[ecis2016.org] While Rajarhat New Town in Kolkata is one of the most affordable housing markets, the region has failed to take off, because of changes in government policies and industry exits. We look at whether it makes sense to invest in a property here
The first movers into any property location, generally do so, because of the affordability offered by that particular location. This was evident in Greater Noida West in Delhi-NCR and the regions beyond Thane in the Mumbai Metropolitan Region. Moreover, early movers often reap the benefits of capital appreciation and improvement in overall livability, in due course of time. However, Rajarhat New Town, in Bengal, is a case study in contrast.
You are reading: Rajarhat New Town: An affordable market with infrastructure challenges
“I bought an apartment in Rajarhat New Town in 2012 and six years is a fairly long time, for any new location to settle down. However, even today, the basic civic issues have not been sorted out. I cannot move out in the night, as the area is deserted. I repent my decision to buy an apartment here,” laments Sunanda Ghosh, a housewife.
Property prices and appreciation potential in Rajarhat New Town
According to Bikash Paul, a local property agent, buyers like Ghosh are disappointed, because of the poor pace of developments, as well as the fact that the market has not picked up, in terms of capital value appreciation.
“The demand is slow in this region and there is oversupply. As the entry point has been low, most of the initial buyers are investors, who are looking for long-term appreciation. Amidst this scenario, any end-user buyer, who has bought in this location and shifted in, will feel like s/he is living in a ghost city,” Paul explains. The base capital values, which range between Rs 4,000 per sq ft and Rs 6,000 per sq ft now, have barely appreciated by Rs 1,000 per sq ft, for those who have invested three to four years ago.
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What has dented sentiments even further, is that property prices in Rajarhat have corrected by around 10-15 per cent, in recent times. Rakesh Gupta, director of Squarewood Projects, agrees that there is a crisis in this market. According to him, most of the projects in Rajarhat New Town, were launched with investors’ money. Now the investors are also stuck, because there are no buyers.
“Investors are unable to exit, because there is no resale activity in this market. There are three pockets in Rajarhat New Town and a major part of the locality falls under the ‘future/upcoming’ category, with prices as low as Rs 2,500 per sq ft. Of course, there are also certain pockets, which are closer to the Infosys campus and IBM building, where prices have peaked to a level of Rs 6,000 per sq ft and will pick up sooner than other pockets,” says Gupta.
Lack of job opportunities hits demand for real estate in Rajarhat New Town
Another reason why this new township did not pick up as expected, could be the lack of enthusiasm towards Kolkata from corporates. Rajarhat New Town was created when companies like Wipro, Cognizant and Tata Consultancy Services, were expanding their presence in the city, to accommodate the projected demand for quality residential complexes. Today, the consumption of office space per household in Kolkata, is the lowest among tier-1 cities.
A report by Jones Lang LaSalle also said that Kolkata scored the worst among cities, in the sale of office spaces and Rajarhat performed ‘lower than expected’ among nine townships across India.
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This raises serious questions about the future of the locality. Analysts believe that since first movers have faced disappointments, in terms of capital appreciation and livability, hence, fresh investments in the market will be a challenge. Also, with property prices softening across Kolkata, this township does not have the price point advantage, to the extent that affordability could be a magnet for investment.
Check out properties for sale in Rajarhat
What could help, are incentives for corporates to set up their bases and measures to attract the migrant workforce to this township. In the meantime, Rajarhat New Town, which was carved out of agricultural land to make it a ‘future’ location, will continue to remain a future location.
Rajarhat New Town real estate market: Fact file
- Rajarhat New Town was created, to accommodate the projected housing demand of the workforce, when corporates were invited by the Left Front government to establish bases in Kolkata.
- Investors’ money from mining industries in neighbouring states, fuelled real estate supply in this market.
- Land acquisition issues and lack of incentives for businesses, meant there were no takers for this market.
- Capital values are around Rs 4,000-6,000 per sq ft.
- Prices in upcoming/future areas of the township are as low as Rs 2,500 per sq ft.
- While it may be one of the most affordable housing markets, it is faced by lack of appreciation, exit options and quality living.
(The writer is CEO, Track2Realty)
Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle
