Kolkata Real Estate growing at 150%

Demand from IT & ITeS sectors encourage developers to build.

The IT and ITES boom in Kolkata has led to a deluge in office supply space with the increase being pegged at a whopping 150 per cent.
According to a latest Cushman and Wakefield report, the total supply of office space in Kolkata for the year 2007 is around 3.5 million square feet, with emerging suburbs of Rajarhat and Salt Lake Sector V accounting for the lion's share. The study indicates that the supply is in tandem with the demand since the vacancy rates in the city hovering between five to eight per cent.

This year, approximately 1.5 million sq ft has been projected for IT/ ITES SEZ in New Town, Rajarhat, which has already witnessed substantial pre-leasing activity. Another 1.5 million sq ft has been booked by corporates like Genpact, TCS, PWC, Cognizant and IBM Daksh in Salt Lake Sector V and Rajarhat.

In 2006, the supply of office space in Kolkata was around 1.35 million sq ft, of which 1.34 million sq ft has been absorbed. This represents a marked improvement over 2005, wherein the supply was at around 700,000 sq ft and the corresponding absorption was around 600,000 sq. Relatively low rentals, easy parking availability and improved connectivity have contributed to the development of the emerging suburbs. Owing to saturation in central business districts (CBD) , Park Circus connector and Rashbehari connector have also emerging as locations for corporate offices.

The study also points out that while majority of the supply will be by large developers, smaller local developers who have proposed IT/ITES offices in the range of 50,000 -100,000 sq ft in Sector V will cater to cost sensitive requirements with low rentals. The study is corroborated by Jones Lang LaSalle report on real estate in Kolkata, released in February 2007, according to which, "Kolkata, whose economy grew by eight per cent in 2005, is home to 175 IT and ITES firms which employ approximately 40,000 people. Rapid expansion and increased business activity is expected to strongly boost demand for speculative built space as well as built-to-suit offices and 4.5 million sq ft of additional supply is likely to be completed by 2007 in Salt Lake and New Town Rajarhat."

Retail clients are also joining the fray.