Kolkata property prices have moved up 60% year-on-year, highest among all the Indian cities and much above the national average of 21%, the RBI said in its annual report.
To track real estate price movements, the RBI has compiled quarterly house price indices for nine major cities as well as an aggregate all-India index based on data on property transactions received from registration authorities of state governments.
The RBI, in its annual report, has pointed out that property prices in Kolkata witnessed the highest growth of 60% between the fourth quarter of 2012 fiscal and fourth quarter of 2013 fiscal. It was lowest for Mumbai at 10.6% during the same period.
Although Credai president and managing director of CSR Estates C Sekhar Reddy said the RBI’s assessment is based on presumptive valuation, data available from the West Bengal government show that property prices have sky rocketed mainly because of high value land sale pushed by the state government agencies since 2009.
The Kolkata Municipal Corporation (KMC), Kolkata Municipal Development Authority (KMDA) and the West Bengal Housing Board are mainly responsible for land deals and the three agencies together have sold a little above 5,000 acres for R18,000 core in the last four years, a KMDA official said.
KMC this June auctioned a 2-acre plot on the EM bypass for R115 crore, the biggest land deal in Kolkata so far with price per cottah translating to R96 lakh. In an earlier land deal in 2009 KMC sold a 3.35-acre plot on the same EM bypass for R135 crore via the auction route and this translated to R70 lakh per cottah. Housing Infrastructure Development Corporation (HIDCO) auctioned a 2.25-acre plot in the IT township of Rajarhat for Rs 51.13 crore.
The government agencies have set the trend, Harsh Vardhan Patodia, of Credai Bengal said. He however didn’t agree with the RBI figure saying property prices in Kolkata have gone up 18% in the last one year but prices in the city crashed during the fourth quarter last fiscal.
The latest National Housing Bank residex (for quarter to March 13) shows that property prices in Kolkata have dipped 5.57% quarter-to-quarter, the third most decline after Guwahati and Ludhiana among the eight cities that have shown a declining trend. According to the NHB data Jaipur witnessed the highest quarter-to-quarter increase 28.74% in the last quarter, FY13 with 10 other cities showing an increasing trend.
However, SS Bagaria, owner of AHW Steels, who won the bid in KMC’s recent auction, said land prices in Kolkata was sky rocketing because of an acute crunch in land availability. A number of infrastructure projects like the east- west metro corridor have occupied most of the land and the scarcity has created a good market for properties. He expects that his R400 crore ultra luxurious apartment project would fetch good returns with each apartments to be sold at prices between R5 crore and R6 crore.
Reddy said tracking real estate price movement on the basis of data received from registration authorities of state governments would not be perfect since the circle rate adopted for computation of gains is based on presumptive value.
The government has proposed taxation on property deals inserting section 43 CA of the Income Tax Act.
The taxation would be done on the assessed valuation of a property at the time of transfer instead of on the sale price fixed when the project was initiated. This has a cascading effect on the realty prices with buyers finally having to pay more; Reddy said adding that Credai was talking to the finance ministry on the issue.