In a resounding display of economic prowess, Kolkata has emerged as a major powerhouse in India’s real estate market, witnessing remarkable growth across various sectors, including industrial and logistics and office space.
Kolkata has secured its position among the top three cities for industrial and logistics (I&L) leasing activity, accounting for an impressive 8-12% of industrial leasing activities in the nation between April and June of this year, according to a report by CBRE, a global real estate services firm.
This remarkable growth can be attributed to Kolkata’s strategic location, robust transportation infrastructure, favorable economic trends, and surging demand for warehousing facilities. Additionally, the entry of international stakeholders into the region has spurred globalization within the sector, with local real estate developers riding the wave of this transformation.
Despite global challenges and a slowdown in e-commerce leasing, Kolkata’s I&L sector demonstrated resilience in the first half of 2023, owing to record supply additions resulting from pending project completions. The state’s ongoing infrastructure enhancements, including road and port developments, are set to further bolster the logistics sector. During April to June 2023, Kolkata captured a significant 8-12% share of leasing activities.
Presently, Kolkata boasts an impressive stock of nearly 10 million square feet of Grade A logistics developments, strategically located along key corridors such as NH-2, NH-6, Taratala, and other micro-markets. Notably, NH-6 accounted for the majority of this supply, at 57%, followed by NH-2 at 37%, Taratala at 4%, and other micro-markets at 2%.
Ram Chandnani, Managing Director, Advisory & Transactions Services, India, CBRE, highlighted West Bengal’s remarkable growth in Eastern India, attributing it to a potent combination of a skilled workforce, transparent governance, and enhanced infrastructure. The real estate dynamics in Kolkata, in particular, are at a stage where the addition of high-quality supply is driving absorption, thereby propelling the state’s real estate growth trajectory.
Furthermore, West Bengal is well-positioned to attract global investments, thanks to favorable policy incentives. The Industrial and logistics sector, in particular, is showing promising growth, expected to continue at a robust rate of 9-10% this year.
Kolkata’s advantageous location and exceptional accessibility have solidified its status as a pivotal business and financial hub in Eastern India, making it the epicenter of commercial real estate operations in West Bengal. Currently, the city boasts an office space stock exceeding 34 million square feet. Furthermore, nearly 2.4 million square feet of investment-grade space, including projects such as Ideal Unique Center, The Summit, and Imagine Tech Park in the Peripheral Business District (PBD), are slated for completion by the end of 2024.
The Peripheral Business District (PBD) has been a primary driver of expansion, contributing to 70% of the office stock, followed by the Central Business District (CBD) with 24%, and the Secondary Business District (SBD) with 6%. It is estimated that by the end of 2023, total leasing activity will reach approximately 1 – 1.2 million square feet, while new supply is expected to be in the range of 0.9 – 1.1 million square feet.
The growing demand for commercial space is also propelling the residential and retail sectors forward. In the residential segment, East Kolkata dominates with a 31% share of the supply, followed by North at 19% and South at 16%. Among housing categories, affordable housing holds the majority share at 45%, followed closely by mid-range housing at 39%. High-end housing accounts for 10% of the market, while premium and luxury housing segments collectively contribute 6%.
With over 8 million square feet of organized retail area, Kolkata’s expanding boundaries and favorable demographics offer substantial prospects for the retail sector’s expansion. Organized retail supply distribution in the city has seen South Kolkata taking the lead with a 31% share, followed by East Kolkata at 24%, West Kolkata at 17%, North Kolkata at 15%, and Central Kolkata at 14%.
While Kolkata remains the primary real estate market in West Bengal, infrastructure development projects such as the Andal airport and the Silicon project, combined with favorable policies, have driven real estate growth towards tier-II cities like Durgapur, Siliguri, and Darjeeling. These cities have consistently attracted investor attention, signaling a promising expansion beyond the capital.
In conclusion, West Bengal, especially Kolkata, is currently witnessing a controlled supply that is driving absorption, further fueling the state’s real estate growth trajectory. The strategic positioning of industrial and IT parks is expected to create new demand centers and lead to the development of new asset classes.