The real estate market in Kolkata is headed for rough weather, as leading city realtors have decided to increase prices for upcoming real estate projects by 5-20 per cent in the coming months in an effort to pass on rising construction cost, increasing cost of funds and a slowdown in home buying.
The decision, taken collectively by members of the Confederation of Real Estate Developers Association of India (Credai) of Bengal, would come into effect by September this year, said Pradeep Sureka, president of Credai Bengal.
However, Pawan Agarwal, director of NK Realtors, a leading real estate marketing agency in the city, warned that compared to the same period of 2007, demand for property in the city and its fringes had dropped by 30 per cent in 2008.
The price rise could mean property prices rising Rs 100-500 per square feet.
A property in Rajarhat, where prices had stagnated between Rs 2,500 and Rs 3,000 till about a couple of months back, would not be available at less than Rs 3,000 – 3,500 per square feet in the coming months, a price comparable to some of the tier I real estate markets in the country.
Sureka claimed that unlike Mumbai or Delhi, where land accounted for a major part in property cost, about 80 per cent of property cost in Kolkata was on account of construction material cost and 20 per cent on account of land.
Over the last two years, construction cost had increased by 43 per cent, he claimed.
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“Over the last few months, construction cost has gone up due to continuous increase in prices of steel and cement, labour and staff wage and interest rate. It was further fuelled by ever increasing sanction fees and various government taxes. Thus, it is no longer possible for our member developers to absorb the increasing cost,” he said.
Sureka said demand and supply of real estate in and around Kolkata were matched.