YEAR END 2008

Values, trends & opportunities in the Kolkata real estate market

RETAIL RESIDENTIAL OFFICE HOSPITALITY LAND INVESTMENT WAREHOUSE

KOLKATA MARKET REPORT

2008 Market Review

DEAR CLIENTS: NAI NK Realtors is pleased to present the 2008 Year-End Kol-kata Market Overview. The real estate industry in India is presently passing through a crucial phase. Slump in transactions, severe liquidity crunch and the lowest level of confidence among the investors are the out-come of the global financial crisis. This downturn has gradually seeped into the Kolkata real estate market. Exit of TATA motors small car project from Singur and global economic downturn were the two major factors that have weak-ened the overall sentiment of office and IT & ITES sectors of Kol-kata in recent times. Kolkata retail sector has suffered by the plunging sales and high rentals. However, new formats of retailing has picked up pace at the same time such as value retailing, pharma retailing, mobile retailing etc. The financial crisis has also hit the other real estate sectors like residential, land, hospitality, investment and warehouse hard. There is no doubt that real estate industry is an important driver of the economy. Recent corrective measures taken by RBI would help the sector move in the right direction. Once the global situa-tion is stabilised and confidence are restored, real estate sector would return to the high growth trajectory.

Pawan Agarwal Director

2008 Market Review

CONTENTS Office Retail Residential Investment Warehouse Land Hospitality

AN ANNUAL REVIEW OF values, trends & opportunities

IN THE KOLKATA REAL ESTATE MARKET

THE YEAR IN REVIEW

For the last couple of years Kolkata has been one of the main destinations in India for IT and ITeS invest-ments. Exit of TATA motors small car project from Sin-gur and global economic downturn were the two major factors that have affected the growth of Kolkata office, and IT & ITeS industry in recent times. After a five-year boom, Kolkata office market has started to experience the property downturn from the end of third quarter. The office market has suffered with vacancy increasing in high rental area and corresponding compromise in rental rates, presenting tenants with lease renegotia-tion/relocation opportunities like never before. Corporate houses are either downsizing or relocating their offices to cheaper locations. Most of the corpo-rate houses are holding up their expansion plans due to liquidity crunch. Corporate houses located in the CBD area are opting to move to SBD or outskirts.

Turmoil in the financial world has affected the overall growth of the IT and ITeS sector in Salt Lake Sector-V. This has led to decreased demand and low rentals during the last two quarters. Around 15 million sq.ft. of office space is currently op-erational in Salt Lake, Sector- V and Rajarhat area which is considered to be the most preferred zone to the major national and international IT & ITeS compa-nies. Another 5 million sq.ft. of new office space in-cluding IT Parks and Special Economic Zones (SEZ) will be ready by the next two to three years in the same area. The rental growth in the CBD area which was almost doubled in the last two years is now experiencing fall in rentals over the last couple of months. Corporate houses located in the CBD area have been experiencing less business and opting to move in to cheaper locations.

Landlords have become desperate to close deals at rates much lower than the prevailing rates. There have been a few instances of such transactions in the last quarter.

There has been an increase in demand for office in new areas other than CBD like Topsia, Kasba, Salt Lake Sector-V, Rajarhat etc. These areas are experi-encing moderate growth due to availability of large spaces at lower rental rates and land prices.

OFFICE LEASE RATES TREND

2008 Market Review – OFFICE

Rs. / sq.ft. / month

Source: NAI NK Realtors Research

GRADE-A, OFFICE

OFFICE VACANCY RATES

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008

Park Street Camac Street A.J.C. Bose RoadTopsia Salt Lake

GRADE-B, OFFICE Rs. / sq.ft. / month

0%

20%

40%

60%

CBD 2% 2% 4% 4%

Topsia Road 5% 6% 15% 17%

Salt Lake (Sector-V) 22% 30% 45% 47%

Rajarhat 48% 44%

Q-3 Q-4 Q-3 Q-4

Grade-A Grade-B

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008

Park Street Camac Street A.J.C. Bose Rd.

Topsia Salt Lake Rajarhat

Kolkata has emerged as an IT destination of choice with the presence of global IT brands and many more being added to the list everyday. Orion Tech City a huge commercial and integrated IT-SEZ backed by 100 per cent FDI is coming up on 155 acres of land at Rajarhat. The first phase would be completed by 2011. Consumer electronics major VIDEOCON group has firmed up its plans to enter into the state IT sector. The Group will set up a 3.8 million square feet IT park at Salt Lake, sector V.

SIGNIFICANT TRANSACTIONS

FORECAST

The vacancy rates in the CBD area is likely to go up in the months to come, owing to the downsizing of cor-porates. Another reason would be renegotiation on the high rentals that the companies had agreed upon be-cause of the bullish market, however, if the landlord does not co-operate then the companies might opt for relocation option resulting in more occupancy in the SBD area. Tenants throughout the turmoil period will drive the market. If the market condition continues to be bad, investors may be desperate to part off with their properties at a much lower price than the quoted market price to sta-bilize their liquidity. This will also lead to renegotiate options for existing tenants since the deals were closed at very high rent-als in comparison to the existing rates. In Rajarhat area vacancy rates expected to rise and rental rates likely to fall in 2009. This is due to antici-pated completion of number of IT Parks and SEZ’s and slow business growth due to global meltdown.

2008 Market Review – OFFICE

SP INFOCITY AT NEW TOWN

UP COMING IT DEVELOPMENTS

Developer Area (SF)

Location

Godrej Properties 1.3 million Sector-V

Ambuja Realty 0.85 million Sector-V

VIDEOCON Group 3.3 million Sector-V

Shapoorji Pallonji & Co. Ltd. 50 Acres Rajarhat

Orion Tech City 155 Acres Rajarhat

TATA Infrastructure 10 Acres Rajarhat

Vacancy in Kolkata office market Overall vacancy in Grade-A and Grade-B office build-ing across all the office locations in the CBD area esti-mated at approximately 3% at the year end. In Salt Lake Sector-V area Grade-A office vacancy at around 30%, while Grade-B office vacancy remains higher, at about 47% and in Rajarhat area Grade-A office va-cancy at around 44%. Lease Rates and Capital Values Office lease rates in Kolkata across all the business district has witnessed a fall over the last six months due to weak demand from corporate and IT sectors. From 3rd quarter average Grade-A rent in Park Street area have fallen by 15% from Rs. 140/sq.ft./month to Rs. 120/sq.ft./month. At mid year, rentals of Grade-A office space in Sector-V were at around Rs. 55-60/sq.ft./month. At year end rentals in the same area de-creased to Rs. 42-45/sq.ft/month. Over all Grade-A space capital value has depreciated by 12-15% across the Kolkata market over the last two quarters. New Town has registered the maximum fall in capital values by around 20%. However, developers are still not ready to negotiate hard on rates.

COMPANY BUILDING SQ. FT. PWC South City Pinnacle 1,10,200 HDFC Ecospace 1,00,000 Acclaris Ecospace 30,000 Reliance Communication South City Pinnacle 55,000 SGS India Pvt. Ltd. LMJ Chamber 13,800 Shapoorji Pallonji Infinity Banchmark 12,000 Thysen Crapp Ecospace 15,000

The global meltdown has affected the Indian retail sce-nario in a major way. This downturn has gradually seeped into the Kolkata retail market . Expansion of major leading brands are either getting postponed or put on hold because of the current li-quidity crunch being faced by them. The mall projects in pipeline are being delayed due to the slow pace in leasing and delay from brands to take possession for fit-outs.

Decreasing sales and high rentals has impacted the big national and international retailers heavily in the newly operational malls where a customer base is yet to get developed. Earlier conceived plans of shopping mall projects are being now converted into other developments either residential or commercial. One of the reasons being too many malls in the same vicinity was creating ex-cess supply over demand. During the last two quarters, strategically located malls with long standing retailers paying low rentals had bet-ter business viability than the newly operational malls with retailers paying high rentals. Plunging sales and high rentals were the two major factors which forced the retailers to renegotiate their deals in the newly operational malls. Developers have either decreased the rentals or extended conditional rent waiver benefit o the retailers. However, this benefit is given to the vanilla retailers only to get them going in the current market situation. In the wake of global market slowdown, retailers are showing more interest in revenue sharing with the de-velopers. Upcoming malls in Rajarhat which were scheduled to be operational by 2008 are getting delayed. Downturn of economy, slow paced infrastructure and other de-velopments have been instrumental in the delay. There are some instances of exit of retailers from cer-tain upcoming malls in Rajarhat that have occurred at the end of the year. This is because, the area is cur-rently lacking of potential catchments. But within one year with completion of lot of under construction resi-dential, commercial, hospital projects, this area will change rapidly.

2008 Market Review – RETAIL THE YEAR IN REVIEW Similar trends have been noticed in case of the retail-

ers operating in the food and grocery segment. More Spencer’s Spinach, Reliance Fresh, 6Ten etc. all have either renegotiated or closed unviable stores in large numbers. Value retailing in Kolkata has been very successful since its inception - continued growth of ‘Bigbazar’ speaks in support to this. The size of the market and customer preferences towards value retailing has brought in many of such retailers to this market. The growth is more likely at the times when spending has become less and demand of value for money products have increased considerably due to global market slowdown. The following are the current account of value stores chains of various brands that have already set up in and around Kolkata.

Retailer Brand Operational Stores

Aditya Birla Retail More 32 Spencer’s Retail Ltd. Spencer’s 24 Future Group Bigbazar 9 Wadhawan Group Spinach 9 Reliance Retail Fresh 4 Bazar Kolkata Group Bazar Kolkata 5 Vishal Retail Ltd. Vishal Mega Mart 6 REI Agro 6Ten 7

Another format of retailing has picked up pace in re-cent times and that is organized pharma-retailing. brands like Frank Ross, Med Plus, Medica Health Shoppe, Iris etc. have been opening their stores on a rapid basis and gaining popularity through various cus-tomer loyalty program being offered by them. Usual format sizes of the stores vary from 100 sq.ft. to 400 sq.ft. and mostly coming up in high density resi-dential catchment areas like Hazra Road, Park Circus, Southern Avenue , Garia, etc.

Hyderabad based pharma-retail chain Med Plus store on Hazra Road

Retail medicine chain Medica Health Shoppe store on NSC Bose Road, Naktala

Rentals for both malls and stand alone shops are ex-pected to drop by 10% to 15% in the next two quar-ters.

In the current scenario retailers are likely to avoid fu-turistic malls without immediate and appropriate catchments.

At present with real estate cost and rentals both fal-ling ,retailers would try to capitalize the situation.

Minimum guarantee and revenue sharing model, for instance, will be witnessing growing acceptance among retailers and developers alike in case of mall transactions especially.

FORECAST

2008 Market Review – RETAIL

MALL LOCATION SQ.FT. CITY CENTRE- II RAJARHAT 5,50,000 AXIS RAJARHAT 5,00,000 TERMINUS RAJARHAT 1,80,000 OZONE V.I.P ROAD 1,50,000 DOWN TOWN SALT LAKE, SECTOR- III 1,20,000 LA VIDA SALT LAKE, SECTOR-III 85,000

SUPPLY IN THE NEXT ONE YEAR

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008

CBD North Kolkata South KolkataE.M.Bypass Salt Lake New Tow n

Rs. / sq.ft. / month

MALL VACANCY RATES

0.00

50.00

100.00

150.00

200.00

250.00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 2008CBD North Kolkata South KolkataEast Kolkata New Tow n

MALL LEASE RATES

STAND ALONE LEASE RATES Rs. / sq.ft./ month

4%

5%

1%

2%

3%

0%

2%

4%

6%

8%

10%

City Centre M etropo lis M ani Square Soth City Forum

Overall vacancy in the malls like Forum, City Centre and Metropolis were at 2%-4% for the last two quar-ters. The new operational mall Mani Square on E.M. Bypass had a moderate vacancy at 5%, while South City mall at Prince Anwar Shah Road had low vacancy at 1% in the same quarters.

New METRO store on E.M. Bypass Road

Kolkata retail market has slowed significantly over the last quarter with many national and international life-style retailers choosing to adopt wait and watch pol-icy. Overall rental values for malls across Kolkata mar-ket decreased by 25% during the last quarter, while the rental dipped maximum in the CBD area at 35% to 40%.

Rental values in the malls at north Kolkata were in the range between Rs.100-120/sq.ft./month, in south Kol-kata rents were Rs.140-160/sq.ft./month, in EM By-pass rents were Rs.135-155/sq.ft./month.

In CBD area stand alone rentals were quoted between Rs.150-200/sq.ft./month, while in NewTown rentals were in the range of Rs. 40-60/sq.ft./month.

Source: NAI NK Realtors Research

2008 Market Review – RESIDENTIAL THE YEAR IN REVIEW

Continued growth was the story of Kolkata residential real estate market for the last 3 to 4 years which seems to have stopped at the end of the year. Dipping senti-ments due to global economic slowdown is one of the main reasons that has been leading the market to-wards southward. Sales rate in the Kolkata residential market that had been growing at about 30%-40% in 2007 have de-clined considerably in 2008. The 1st two quarters saw 5%-10% growth while the last two quarters have wit-nessed 5%-15% fall across the market.

HIG residential projects have been the hard hit by the current economic downturn and transactions in this sector plunged to the lowest level in more than three years. First time home buyers and investors are adopting a wait-and-watch policy in the wake of the economic downturn.

Due to sub prime crisis and Job losses in the US, NRI investment has slipped into lower gear and they are also adopting a wait-and-watch policy.

Slump in sales due to falling demand coupled with un-availability of funds and soaring real estate cost had restricted the developers to launch new projects in the last two quarters. They are adopting a wait-and-watch policy. This is evident with the number of construction projects sanctioned by the building department of Kol-kata Municipal Corporation in the last quarter of 2008. During the last quarter (till middle of Dec-08) total num-ber of approved building plan was 225 while the same quarter of 2007 witnessed a total of 941 sanctioned plans.

Source: KMC As the downturn effect started zooming in and around the market, developers are finding it difficult to move their inventory. Instead of reducing the price as those bear high construction cost, few developers are com-ing up with various attractive offers to boost up sales.

AVERAGE OUTRIGHT VALUE TREND

Source: NAI NK Realtors Research

Housing plans sanctioned in 2008

October 109

November 82

December 34

Housing plans sanctioned in 2007

October 282

November 310

December 349

Rs. per sq.ft.

Rates in Rs. per sq.ft.

South Central Queens Park 7000-10000 Sunny Park 7000-10000 Gurusaday Road 7000-10000 Ballygunge Cir. Rd 8000-10000 Ballygunge Park Rd 7000-10000 Mayfair Rd 6500 - 9000 Ballygunge Place 4000 - 6000 GoalPark 4500 - 6000 Gariahat 4500 - 7000 Rashbehari 4000 - 6000

South-West Alipore 7000-12000 Behala 1800 - 2200 Batanagar & Maheshtala 1500 - 3100 South Eastern Fringe Garia 1700-2300 Narendrapur 1700-2150 R.B.Connector 4100-4600 Howrah Dobson Road 2500-3000 GTRoad (South) 2500-3000

South Lansdown Road 6000-8000 Bhawanipore 6000-7000 P.A. Shah Road 3500-6500 Jadavpur 3000-3500 Tollygunge 3300-4000 East Salt Lake 3000-4500 Beleghata 2500-2950 Kankurgachi 3000-4200 EM Bypass (Cent) 3600-4600 NewTown 2500-3600

KOLKATA December - 2008

North Jessore Road 1800-3000 VIP Road 2400-3500 Madhyamgram 1500-1900 Shyambazar 2200-2800 B.T.Road 1500-1900

Central Park Street 9000-11000 Loudon Street 9000-11000 Theatre Road 9000-10000

RESIDENTIAL SALE RATES

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Q-1 Q-2 Q-3 Q-4 Q-1 Q-2 Q-3 Q-4

2007 2008

North Central South-CentralSouth South-East South-WestEast NewTown

Sluggish market situation is expected to be contin-ued till the global economy starts improving.

Expect a further correction in home loan rates in

the next couple of months. Lower wage inflation in the coming fiscal year

across the IT service industries would restrict the upper MIG and HIG housing sectors growth.

The sharp appreciation in the dollar could drive

NRI investment in the residential projects further. Fall in the price of steel and cement and lower in-

terest rates in home loans would spur the new de-velopments as well as demand.

Encouraged by the current measures taken by RBI

to boost housing sector, large developers are likely to invest more in mid-income housing pro-jects in the Rs. 15-25 lakh range.

FORECAST

2008 Market Review – RESIDENTIAL Kolkata acknowledged the downward movement of residential price from the third quarter onwards. The correction was hovering in the ranges between 5% and 15% over the last quarter. Unlike the other metro cities, real estate price in Kolkata had never reached to an unrealistic proportion. This is because, the market is mostly driven by the end user.

The last quarter also witnessed a slump in over all de-mand. The volume of residential sales that had been growing at about 30%-40% in 2007 have declined con-siderably at the end of the year. However, this was mostly applicable to the premium projects across the city and its suburbs.

Due to high demand and low supply in the central and south-central location such as Loudon Street, Elgin Road, Ballygunge Circular Road, Queens Park, Sunny Park prices had appreciated maximum by 30-40% and were in the range of Rs. 10,000-13,000 per sq.ft. till 2nd quarter. At the end of the year the quoted rates came down at a range of around Rs. 7000-11000 per sq.ft. in the same areas.

The residential markets in the upcoming areas were thriving, particularly in Newtown, Rajarhat, Madhyam-gram and Maheshtala area. A number of premium pro-jects such as Elita Garden Vista, New Town Heights, Sankalpa, Srijan Midlands, Eden City has been launched over the last twelve months.

Prices in Newtown areas have stabilized over the last one year after a considerable growth in 2007.

Increasing demand for residential units with modern amenities and facilities in the form of mini township is currently driving the developers to explore new areas. Maheshtala municipality in the south-west fringe is one of such areas which has emerged in recent times.

With the strengthening of infrastructure in Maheshtala such as a monorail from Taratala to Budge Budge, a flyover from Nungi to Jhinjira Bazaar (Taratala), widen-ing of the Budge Budge Trunk Road from 12 metre to 25 metre and two large upcoming residential projects, the area is going to be one of the most sought after location in the Kolkata residential market.

Kolkata-based Eden Group and UK-based REIT Asset Management Ltd is building EDEN CITY project spread over 22 acres with more than 2000 Flats. A centre for science, sports and culture is planned to be built near the project. A 2000 sitting capacity indoor stadium and a science library and a meeting and convention centre with facilities for 300 people would be built along side of EDEN CITY project.

Calcutta Riverside a huge 262 acres township by Riverbank Holdings jointly with BATA is currently be-ing redeveloped at Batanagar under Maheshtala mu-nicipality. Apart from 3500 residential units the town-ship will have … International Standard School Multi– specialty Hospital 5 Star Crowne Plaza Hotel Shopping Mall with Home Town and Big Bazaar 5 Screen Multiplex A Golf Club and the Largest Sports Club in Kolkata Platinum Registered IT ITES SEZ Marina-Luxury Dock

CALCUTTA RIVERSIDE

2008 Market Review – INVESTMENT THE YEAR IN REVIEW

Kolkata real estate market has always provided the po-tential of earning high returns to the investors be it indi-viduals, NRI or institutions. High growth in industries such as IT and BPO services, the iron and steel sector, better infrastructure across the city has spurred the overall growth through all real estate sectors ranging from apartments to shopping malls, office towers to industrial space, hotels to hospi-tals in and around Kolkata. Investors are quite active in almost all real estate sec-tors, however, Kolkata is known to be an end user mar-ket. Although investment is a practice which is cur-rently exercised less due to the global financial markets turmoil and liquidity crunch, however, any end-user market is always an attractive destination for invest-ment. Owing to the steep fall in the stock markets and global recession the mass investors in the realty sectors had vanquished in the beginning of the third quarter. How-ever, big investors with strong liquidity resources are negotiating hard as they feel it is the right time to invest in properties.

Investment Sector ROI (in %)

Residential 5%-6%

Commercial 12%-16%

Warehouse 7%-8%

Potential Residential Investment Areas

Increasing real estate developments in the city sub-urbs such as Barasat–Madhyamgram stretch in the north-east beyond Rajarhat, Kona in the west of Howrah, Garia-Narendrapur stretch in south-east, and Batanagar in the south-west currently attracting inves-tors and occupiers. These areas would be potential for moderate long-term returns.

Barasat, Madhyamgram

Barasat and Madhyamgram area is attracting the de-velopers and currently witnessing a fast development after Rajarhat in northeast. Proximity to Kolkata and airport attracting people from surrounding areas.

Kona

In the west of Howrah Kona is becoming a hotspot for real estate destination. The Kona Expressway is con-necting Kolkata to National Highway-6 on one side and the airport via Belgharia Expressway on other which offers free and fast flow of traffic is fuelling the growth in the area.

Garia, Narendrapur area

Extension of metro rail till Garia and extension of by-pass up to Baruipur which further connects Amtala on the D.H. Road will spurt the demand in the near future. Sherwood Estate in Narendrapur has been on the ra-dar to the investors over the last couple of years.

Mahestala area

With the introduction of infrastructural projects such as a monorail from Taratala to Budge Budge, a flyover from Nungi to Jhinjira Bazaar (Taratala), together with two large residential projects, Maheshtala in the south-west is going to be one of the most sought af-ter location in the Kolkata residential market.

EM Bypass Stretch

The Eastern metropolitan Bypass is now the most happening stretch of Kolkata connecting Kolkata inter-national Airport in the north and Narendrapur in the south. Existing as well as planned large shopping malls modern offices, well equipped hospitals, interna-tional schools, five star hotels, and seamless connec-tivity has made this area, the most sought-after loca-tion.

Buy-to sale investment was high particularly in the residential projects across the Kolkata market up to the third quarter. Due to wait and watch policy adopted by the investors amid the global meltdown this type of transactions have become stagnant from the third quarter onwards. Rate of return in commercial projects across all the areas in Kolkata remains high compare to other real estate sectors and number of transactions were also high in this segment.

2008 Market Review – INVESTMENT

After the amendment of existing norms of Foreign Di-rect Investment (FDI) in real estate by union govern-ment in March 2005, Indian real estate sector has wit-nessed a spurt in FDI construction activities in almost all the real estate sectors. Kolkata too is not far behind in attracting the FDI in real estate compare to other cities in India. Growing IT and ITES sectors, governments pro-active policy towards urbanisation coupled with the inade-quate quality residential, retail and office space and international hotel chains drew immense interest among the foreign investors. As a result Kolkata roped in a number of FDI construction projects across the sectors. Nirvana Country formerly the Kolkata West Interna-

tional City, India’s first FDI township project is coming up on the Kona Express Highway in the West of Kolkata. This is a joint venture of Indonesia based Salim Group, KMDA, and Universal Suc-cess.

The New York-based NRI, jointly with London-

based REIT Asset Management Company is cur-rently constructing a residential project named Eden City at Maheshtala in South Kolkata.

Elita Garden Vista, a 1,278-unit complex, is being

developed in Action Area III of the Rajarhat Town-ship jointly by Keppel Land Limited from Singapore and Jatia and Puravankara Group from India.

Globsyn Crystals, a state-of-the-art IT building is

being developed through a joint venture with Kol-kata-based realty firm Sureka Group and Shrachi Group and US based funding agency New Vernon private-equity Ltd (NVPEL).

Yatra Capital Ltd, which is a company listed on the

Euronext, Amsterdam, and is dedicated to invest-ment in the Indian real estate market formed by Saffron Asset Advisors has invested 7 million dol-lar for a 40% stake in Jalan Intercontinental Hotels Pvt Ltd to build a 200 room business hotel at the junction of Rashbehari Connector and E.M. Bypass in Kolkata. The hotel will be supervised by Indian Hotel Ltd under the Taj Gateway brand.

FDI in Construction

Buying of launching projects will be very less as very few properties will be launched in upcoming months.

Outright purchase of desperate selling will in-crease.

Leased property buying would be very less in

coming months as the returns offered by develop-

ers/owners are between 10%-12% whereas inves-

tors are expecting 14%-18%. At present Bank

LRD rates are varying between 13.5%-14%.

FORECAST

Yatra Capital Ltd has invested Rs 117.6-crore for a 50% stake in their second venture project in Kol-kata to built an IT SEZ project at Batanagar. Riv-erbank Holdings Private Ltd is their partner in the venture. The funds will be sourced by Yatra through its blue-chip global institutional investors like Aviva, ING Clarion, HSBC, Fortis and ABN Amro.

The inflow of FDI has led to an appreciation of the overall quality and price of real estate projects in Kol-kata and offered a high ROI. The global economic downturn and growing political agitation against land acquisition across the state for which TATA has roll back its small car project from Singur has also impacted FDI inflow in the Kolkata real estate market. Due to land acquisition problem, the Rs 400-crore Bonhoogly FDI project is being held up for more than a year where UK based REIT is one of the stakeholder.

Rajarhat, the favoured IT and ITeS destination of Kolkata

2008 Market Review – WAREHOUSE

Warehousing needs in Kolkata dates back to the year 1686 when the British traders had setup their first trading depot in Hooghly, 38km upriver from modern-day Kolkata. In the course of time this need had grown by leaps and bounds as the British East India Company trad-ers turned three small villages to modern-day Kol-kata (formerly Calcutta), a major business centre and the capital city of British India. At that time Kolkata had attracted many British and other foreign busi-ness houses to set up their shops here. As a result many godowns (warehouse) were built near the Ghats (river port). Many of them still exist on Strand Road, Hide Road etc. With the existing International Airport, riverine port, good road and rail connectivity, Kolkata is now the major commercial and financial hub of eastern India. It is also the gate way to eastern and north-eastern states of India and neighbouring land locked coun-tries like Nepal and Bhutan. Kolkata constitutes a market of over 13 million people, while the North Eastern Region provide a market of approximately 100 million. Kolkata is home to many industrial units, of large Indian corporations, whose product range is varied and includes - engi-neering products, electronics, electrical equipment, cables, steel, leather, textiles, jewellery, frigates, automobiles, railway coaches and wagons. Several industrial estates are situated in the areas like Taratala, Kalyani, Uluberia, Sankrail, Dankuni, Howrah, Kasba and Salt Lake. Till date 12 Growth centers has been established in different locations of the state such as Kalyani (Phase I, II, III), Falta, Uluberia, Bishnupur, Raninagar, Coochbihar, Malda, Dadgram, Haldia, and Kharagpur, Three more Growth Centres are in the pipeline at Jalpaiguri, Bolpur and Malda (Phase II). A huge leather complex has come up at Bantala. Specialized setups like Toy Park, Food Park, Apparel Park, Garment Park, Foun-dry Park, Biotech Park, Rubber Park, Plasto Steel Park, Light Engineering Park and a Gem and Jewel-lery Park have also been established in the areas like Sankrail, Uluberia, Salt Lake, Howrah, Kharagpur. Guptamoni and Barjora. There are many SEZ’s have planned for the state and three are operational. North Bengal is fast becoming the hotspot for vari-ous food Park investments.

THE YEAR IN REVIEW

The growing market of industrial, and agricultural pro-duction of the entire region is fuelling the growing de-mand for the warehousing in and around Kolkata.

Growing investments in Iron and Steel, Automotive telecommunication and Power sectors.

Growing activities of organized retail.

Growth in export of Iron ore, leather and leather goods, garments, vegetables, fruits, horticultural products and frozen foods.

Growth in import of Power plant equipments, coals, edible oils, pulses, chemicals, electronics and medical equipments.

GROWTH DRIVER

MAJOR WAREHOUSING ZONE

Hide Road, Taratala Road, Transport Depot Road –approximately 6 km. stretch which constitutes 40% of the warehouses in Kolkata.

Kona Expressway, NH2 (15 km. stretch of Delhi Road ), NH6 (15 km. stretch of Bombay Road) - fast emerging as modern warehousing zone, consti-tutes 50% of the warehouses.

Other catchments include Dum Dum Road, Dunlop, B.T Road, Madhyamgram, Rajarhat Road, Bantala, Topsia, Uluberia, Andul and Santragachi.

2008 Market Review – WAREHOUSE

The deepening financial crisis has lowered domestic and international demand for various industrial and agricultural products which has impacted warehous-ing demand in turn. Corporate sectors are now holding their expansion plans. Kolkata is no exception. There is approximately 2.75 million sq.ft. of warehouse space in greater Kolkata. Warehouses at Uluberia, Dhulagarh, Junglepur,

Kona Crossing, Jagadishpur and Amta comes un-der NH-6 zone. The total inventory of ready ware-house space in this zone is approximately 1.3 mil-lion sq.ft. Vacancy was at 24% at the year end.

SUPPLY AND VACANCY

Good specification with better tonnage capacities: Rs. 14-18 / sq.ft../ month.

Normal Specification with moderate tonnage ca-

pacities : Rs. 8-13 / sq.ft./ month.

LEASE RATE

PLANNED INVESTMENT Kolkata Logistics Hub: Shifting the wholesale and retail trade to free up the city from congestion. Authority: KMDA. Location : Kona Express Way. Area: 108 Acres, 4.5 million. sq.ft. (30% reserved for warehouses). Parking: 1200 vehicles. Facilities: Truck Terminal, Modern and specialized warehouses with reverse logistic facilities, Parking facilities, Wholesale and retail trading platforms, Office and institutional space, accommodation and facilities for repairing and refueling of trucks. AFL Logistics Hub: India's leading integrated logistics service provider, AFL Logistics has acquired land at Dhulagar on NH-2 to set up a logistics hub.

Prologis, the US based leader in supply chain distribution ser-vices has acquired land at

Shaktigar near Bardwan to develop a logistics park. The park will house a wide array of services, right from container terminals to facilities of overhauling of goods, warehousing, integration with the road net-work, banking facilities and restaurants. TATA Logistics Park: TATA Realty and Infrastructure Ltd. is planning to set up a business-cum-logistic park in the state. The lo-gistic park will have a separate free trade warehous-ing zone and a domestic tariff area unit. This will be built in different phases and the first phase will come up over 50 acres, which will be expanded to 200 acres.

Areas like Dankuni, Durgapur Expressway etc. constitutes the NH-2 zone. The zone contains ap-proximately 0.25 million sq.ft. warehouse space. At the year end vacancy was moderate at 9.50%.

Taratala, Hide Road and Transport Depot Road

zone which has close proximity to Kolkata Port is considered as the old warehousing zone. The area contains around 1.2 million sq.ft. warehouse space and vacancy was low at 4%.

Growth in warehousing sectors in Kolkata has been remarkable over the last few years. NH-6 and NH-2 zones are looking highly potential for the development of large scale modern warehousing hubs and many national and international companies are coming up with such developments in these areas. At present locations on the National Highway No.

6, and No.2 has emerged as the preferred ware-housing locations in Kolkata. The NH-2 establishes connection with the North India and NH-6 with the South and West India. The two zones benefits from its strategic locations. It is also supported by the industries located in and around Howrah.

NH-117 (Kona Express Way) establishes connec-

tion with the city, its ports and airports. More im-portantly, through NH 34, 35 and 36 it links up the North-Eastern states, Bhutan and Bangladesh. This area is coming up fast on the warehousing map of Kolkata.

A warehouse on NH-2

EMERGING AREAS

Hospitality industry in India is one of the worst affected sectors. But unlike other metro cities in India, hospital-ity industry in Kolkata had less affect from the global financial meltdown.

Rapid growth of IT, infrastructure and other industrial sectors which were instrumental for proposed 12 to 14 national and international hotel chains in Kolkata seems to be delayed at the end of the year on the wake of the global slowdown. Several planned star hotel chains which were expected to be operational this year along the E.M. Bypass have been delayed due to go slow policy adopted by the concerned de-velopers.

In the last two quarters, the average occupancy in the city star hotels were in the range between 75% and 80%. At the onset of peak-season, occupancy further dipped by 5% to 10%.

The room rent of star rated hotels have fallen in the range of 15% to 20%. Currently the average room rent in the 5 star hotels hovering between Rs. 8000 and Rs. 12,000. All the six operational five-star hotels in Kolkata-ITC Sonar Bangla, Hyatt Regency, Taj Bengal, Oberoi Grand and The Park, currently facing the slowdown heat and offering various discounts and facilities to attract customer. Reduced corporate activities such as conferences, international conventions and conferences, were re-sponsible for this slump. This same trend seems to be consistent for the next two quarters. Chocolate Hotels Pvt. Ltd, a Kolkata-based company is coming up on AJC Bose Road with 63-room Chrome Hotel in Kolkata. Chrome will have an all-day dining and a “fine-dining” restaurant. The Riverbank Developers, a joint venture between Bata India and Calcutta Metropolitan Group, will set up the country's first marina business-cum-leisure hotel and service apartments at Batanagar on the south-eastern fringes of Kolkata beside the Hooghly river. Marina is a small harbour for small boats that are used for leisure. The hotel will provide the facilities for park-ing at least 25 boats. It would have 200 rooms and 75 service apartments and would be built on four acre. The hotel would come up by 2013 under the brand name 'Crowne Plaza Hotels & Resorts' and Interna-tional Hotels Group (IHG) would be providing technical and management services.

Land market in Kolkata has also been affected by the recent global financial crisis. Slow residential move-ment, non availability of fund, low industrial growth translating into lower land rates and fewer transac-tions.

Developers are more interested in completing their ongoing projects rather than acquiring new lands.

Land transactions have come to a stand still in the last two quarters.

Investors are facing fund crunch. Financially sound investors are adopting wait and watch policy.

RESIDENTIAL LAND RATES

Area Rates (Rs./ cottah) Alipore 4.0-7.0 million Ballygunge (prime areas) 5.0-8.0 “ Ballygunge (other areas) 3.0-4.2 ” Park Street, Theatre Road 4.5-7.0 ” Gariahat, Rashbehari 3.5-5.0 ” Shyambazar 0.7-3.0 ” VIP Road 1.5-2.5 ” Salt Lake 1.0-4.0 ” Jodhpur Park, Jadavpur 1.0-2.5 ” Tollygunge, Behala 0.8-1.5 “ Garia, Narendrapur, Joka, Kona 0.4-0.6 ” Joka, Pailan 0.3-0.5 ” Jessore Road, B.T. Road 0.7-1.5 ” Madhyam Gram 0.15-0.3 ” Developable Land in fringe areas 0.05-0.15 ”

INDUSTRIAL LAND

2008 Market Review – LAND & HOSPITALITY

For the last couple of years Kolkata has been one of the main destinations in India for industrial invest-ments such as large steel plants, power plants and automobile plants.

A huge land is required for these planned and new in-vestments. Currently land acquisitions through govern-ment have clouded the future of various large indus-trial and infrastructural projects in different parts of the state due to rising political pressure from the opposi-tion parties.

The following areas are potential for industrial devel-opment and many new industries are coming up in these areas.

Demand Areas Rates (Rs./ cottah) NH-6 (From Shalap crossing to Uluberia) 0.4-0.5 million NH-2 (From Dankuni Crossing to Chandan-nagar) 0.2-0.3 million

Durgapur Expressway (From Dankuni to Tarakeswar Crossing) 0.18-0.25 million

D.H Road (From Joka to Amtala) 0.1-0.2 million

LAND HOSPITALITY

NAI NK Realtors is a real estate service pro-vider and provides real estate services to both local and global clientele. NAI NK Real-tors services include multi-site acquisitions and dispositions, sublease, tenant represen-tation, lease administration and audit, site searches, finance and investment services, demographic analysis, feasibility analysis, due diligence and related consulting and ad-visory services. For more information, visit NAI NK Realtors Web site at: www.nkrealtors.com This report contains information available to the public and NAI NK Realtors accepts no responsibility if this should prove not to be the case. No warranty or representation, ex-press or implied, is made to the accuracy or completeness of the information contained herein. The same is submitted subject to er-rors, omissions, change of price, rental or other conditions, withdrawals without notice.

2008 Market Review

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