Even as industrialists worry over the slow pace of reforms hitting industrial resurgence in West Bengal, one business is growing by leaps and bounds in the state — real estate.
Experts say realty today is one the fastest growing sectors in Bengal’s otherwise gloomy economy.
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One example is Best Western, the world’s largest hotel chain, which is upbeat about the state’s real estate outlook.
“We expect the hotel business to grow by 10-15 per cent pan-India this year and eastern India is expected to post a faster growth,” Sudhir Sinha, India president and chief operating officer of Best Western, said on the phone from Bangalore.
He said there was a demand-supply gap in the hotel business in eastern India and expected the region to enjoy a good growth rate in the next five years.
“The realty sector in Bengal is expected to grow at a handsome rate of 15-20 per cent in 2012,” he said.
Best Western too plans to open a 150-room hotel near the airport by March next year. It is also looking for properties in Bengal’s smaller cities — Siliguri, Darjeeling and Durgapur.
“We are looking for more properties in Kolkata. We are looking for hotel owners for partnerships,” Sinha said.
The company already owns an 80-room property in Vedic Village on Kolkata’s outskirts.
The Bagaria Group of Kolkata, which is into steel, tea and real estate, sees a boom in demand for luxury housing.
The group recently bought a two-acre plot from the Kolkata Municipal Corporation paying Rs 57.5 crore (around $10.4 million) per acre — one of the highest amounts paid for a plot in the city.
Sheo Shankar Bagaria, the group’s head, said they would set up a residential property on the land, spending Rs 100 crore (around $18 million).
Also, out of the Rs 500 crore (around $90 million) the company plans to invest this year across India, Rs 300 crore (around $54.4 million) would only be spent in Bengal.
Bagaria said 60 per cent of the business in real estate in India was happening in housing property.
“About 40 per cent of the total business is in commercial properties, whose demand is low due to the slow industrial growth. And Bengal’s picture is the same compared with the rest of the country,” he said.
“The real estate sector is definitely contributing to Bengal’s economy,” said Debmallya Banerjee, a co-chairman of industry body Assocham (Associated Chambers of Commerce and Industry) here.
He said demand for housing and commercial property was growing due to a steep rise in people’s spending capacity and the entry of multinational companies, especially information technology firms.
Banerjee, who heads Assocham’s eastern and northeastern council, said there was doubt and fear among investors in the manufacturing sector since many companies had became sick or had closed down due reasons, including powerful trade unions.
This might contribute to the growth of the less risky real estate business, which gives high returns, he said.
“The fear psychosis regarding the setting up a manufacturing plant in Bengal may be contributing to the real estate story along with other reasons,” he said.
He expects the booming housing business to post a very high growth in the days ahead compared to commercial property such as hotel and resorts.
“Commercial property is a need-based product,” he said.