The Kolkata office market remained subdued in 2014 with total absorption of around 1.66 million square feet, similar to 2013 levels. Demand was led by the BFSI, IT/ITES, and construction sectors. Limited supply addition of 1.14 million square feet and below-average absorption kept vacancy levels stable. Grade A office rents declined 7% year-over-year across micromarkets except one. Capital values decreased 16% year-over-year in peripheral locations but increased 3% in the CBD due to domestic investor demand. The market is expected to remain stagnant in 2015 until policy level issues are addressed.

1. 1 Research & Forecast Report | January 2015 | Colliers International
Market is likely to
remain stagnant in
2015
The Kolkata office occupier market continually remains
subdued for the second consecutive year as a result of the
policy level issues, with total absorption totalling around
1.66 million sq ft in 2014. This figure is similar to the 2013
levels. The primary contributor of this demand was BFSI
with around 25% share, followed by IT/ITeS with 21%
and the construction sector with 16%. Major transactions
include the purchase of large office spaces by local
companies and leases of about 40,000 sq ft by Serco Global,
30,000 sq ft by KPMG and 29,000 sq ft by British Telecom.
Due to weakening demand and policy level stagnancy,
developers deferred their projects and only about 1.14
million sq ft of prime office space was added to the city
office space. Major completions this year include Merlin
Infinity measuring 0.43 million sq ft and Martin Burn
Business Park consisting of 0.4 million sq ft office space.
Most of the projects completed this year are located in
Sector V/New Town. Around 16 million sq ft of office
space is at various levels of construction in the city, and is
expected to be completed by 2017.
Grade A office rents in Kolkata have continued on a
downward trend and declined by 7% YoY in the face of
relatively weak demand. Capital values showed mixed
trends across the city, with the CBD registering 3% increase
YoY on the back of domestic investor demand. Peripheral
locations like Sector V and New Town recorded a 16% YoY
decrease.
Limited supply addition and below-average absorption kept
the vacancy on the same levels.
For the first time in Kolkata, the local government reduced
City Office Barometer
Research &
Forecast Report
Kolkata | Office
January 2015
Rental Values
*Indicative Grade A rents in INR per sq ft per month
**Park Street, Camac Street, Chowranghee Road, AJC Bose Road
***EM Bypass, Topsia, Ruby
****Salt Lake, Rajarhat
MICRO MARKETS
RENTAL
VALUE*
% CHANGE
QoQ YoY
CBD** 85 - 115 -5% -11%
SBD*** 65 - 75 -7% -7%
Sector V/ New
Town
42 - 50 0% -6%
PBD**** 34 - 35 -1% -4%
INDICATORS 4Q 2014 1Q 2015 F
Vacancy
Absorption
Construction
Rental Value
Capital Value

2. 2 Research & Forecast Report | January 2015 | Colliers International
the circle rate in the range of 8% to 33% across the city to
streamline property valuation by reducing discrepancies
between registration price and actual market value of
properties.
Looking at the weak demand, developers refrained from
launching new projects. Hence, no major new project was
launched in 2014. This further created an impact on the
rents as it declined by 7% YoY on the average across all the
micromarkets, except in SBD locations like EM Bypass,
Topsia and Ruby, where rents remained stable. Similarly,
capital values declined in Sector V and New Town by 10%
YoY but it rose by 8% YoY in the CBD due to robust demand
by local companies. All other micromarkets remained
stable.
Trends to watch for in 2015:
The next year is expected to remain stagnant until the city
receives a boost at the policy level. Developers will refrain
from completing their projects until they see a strong signal
of improving demand. The market will remain tenant
favourable and rents may decline further in peripheral
locations due to robust under-construction developments
in the pipeline. However, rents for prime office spaces
located in the CBD will remain unaltered due to consistent
demand and limited supply in this location.
Source: Colliers International
Top 5 Transactions of 2014
Key Under Construction Projects
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Mount Hill Realty Godrej Water Side 70,000 Sector V/ New Town Sale
RDB Group Godrej Water Side 70,000 Sector V/ New Town Sale
Serco Global BIPL 38,000 Sector V/ New Town Lease
KPMG Godrej Water Side 30,000 Sector V/ New Town Lease
British Telecom DLF-II 29,351 Sector V/ New Town Lease
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
Mani Twin Mani Group 1,800,000 Rajarhat 2015
Technopolis 2 Forum Projects 1,200,000 Bantala 2015
Magnacon Infinity Group 740,000 Salt Lake 2015
Notes:
1. Office Market: The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata (EM Bypass, Topsia, Ruby), Salt Lake/
Sector V and New Town / Rajarhat.
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th December 2014.
Average Rental And Capital Value Trend
8,000
10,000
12,000
6,000
4,000
2,000
0
120
100
80
60
20
40
0
Forecast
New Supply, Absorption And Vacancy Trends
5 25%
20%
15%
10%
5%
0%
4
3
2
1
0
2010 2011 2012 2013 2014 2015F 2016F
New Supply (In Mln sqft) Absorption(In Mln sqft) Vacancy(In %)
2008
2009
2010
2011
2012
2013
2014
2015
2016
RentalValuesINRPersqftPerMonth
CapitalValuesINRPersqft

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Primary Authors:
Surabhi Arora
Associate Director | Research
+91 124 456 7500
surabhi.arora@colliers.com
Sachin Sharma
Assistant Manager | Research
Amit Oberoi I National Director
Valuation & Advisory Services & Research
For Office Services:
Swapan Dutta
Sr. Associate Director | Office Services
Swapan.dutta@colliers.com
Colliers International
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