If you are a resident of Salt Lake and cursing your municipality for not waiving property tax like the Kolkata Municipal Corporation (KMC) did for city dwellers, breathe easy.

The Trinamool Congress government has finally decided to introduce a tax waiver scheme for Bidhannagar Municipality. State urban development minister Firhad Hakim on Tuesday said the government was working on the process of implementing the waiver scheme.

“Similar to the KMC, we are working on the process of implementing the tax waiver scheme for Bidhannagar Municipality,” Hakim said at Writers’ Buildings on Tuesday.

The Trinamool-led Bidhannagar Municipality had long been mulling introduction of a tax waiver scheme for the residents of the township. Ever since Supreme Court had scrapped the municipality’s property tax structure in 2007, declaring it as arbitrary, the civic body has been suffering a severe fund crunch. It could not collect property tax that is a major source of revenue generation. The previous Left-run civic body had set a target to collect an annual property tax of Rs 12 crore after preparing a new tax structure.

Bidhannagar Municipality chairperson Krisna Chakraborty said the civic body is ready to collect property tax once the waiver scheme gets introduced. “We are ready. Introduction of the tax waiver scheme will benefit us,” she said.

Civic officials said the residents of the township will be benefitted with the introduction of the waiver as most have not paid tax since 2007, following the Court verdict. Till now, tax arrears run into crores. With the introduction of the scheme, most of the residents will likely be required to clear the principal due.

However, the Bidhannagar Welfare Association that has been continuously fighting on this disputed property tax issue, wanted to know about what the government was exactly planning on. “We have not been informed as to what amount of tax the residents have to pay, so where does the question of having a tax waiver scheme comes from?” association general secretary Kumar Shankar Sadhu said.

The civic body had also decided to make fresh assessments of tax and was to send self-assessment forms to the residents. The welfare association had been repeatedly saying that the civic body had no bar in collecting tax following the old tax structure.There is finally some good news for the residents of Salt Lake. The Mamata Banerjee government has decided to introduce a tax waiver scheme for the Bidhannagar municipality.

State urban development minister Firhad Hakim said that the government was working on the process to implement the waiver scheme soon. “Similar to KMC, we are working on the process to implement the tax waiver scheme for Bidhannagar municipality,” Hakim said at Writers Buildings on Tuesday.

The Trinamool led Bidhannagar municipality had been mulling on to introduce a tax waiver scheme for the residents of the township. Ever since the Supreme Court had scrapped the Bidhannagar Municipality’s property tax structure back in 2007, declaring it as arbitrary, unconstitutional and violative of Article 14 of the Constitution. The civic body has been badly suffering a fund crunch, as they could not collect property tax which is a major source of revenue generation. The previous Left run civic body had set a target to collect an annual property tax amount of Rs 12 crore after preparing a new tax structure.

Kolkata’s Rs. 6,000-crore Barrackpore to Joka light rail transit (LRT) project has now been put on the backburner.

Srei Infrastructure Finance Limited, along with its technical partner, Amex Corporation signed an MoU with the state government last year.

According to highly placed sources, the project has not progressed at all since the launch. “The detailed project report (DPR) is yet to be prepared. There is no sign of the project taking off,” said a senior official.

The project has also apparently run into a land acquisition hurdle. As the private firm will have to bear the huge cost to execute the project, former transport minister Subhas Chakraborty had promised that the government would hand over about 250 acres to Srei. However, with all projects requiring land acquisition remaining on hold, it is uncertain whether the government would be able to find so much space within the city or its surroundings.

Sources said about 300 acres were lying vacant at the Joka end, while another 40 acres were available in Barrackpore, where a closed factory is located now. However, looking into the present scenario, it may not be easy for the government to actually acquire the land and hand it over to the developers.

Managing costs could also become a major problem as the delay would escalate the same. Srei officials said they were working on the project. “Traffic alignment and related route surveys are on,” said an official.

Kolkata Property values have risen at the fastest pace among Indian metros since 2007, according to the National Housing Bank’s (NHB) Residex—an index of property prices. Property values in Kolkata rose by an average of 16.8% while those in Bangalore property fell by 15.6% in the period. Fewer speculative deals and lower base prices saw the eastern Indian metropolis outpace hotter markets such as Mumbai property and Delhi property, where property values rose at a comparatively sedate average of 7.5% and 7.3%, respectively.

The NHB residex, which was launched in July 2007, measures property prices in six-monthly intervals. The index currently captures data submitted by a variety of sources, including housing finance companies and real estate agents, for 15 cities, with plans to widen the index to 63 so-called tier I cities and state capitals in the future. Of the 15 cities, only the West Bengal capital Kolkata, Faridabad in the national capital region, and Bhopal in Madhya Pradesh saw average double-digit growth in this period. NHB officials said one of the reasons for Kolkata’s numbers was people investing the proceeds of the Sixth Pay Commission payouts last year. Cities such as Jaipur, on the other hand, saw declines because of massive oversupply, said Raj Pal, a principal adviser with NHB.

Jaipur property saw prices rise 19% (over 2007 levels) in the January-June 2008 reporting period. Prices fell 3.4% in the six months between July and December and declined another 38.3% in the first six months of January. Analysts, however, said high prices in some of the smaller cities could be a combination of low starting prices and low supply leading to higher price growth. “The base is very low, so when prices in these cities move even slightly it seems like a big increase. While in Mumbai even if prices shoot up, the increase is not so much because of the high base,” said Anshuman Magazine, managing director of real estate consultant CB Richard Ellis.

“Also, in a lot of smaller cities it is difficult to get land because of zoning issues. The cost of land is very high in, say, an area such as Benares, where infrastructure is limited and there are zoning issues. It is very difficult to buy clearly titled land in smaller cities which restricts the supply of land, therefore pushing up prices,” Magazine said. Others said that the majority of the real estate boom was restricted to the main metros. “The growth went to secondary and tertiary markets after a while.” said Aditi Vijayakar, executive director, residential, for consultancy Cushman and Wakefield.

Indian property investors intending to sell could do well waiting for about six more months to get some added advantage, say experts. “It depends on at what level they had entered. In another three to six months the Kolkata market will be stable and input costs are anticipated to rise after that. Since there are no major projects that have been announced, there will be strain on supply. People should wait for at least six months before starting to sell,” said Pradeep Sureka, managing director of Bengal Park Chambers Housing Development Ltd. He added that ideally a two year wait would bring in maximum returns.

Debjani Mukherjee Sarkar, general manager — marketing of Bengal NRI and Varun Kathotia, director — marketing of Fort Group agreed. “In the past two months, the trend has shown that the market is picking up. The Bengal NRI, however, believes that people should wait for around six months to get an appreciation of about 10 to 15 per cent,” she said. “Land prices have not changed much and unless one can strike a very good deal, it is better to wait another four months before one sells a property,” Kathotia said. Some said in a couple of years, there would be major rise in property prices. “Those who had invested between 2005 and 2007, early 2008 had been the best time to sell off. At the moment, the market is slightly down and it is the right time to buy rather than sell. By 2011, there will be another 20 to 30 per cent jump in the market and that will be the ideal time to sell,” said Mayank Saksena, associate director of Joneslang Lasalle Meghraj.

“Two years from now, there will be a more than 30 per cent rise in prices,” said Sumeet Dabriwala, managing director of United Credit Belani Group. He added that people should wait for six months to one year because the condition at present was just the beginning of an uptrend. Many divided investors into different categories. “Selling will depend on when the person had taken possession of the property. If he is an old investor, this time is good enough to fetch him a profit and if he has been a recent investor, it will be better for him to wait for some time as the market has stabled and from here, it will only improve. In another year, the market will improve at least 10 per cent,” said Rahul Todi, managing director of Shrachi.

Rajesh Somani of Somani Realtors classified investors according to the amount of money they had spent. “People who had put in their money in properties of over Rs 40 lakh can sell them off as market growth in that segment is very slow but for investors under Rs 30 lakh, it will be advisable to wait for another six months, because the market is showing a positive trend,” he said. “The market has stabilised. People who had bought a correctly priced property will get better returns than bank interest, but those who purchased at exorbitant prices, expecting to make a fortune, will suffer a loss. Sellers who can afford to wait for another six months will get better return. .

Kolkata is feeling the strain of the credit crunch and no more so than the hospitality industry.

Of the 19 hotel projects that were to begin operations in 2011-12, adding over 5,000 star-category rooms, at least six have been delayed, five put on the backburner and one shelved following reversals that developers faced over the past year. The seven projects that are on track will add 1,365 rooms in the city and its surroundings. Though Confederation of Real Estate Developers Association of India (CREDAI) had warned of a 12- to 18-month delay in the hotel projects after tourist traffic dipped and corporate travel nose-dived towards the end of last year, the situation is turning grimmer.

“About four-five years ago, a flurry of hotel projects was announced in Kolkata,” said CREDAI Bengal president Pradeep Sureka. “At that time, investment sentiment was riding an all-time high, with Kolkata projected as the next big destination. Industry captains streamed in, triggering more frequent visits by executives. There was every indication that rooms would be occupied as soon as capacity addition took place. Hence, lot of hoteliers and real estate developers jumped in. But the situation has changed. Not only has Kolkata lost the prime investment destination tag, the meltown has jolted the hospitality industry,” he added. In fact, a lot of developers who had jumped onto the hospitality bandwagon are now trying to get out. “At a time when everyone is battling a financial crisis, operating in a non-core sector is a strict no-no. That is what many have realized,” Sureka explained.

A kilometre-long section of the Eastern Metropolitan Bypass between Science City and the SilverSpring condominium project, that was to emerge as a hotel hub, will continue to have ITC Sonar as the sole destination. The latter does have plans to add a super-luxury property with 450-plus rooms, but plans are yet to be finalized. “ITC’s expansion plan is definitely on. But it will take some time for a project of this size to take off,” said ITC Welcomgroup eastern region chief Ranvir Bhandari. There is, however, no discernible progress on the four star hotel projects in the neighbourhood. The promoters Emaar-MGF, DLF and Apeejay Surendra look content to keep the plots idle. “Companies will not pump cash into new projects if no returns are assured in two-three years,” said an executive of one of the companies. No one, though, was willing to make an official comment. Officials of The Park were not available for comment, while Emaar-MGF bosses maintained a stoic silence. A senior DLF official said construction would begin by the end of this year and completed by 2012. “We will start work once the liquidy crunch eases,” he said.

Real estate developers in Kolkata are trying to increase housing demand providing buyers with India’s latest prize, a free Tata Nano car.One Kolkata-based real estate company has decided to give the car “free” with a flat for its first 50 buyers. The realty firm has sold 24 apartments in the last two days, said Ravi Pincha, director, RDB Industries. “We have seen an overwhelming response for the apartments in Kolkata, and have received more than 130 enquiries in the last two days,” he said. The company might place orders for more Nanos, said Pincha.

In the months of October-November last year, several property developers in India had started advertising freebies to attract customers as Kolkatta property prices stagnated. However, with the sale of residential projects in Kolkata gradually picking up, not many developers are offering add-ons to attract customers and this trend will surely slow down, so take it while you can get it.

Kolkata retail and residential projects are being delayed or deferred due to the financial credit crunch according to Jones Lang LaSalle Meghraj.Commercial and retail development in Kolkata, West Bengal and in its suburbs had nearly doubled real estate prices over the last few years. However, although 40 to 50 projects are lined up in the city currently, around 100 projects are delayed or deferred due to credit crunch as well as because of uncertainty over projects’ viability and sustenance.

According to Mr Mayank Saksena head of transactions in Kolkata, Jones Lang LaSalle Meghraj, around 40 to 50 projects are lined up for Kolkata while around 100 have been delayed. On an average, each of these projects is of approximately 200,000 square feet priced at an average of INR 3,000 per sq ft. Local developers deliver very satisfactory products at lower prices. For instance, Bengal Unitech is charging INR 3,200 per sq ft in Rajarhat, while other local developers charge INR 2,500 per sq ft for comparable projects.”

Property prices in Kolkata are also down 15% and a further correction of 10% is expected, on the back of slowed retail activities and consumers going into savings mode.