Sunday, July 26, 2009

Kolhapur: Fertile ground for growth

Kolhapur is more than just the home to the eponymous ‘chappal,’ macho wrestlers and the spicy mutton curry. It has over 480 foundries, is a significant textile and silver smithy centre and several industrial estates dot its outskirts.


View Kolhapur, Maharashtra in a larger map

The state government has tried to position it as an IT destination, with not much success though, and it is south Maharashtra’s educational centre. “Kolhapur is an agri-industrial town with a presence in the education sector.

The fertile region around the city is home to the dairy and sugar industry. So it is the wealthy agriculturist who wants a presence in town and drives the real estate sector here,” said Baba Patil, a former civil servant now settled in the city.

With this kind of a profile and prospective buyers, the preference is for bungalows or row houses although flats are what sell. The market for flats is derived from the industrial activity of the region. Rajiv Parikh, president, CREDAI-Kolhapur, an industry body of real estate developers and builders, says buyers in Kolhapur come from the region around it — from Belgaum in Karnataka, Goa and of course, Mumbai and Pune.

“We were affected by the slowdown from September 2008 but thankfully the economy picked up soon after because rates here had not escalated the way they did in say Mumbai. Since we did not have a very steep rise in rates, the fall also was not very great and order cancellation was under 10%. For the past four months, prices have been stable and customers are coming back,” Mr Parikh said.

Prices of flats rose around 20% prior to September, 2008, and some projects did come to a halt. Mr Parikh said, however, no new projects had begun then but the projects that had put construction activity on hold too had resumed work since April.

“Demand has begun to pick up so projects are being revived,” he explained. Added vice-president, CREDAI, Maharashtra, and Kolhapur builder, Ram Purohit, “Despite the slowdown and the exit of investors from Mumbai and Pune, properties are available at reasonable prices. A 2BHK unit of 900 sq ft costs between Rs 15 lakh and Rs 20 lakh and a 1BHK unit is available between Rs 7.50 lakh and Rs 9 lakh.”

The annual addition to the city’s housing stock is around 2,000-3,000 flats and around 500 bungalows/ row houses. Builders from the region explained that the preference even of the middle-class locals is for a row house or a bungalow: the region is still not that industrialised and urbanised to go for a flat. Of course, this means that there is a category of `affordable’ row houses or bungalow projects. Mr Parikh admitted that the affordable category of housing had made its entry into Kolhapur as well, with flat sizes coming down.

However, the city is yet to witness the one-and-a-half or two-and-a-half bedroom, hall kitchen apartment (BHK) phenomenon of the metros and larger cities. Flat sizes have come down. A 2BHK flat used to be 1,000 sq ft in the affordable category, it is now perhaps 800 sq ft and cost around Rs 15 lakh. Of course, these prices depend on the locality. In the upper-end localities of the city such as Tarabai Park and Shahupuri rates range from Rs 1,800-2,000 per sq ft.

On the outskirts of the city rates hover around Rs 1,500-1,700 per sq ft,” Mr Parikh said. Mr Purohit concurred, saying prime city locations like Tarabai Park, Nagala park, Shivaji Park, Rajarampuri, where premium properties are available, have not been impacted. “Rates in these areas have remained unchanged, between Rs 1,800 and Rs 2,100 per sq ft, depending on the locational advantage,” he said.

Kolhapur is another city where the mall mania did not quite catch on. Nor did the state government’s efforts at positioning the city as an IT hub. This impacted the commercial and office space. Sales of such spaces happen at Rs 2,500-3,000 per sq ft for first and second floor spaces.
Gouri Agtey Athale - The Economic Times

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