The real estate market in Kolkata, which had started to occupy a place in the national map thanks to the developments like the IT clusters in Rajarhat and Sector V, it has been hit by the economic downturn and faced with falling demand, stagnating prices and increasing unoccupied spaces.
The market has seen 30 per cent fall in demand in the last two months.
In tandem, property prices, especially the residential ones, have fallen by 15-20 per cent across the board in the last two months.
Rentals for offices too have fallen, with companies averse to shift to new offices in a bid to check costs.
In case of retail malls, ector experts said, all leasing activity had come to a standstill, with no retailer willing to open a shop.
Sources at a newly-opened mall on Eastern Metropolitan Bypass, spread over 700,000sq.ft., said the mall owners were facing difficulties in selling 10 per cent of the unoccupied space at the mall.
In case of commercial property, rentals in Rajarhat decreased from Rs55-65 per square feet two months ago, to about Rs 45 per square feet.
At CBD it decreased from Rs 80--120 per square feet to Rs 60-90 per square feet at present.
In case of malls it slipped from Rs 200-250 per square feet to Rs 100-150 present.
"The fall in prices, especially for residential real estate projects have been in the range of 15-20 per cent. It is less than that in Delhi and Mumbai, where there has been a drastic fall in prices," said Jitendra Khaitan of Pioneer Properties.
Khiatan said, in the coming months, a further 5-10 per cent fall in property prices was expected.
However, some property consultants were of the view that property prices have already dropped by almost 40 per cent in the last couple of months.
In such a situation, developers are finding it difficult to hold on to the existing levels, though most of them rule out the possibility of reducing prices in the coming months.
Harshavardhan Neotia, managing director of Bengal Ambuja, said, "I do not foresee any fall in property prices in the coming months, as it did not go up very much in the last few years. Also, apart from select clusters like Rajaarhat, there has been little supply of housing units."
Till around August-September of this year, developers were trying to entice property buyers in anticipation of prices going higher due to rising raw material costs.
Credai had organised property shows, in which it promised to sell houses at "discounted prices".
However, things turned out differently.
For one, raw material prices started falling.
According to Pradeep Sureka, president, Credai, Bengal, high raw material cost already factored in upcoming projects, and so developers were not in a position to drastically reduce prices.
Neotia of Ambuja Group said fall in construction cost represented barely a difference of 2-2.5 per cent in pricing. Many areas continued to face a short supply of housing units, he added.
Recently, Credai had urged its members to reduce prices.
"Credai is urging and advising its members across the country to make every effort in lowering prices to the levels possible. This will have a desirable impact and a cascading effect on employment in the industry as well as on more than 170 other industries as well as the economy and country as a whole. Some developers across the country have already reduced prices, Credai now requests all its members to do the same," said a recent press release by Credai.
Its members had chosen to ignore it though.
Credai members and developers said they did not anticipate any drastic correction in property prices in the eastern region.
Sureka added that over the last two years, there had been no across-the-board reduction in property prices in and around Kolkata.
However, in the last two months alone, there has been about 10-20 per cent fall demand in the real estate market in Kolkata.
"The fall in demand, especially for residential real estate projects have been in the range of 15-12 per cent. It is less than that in Delhi and Mumbai, where the demand is less by nearly 50 per cent," claimed Khaitan of Pioneer.
Khaitan said, in the coming fall in prices would not be more than 5 per cent, even with construction cost falling.
Neotia and other developers were saying now that they did not consider the fall in cement and steel prices as significant factors in price determination.
Neotia said the two per cent or so fall in construction prices did not contribute much to overall pricing of a project.
