Kolkata land prices soar on mall fever

The frenzy has led to a realisation among land owners about the value of their holdings and they are making a killing.

It is Gurgaon revisited. The mall mania sweeping over Kolkata has set real estate prices soaring while landlords are making hay "" a phenomenon that gripped the bustling Delhi suburbs not so long ago.

Ritzy malls are being set up in Kolkata in a frenzy to cater to the influx of techies, as also to make believe that the Left Front has taken the 'right' turn.

Newer areas like the suburbs and the east of Kolkata are hotting up and the EM Bypass has become one of the hot zones. At least five new malls are slated to come up around the Bypass area in the near future, with each offering between 400,000 sq ft and 450,000 sq ft space. Two others are being developed elsewhere in the city.

About Rs 100 crore would be invested in each mall, according to estimates.

Specialised malls, dedicated to products like jewellery or home fittings or furnishings are also being built. The frenzy has led to a realisation among land owners about the value of their holdings.

Land owners having plots of more than two acres are being wooed by real estate developers, driving up the perceived value of the property.

Plots are changing hands at rates similar to that for roadfacing showrooms.

Real estate developers said that the premia charged on land have reached unrealistic levels. Rahul Saraf, who brought the international mall format to the city in the form of Forum, says some properties are charging premia as high as 100 per cent.

For instance, in the area around Park Street and Theatre Road, the heart of the city, prices have appreciated around 67 per cent in a year.

Plots, which were going for Rs 30 lakh per cottah a year back were now being hawked at Rs 50 lakh per cottah.

The scenario in suburban areas is not much different. Saraf says prices in the suburbs are going at the same rate as apartments. Typically, the prices in the suburbs vary between Rs 1,200-1,500 per square feet for a finished apartment. Landlords are asking the same rate for large plots.

Sushil Mohta, managing director of the leading real estate development firm Merlin Group, described the phenomenon as typical of developing economies.

The prices of all properties at premium locations are rising, whether in the city or suburbs. Mohta said prices in central and south of Kolkata have appreciated 20-25 per cent, year-on-year.

Good appreciation had also taken place in residential areas like Salt Lake and Garia.

Premia are rising in residential locations as they offer a large and local catchment area and hence are lucrative for mall developers.

Not surprisingly, land owners are eager to cash in on this.

Mohta said the price escalation was a fallout of the demand-supply situation.

According to Saraf, land owners have to realise that malls represented the most expensive form on infrastructure to build and mall projects could not afford to pay the same premium like any other showroom.

Harsh Neotia, who recently built a mall at the Salt Lake City Centre, said, "I am not in the market now but, if real estate prices are escalating then malls will become unviable."

However, whether prices are sustainable on a long-term basis would depend on the success of the malls. For now, the going appears to be good at least for the land owners!