How Tier-2 & 3 cities becoming new investment destinations for realtors

Roping in former Indian skipper and former BCCI boss- Saurav Ganguly as their brand ambassador has been a master stroke. Known for his ‘never-say-die’ attitude, Ganguly has not only boosted the morale and spirit of the company and its employees, post pandemic, but has also pushed up sales to its peak. That’s what its helmsman feels.

Speaking to BizzBuzz exclusively, Ketan Sengupta, the multi-faceted Managing Director & Chief Executive Officer of Bengal Peerless Housing Development Co Ltd, looks 360 degree at Kolkata’s realty segment and also on how his different creative pursuits helping to humanize the brand and making it more relatable to customers, demonstrating the company’s commitment to creativity and innovation

What is the overall residential reality scenario in and around Kolkata now?

The residential real estate market in Kolkata has been growing steadily in recent years. The city has seen an increase in demand for affordable housing units, especially in the suburbs and peripheral areas. The Covid-19 pandemic has also influenced the city’s real estate market, leading to a shift in preferences towards larger homes with open spaces and amenities like parks and gardens. In terms of pricing the real estate market in Kolkata is relatively affordable compared to other metropolitan cities in India. However, it is important to note that prices can vary significantly depending on the location, amenities and quality of construction. Overall, Kolkata’s real estate market is expected to continue its growth in the coming years, with a focus on affordable and mid-segment housing.

Which sub segment is growing faster-affordable or premium?

In Kolkata’s real estate market, affordable housing is growing faster than the premium segment. The demand for affordable housing units in the city has been increasing steadily. This is due to the fact that significant portion of the city’s population belong to middle and lower income group and are looking for affordable housing options. On the other hand, the demand for premium housing units in Kolkata has been relatively stable. While there is a market for high end luxury homes, the majority of the demand in the city is for affordable and mid segment housing. Overall, the real estate market in Kolkata is expected to continue to focus on affordable and mid segment housing in the coming years, as this is where the majority of the demand is coming from.

Is the market dominated by investors or end users?

The real estate market in Kolkata is dominated by end users rather than investors. While there are investors who invests in the city’s real estate market for the purpose of generating rental income or capital appreciation, the majority of the demand comes from end users who are looking for homes to live in. This is due to the fact that Kolkata has a large population of middle class and lower income groups who are primarily interested in buying homes for their personal use. Additionally, with the growth of the IT sector in the city, there has been an increase in the number of young professionals looking to buy homes in Kolkata. Overall, the end user demand is the main driving force behind the real estate market in Kolkata, with investors playing a smaller role.

What about the current inventory situation?

The current inventory situation in Kolkata’s real estate market is mixed, with some segments having an oversupply of units while others have a shortage. In the affordable housing segment, there is generally a shortage of units, especially in the peripheral areas and suburbs of the city. This is due to the high demand for affordable housing options from the middle and lower income groups, which has led to a supply crunch. On the other hand, in the premium and luxury segment there is an oversupply of units. This is due to the fact that developers have focused on building high end luxury homes, which has led to an oversupply of such homes. Overall, the inventory situation in Kolkata’s real estate market is dependent on the segment; with affordable housing facing a shortage of units while the premium segment facing an oversupply. However, with the changing market dynamics due to the Covid-19 pandemic, the developers are expected to have a better balance in the inventory situation.

How are Tier-II and Tier-III cities coming up as realty destinations for large organized sector players like you?

Tier-II and Tier-III cities are emerging as realty destinations for large organized developers in India. With rising urbanization and the growth of the economy in these cities, there is a growing demand for affordable housing and commercial spaces. Additionally, the availability of land at a lower price, lower construction cost and relatively lower competition and a growing demand for housing and commercial spaces in these cities makes them an attractive investment option for developers. Additionally, the government’s focus on developing infrastructure in these cities such as roads, airports and other amenities will boost the real estate demand in the long run. Overall Tier-II and Tier-III cities are expected to continue to grow as realty destination for large organized developers as they offer a good return on investment for affordable housing and commercial spaces.

One of Peerless Housing’s first project was at Sodepur, then came (after several years) Sonar Toree at Shantiniketan. Since then, Bengal Peerless never ventured out of Kolkata. Any particular reason for that? Would you be open to that going forward? Any plans?

One of the reasons why we limited our operations to Kolkata is to have a better understanding of the Kolkata real estate market and also to leverage the existing network and relationship of this region, by doing this we developed a better understanding of the market dynamics which helped us making better investment decisions. Another reason why we limited our activities within Kolkata market is to manage our resources and operations more effectively, by which we optimized our resources properly and focused on delivering quality projects on time.

What would be your focus in the years to come –affordable, mid segment, premium? And why?

Depends on the market scenario, however the trend is towards the affordable and mid segment housing projects as these housings are expected to continue in the coming years which would optimize the return on investment.

After Axis Mall, Bengal Peerless has not done any commercial project either. Any plans to re-enter the commercial space?

We are coming up with a land mark project in Newtown Action Area 1, with residential space, commercial space and retail space together within one structure. This project will be a land mark destination may be the 1st of its kind in India, but the project will be launched under the banner of PGFI.

Many people had thought there would be significant new trends in the realty segment post pandemic. Do you see any such trends?

Yes, the Covid-19 pandemic has led to several new trends in the real estate segment, some of which are expected to continue in the coming years. Like increased demand for larger homes: With the pandemic leading to remote work and online education, people are now looking for larger homes with dedicated workspaces and study areas. Rise of e-commerce and online property sales: with social distancing norms in place many developers have shifted towards online property sales to reach out to customers and provide virtual tours for sales. Focus on green and sustainable homes: With the pandemic highlighting the importance of good health, there is a growing demand for green and sustainable homes that promotes a healthy lifestyle. Overall these trends are likely to continue in the coming years, with developers and customers adapting to the changing market dynamics post Covid-19 pandemic.

How have introduction of RERA and other new laws impacted the real estate segment?

The introductions of the Real Estate Regulation and Development Act (RERA) and other new laws have had a significant impact on the real estate segment. Here are some of the key impacts:

Increased Transparency: By mandating developers to disclose important information about their projects, including project timeline, project approvals etc.

Improved Accountability: By mandating them to register their projects with the regulatory authority and to adhere to strict guidelines on project timeline and quality.

Enhanced Consumer Protection: By mandating developers to maintain a separate escrow account for each project and to use the funds only for that project.

What about the new interest rate regime and trends?

The new interest rate regime has had a significant impact on the real estate sector in India. RBI reduced the repo rate by 115 basis points from March 2020 to May 2021, which led to lower interest rates on home loans. This made it easier for homebuyers to afford homes and led to increased demand for housing.

How has having Saurav Ganguly as your brand ambassador helped you improving your business?

Saurav Ganguly is considered as a comeback man; we have seen him making several comebacks in his cricketing career. His presence as a brand ambassador has been an inspiration for us. Our spirits were down with the strike of Covid 19 pandemic during March, April 2020 leading to closure of construction and other official activities resulting in a negative customer sentiment. However, as things improved we bounced back to full swing and could relate the same with Sourav known for his never say die attitude. Hence his inclusion as a brand ambassador has really enriched us in all aspects. Our sales figures peaked to the maximum. This indeed is a true justification of having him with us.

From writing poetries, recitation, and music to wildlife photography-you have many facets and many creative pursuits. How do you strike a balance? Do they by anyway help in building the image of the company as well?

I like to take up impossible things. When people say something can’t be done, my instinct is to accept the challenge and get it done, however balancing multiple interests and passions can be challenging, but it’s important to prioritize and manage the time effectively. It’s also important to recognize how the various pursuits can complement each other and contribute to the overall personal and professional growth. In terms of building the image of the company, showcasing a diverse range of talents and interests can certainly help to humanize the brand and make it more relatable to customers. It can also demonstrate the company’s commitment to creativity and innovation.