A week after the demonetisation tsunami hit India, a curious bit of news popped up on social media timelines: Kolkata is to get its own Trump Tower, the fifth one in the country.
Over the next few days, as details of the project began to trickle in, the initial disbelief gave way to amusement – the proposed Trump Tower, one of the many imposing structures lining the city’s most prized strip of real estate, the Eastern Metropolitan Bypass, was more of a marketing exercise. The builders were actually in talks with the American President-elect Donald Trump’s Trump Organisation to rebrand an existing 38-storied project that has been languishing for a while. Word in the market? This is a desperate move in desperate times, where every big-ticket real estate inventory is in limbo even as brands such as ITC, Marriott and Westin continue to serenade the indifferent consumers in a pensioner’s city.
A drive around the newer, glitzier parts of the city – Salt Lake Sector V, Rajarhat, Newtown, along the Bypass to New Garia in the south and towards the airport in the north – will make you wonder if you are in Gurgaon (in its early days, with shrinking agricultural fields circumscribed by high rises) or Bangalore. These areas have splendid constructions, glitzy office spaces, a Metro project crawling to completion, a slew of five stars and serviced apartments and shopping malls, fine specimens of public spaces, parks, museum and lovely roads. The prices are appetising too – a 1,000 sq ft apartment in a swank gated complex could be yours for Rs 50 lakh.
But hidden under this veneer are communal, cultural and economic fault lines.
Real estate, a bellwether for growth, has been taking a step forward and two steps back in Kolkata. In the dying days of the Left Front government, Chief Minister Buddhadeb Bhattacharya’s investor-wooing moves brought in some credible employment generators, such as WIPRO, Cognizant and Tata Consultancy Services. Townships such as Rajarhat were created on agricultural lands to accommodate the projected demand for quality residential complexes. Meanwhile, money from mining industries in neighbouring states ensured there was a pipeline of investment into residential and commercial projects. However, all that proved short-lived: the change in governance, combined with other factors, meant that real estate could never really recover.
A report published last year by property consultancy Jones Lang LaSalle said Kolkata scored the worst among cities in the sale of office spaces and Rajarhat performed “lower than expected” among nine townships across India because of the state government’s stance on land acquisition. It added that Kolkata ranked last among eight cities in terms of sales in the residential segment during the first half of 2015. According to property consultants Knight Frank, the city scored over Hyderabad and Ahmedabad in new launches, with hopes pinned on better performance in the second half of 2015 if the industry picks up. Even at a time when real estate prices were dropping in other cities, there was only a marginal reduction in Kolkata – simply because there was no room for further reduction.
Archana Sultania Garodia, a homemaker and small entrepreneur, who recently moved out of a joint family property in East Calcutta, began house hunting in Rajarhat-Newtown area. Many of the complexes, especially the newer ones, she saw were vacant and appeared unsafe. Flats bought as investments, which were lying unoccupied, were in crying need of maintenance. One of the most beautifully designed complexes was mostly occupied by tenants who were drying clothes in the main lobby.
Garodia and her family eventually moved to an upcoming neighbourhood off Behala in the southern fringes of Kolkata, more than 15 km from the central business district of Chowringhee. Even though it is tough to access from the city centre, thanks to sluggish Metro construction, bad roads and traffic congestion, the complex has better occupancy. “Simply because it has more MIG [middle-income group] flats and the crowd is mostly mixed – Bengalis, Biharis and some Marwaris,” she said. Most importantly, for a 1,000 sq ft flat in a complex that has an amphitheatre, pool, three parks, she has had to pay Rs 35 lakh only.
Things are slightly more buzzing in Sector Five, Salt Lake City, with its Information Technology complexes and restaurants and pubs that come alive at night. But despite its youthful and happening vibe, it has not really got enough people to move in.
There is no dearth of big-ticket projects in Kolkata, even though most national players have stayed out. “DLF did try to do something here,” said Indraneel Majumdar, CEO of Modi Group (Kolkata) who has been working with several real estate projects in Bengal. “The way it works is, one big guy comes in and the others follow. But here, there has been a problem of negative word-of-mouth. There is also a huge gap between projection and reality, which is why there are so few takers for these projects.” Majumdar cited the lack of quality projects with quality construction as another reason for the situation.
From Howrah, the twin city of Kolkata that had been in the shadows for decades and is now a hot destination for residential and commercial projects, to NewTown, the pride of Calcutta, projects abound with fancy tags and priced at Rs 80 lakh upwards. But it is a classic case of a bride abandoned at the altar. Rare Earth, a project off the Bypass, near Hyatt Regency hotel, has been struggling to complete for years.
The 24-storied residential project, built on land acquired from a defunct mill, reportedly offered discounts after rates dipped from Rs 7,200 per sq ft in 2014 during its launch to Rs 6,242 in July. Other projects such as Atmosphere (featured in National Geographic series Superstructures), Disney Themes and Versace Interiors, world’s tallest sky walks and other frills, have been crawling for a while.
Supply, say experts, have been outstripping demand. According to Knight Frank’s 2015 July report, it will take four years for all the unsold inventory to take off.
But here again is a catch.
Exodus to other cities
“Demonetisation or economic downturn would not affect Kolkata’s real estate market, which has been fuelled by buyers in the middle segment,” said a real estate player, on condition of anonymity. Most home buyers here are salaried people, who are happy with standalone projects, flats priced between Rs 35 lakh and Rs 50 lakh. A small share of the buying happened when non-residents invested in some of the condominiums that came up around 10 years-15 years ago. Knight Frank estimates that the demand of unit above Rs 1.5 crore is extremely low. Which is why only a Tata Value Homes, which provides affordable housing, would be interested in entering the market. In the northern fringes of the city, 25 acres of land is being developed with a local developer to build homes priced at Rs 40-60 lakh.
“The city’s prospects have been killed by its own,” said Majumder, who recently travelled to North America to pitch a few upcoming real estate projects to the influential diaspora. “Unlike in Kerala, Karnataka, Andhra [Pradesh], those who left Bengal for the US, UK, Australia and other destinations, have not returned to invest. When I did try and pitch for some of the projects, they did not seem interested. While some of them may have their ancestral properties here, where their old parents are languishing, most of them are not convinced about the prospects of their place of birth. It is quite sad.”
Kolkata has never really been an investor’s destination, explains the real estate professional. “Unlike Delhi, Mumbai or Bangalore, which sees an influx of professionals from all over the world who may eventually buy a property in these cities, most people are only keen to flee this city. Even if you are settled abroad and wish to return some day, you would rather invest in a city where you are likely to get a job. Not in Calcutta, where the only reason you return is to meet your ailing family or attend the Durga Puja or a wedding.”
According to experts, those who do own a property in Kolkata have actually invested in Mumbai, Bangalore, or Delhi NCR for their children who may return to the country on professional assignments. This is one reason why the Lodha Group set up a special team in Kolkata for one its projects in Mumbai and even managed to sell 100 units in a year’s time.
Then there was the infamous syndicate – a real estate cartel that stonewalled every attempt by genuine homemakers and corporations to get a toehold in Rajarhat and other new areas.
Damayanti Chatterji, now a US resident, invested in a four-storied building, along with her father’s friends. On paper it was the perfect setting with schools and hospitals and malls close by. It has been five years since and there is no saying when she will get possession of the flat. Efforts at bypassing the syndicate have resulted in complications with lift, electricity and water connections.
While this may be true for most Bengalis, for the Marwari community things have been a little different. A decade ago, they drove the real estate and construction boom, buying bigger, swankier flats in condos promoted by the Prasad or Mani group, or the Ambuja group, where their joint families could thrive. “But that has stopped,” said Majumder. “They are not making any more moves and there are no new families coming in to Kolkata for better prospects. Besides, now with demonetisation, they are unlikely to make any investments that would be conspicuous.”
Majumder, who has travelled extensively in the state, says the money is there, but a chunk of it is with those who have come from Bangladesh and have fuelled a parallel economy. Mostly sand suppliers, small and medium traders, they are happy living in their low-rise MIG or LIG homes. “Even if they have the money, they will not move into a swank high rise,” he observed. “Neither will the condos welcome a Qasim Bhai.”
For some time, the large elderly population, left to fend for itself by two-three generations of Bengalis who exited the city for better prospects, did try selling off difficult-to-maintain old properties and move to a gated complex. “But that experiment did not work,” said Anuradha Sen, who lives in Sydney and had her elderly parents move to a 35-storied gated society in South Kolkata. “I thought they would feel more secure and enjoy the life there. There is enough room for walking and great views. But they were uncomfortable with strangers as neighbours, the staff was too cold and professional for their liking, and they hated the idea of living so high up.” The senior Sens dissuaded others in their circle from uprooting themselves so late in their lives.
To give her due credit, Chief Minister Mamata Banerjee has been trying to turn things around. She has cracked down on the syndicates, and put some of her party men accused of running real estate cartels behind bars. She made it easier for new constructions to come up. But there is one small problem. In large parts of south, central and east Calcutta, the efforts to gentrify some neighbourhoods have failed to a great extent. The slums and local bazaars surrounding a gated community make for a crucial vote bank. But for the Kolkata that is eager to shake off the bits of soil from its roots, it is an uneasy truce with the world locked out of its high security gates. A few months ago, a mob of over a hundred from neighbourhood slums stormed into a posh high rise. The mob was protesting one resident killed in a road accident and damaged dozens of high-end cars parked in the complex. The incident exposed the false sense of security and prosperity enjoyed by a few in the city, while raising questions about how the former communist-elitist society was struggling to cope with an era of conspicuous consumption and capitalism.