The residential market in Kolkata is experiencing an observable change in the demand, whereby, mid-premium housing units have become the apparent leader in the sales as well as in the launch of a new project. Units between 40 lakh and 1.5 crore have been the new range of units that have been influencing the bulk of activity whereas affordable housing, which was once the backbone of real estate in Kolkata, has been playing a secondary but consistent role.
The city has achieved a lot of impetus in the mid-premium segment in the last two quarters. Developers have been positioning their strategies to this demand and increasing a greater percentage of units in this segment. According to the market reports, the new housing releases have been increasing drastically in the city this year, most of which are in the mid-premium category. This has been especially robust in the new growth areas like Rajarhat, Madhyamgram, Baruipur, Joka and in Hooghly where developers have the benefit of access to more acreage and the increasing number of buyers.
This trend is also indicated by sales numbers. The middle-end houses are appealing to young professionals, nuclear families and those who want to purchase second homes because they seek a compromise of space, facilities, and connectivity. The change in preference is also influenced by the increasing incomes, availability of home-loans and need to live lifestyle-oriented lives. Customers are now prepared to spend a little more on gated communities, better security facilities, recreational facilities and closeness to commercial centres.
In the meantime, affordable housing, normally 40 lakh and below, is still under healthy absorption but no longer the market leader. The proportion of low-end units among total new launches has decreased in part because of increased building costs and low developer margins. Nevertheless, first-time buyers and people with less income still have a stable demand. As a matter of fact, the inventory which is not moving in the lower end segment has been decreasing slowly and slowly meaning that the supply reaching the market is being consumed at a constant pace.
The other market trend that will be influencing the market is the trend of mid-sized units. The medium size homes (500 sqft and 1,000 sqft) have become the most sold segment, as they attract buyers who want easy-to-clean-and-use homes but are very contemporary. Small units of small scale continue to dominate in the number of registrations, although the trend is strongly in the direction of the mid-market.
Although launched well, the general trend of the housing market in Kolkata has been affected by lighter shocks owing to the macroeconomic uncertainties. A decline in sales activity was experienced in some quarters to the past year. Nevertheless, developers are not deterred and they are still investing into mid-premium projects due to shorter turnaround and greater profitability.
Experts in the industry think this change is structural as opposed to a transient trend. The increasing number of middle class in Kolkata, development of IT and logistic hubs, and the development of infrastructure are all contributing to the development of mid-premium housing.
