, West Bengal is well poised to attract global investments further as it continues to capitalize on the right policy incentives. Furthermore, the Industrial and logistics sector has showcased promising growth and is expected to grow further at 9-10% this year.”
Boman Irani, CMD, Rustomjee Group and national president of CREDAI, said, “Statecon 2023 ‘West Bengal: Leading the Eastern Growth Story,’ stands as a pivotal event where we take a comprehensive plunge into the state’s real estate landscape. Our aim is to deeply assess its present state and future potential, spotlighting the pivotal role of Tier 2 cities in this growth narrative. This platform serves as an invaluable opportunity for real estate stakeholders and the government to converge and engage in dialogue. Together, we can dissect emerging trends, exchange insights, and collaboratively propel the sector forward. Statecon 2023 encapsulates the synergy between aspirations and action, setting the stage for a dynamic real estate landscape in West Bengal.”
