Investing In Commercial Offices In Salt Lake City Sector V

Table of Contents

1. Why Sector V Still Leads in Commercial Real Estate

Kolkata’s Silicon Valley: Sector V remains the largest and most active office hub in East India. As of 2023, it boasted 12.3 million sq ft of Grade A office space, with an additional 2.3 million sq ft under development—totaling about 14.6 million sq ft, the highest in the metro area.
Continued leasing strength: Q1 2025 saw Sector V (alongside Salt Lake and Rajarhat) account for around 87% of Kolkata’s gross leasing volume, about 0.26 million sq ft leased.
Diverse tenant base: Demand comes from IT/ITeS firms (~39%), BFSI (~13%), engineering and manufacturing (~39%), flex operators (~8%).
Big-ticket deals in 2024: Major firms like HDFC, Capgemini, Tech Mahindra, E&Y, KPMG, and others leased significant office space, showcasing the district’s dominance.

2. Supply Pipeline — New Towers & Upcoming Projects

Sector V’s landscape is evolving, with several landmark projects nearing completion:

The Summit (Merlin Group): A 28-floor commercial tower with flexible office units (from 800 sq ft), 5.25 lakh sq ft space, rooftop dining, 427 parking spots. Scheduled for completion by 2025.
World Trade Centre Kolkata: Covering a 10.5-acre site, part of the first phase is expected by mid-to-late 2025.
WTC, Merlin The Summit, Emami Business Bay: Together adding close to 1.4 million sq ft of Grade A workspace in Sector V by 2025.
Ecospace and other business parks: Ambuja Neotia has built several green business parks like Ecospace, Ecocentre, with more in the pipeline.

What this means for investors: rising supply ensures modern facilities, increasing leasing velocity, and better appreciation potential.

3. Market Dynamics & Rental Yields

Stable rentals: Despite new supply, rental rates in Sector V averaged ₹50–65 per sq ft in early 2025—competitive compared to Mumbai or Bengaluru.
Falling vacancies: A drop in vacancy rates (by ~30 basis points recently) indicates tightened supply and strong absorption.
Long-term leasing demand: With companies deploying hybrid work models, flexible office formats have surged. Coworking spaces are expected to grow ~20% by 2026.

4. Infrastructure & Connectivity Boost

Metro access: Salt Lake Sector V is now on the Green Line of Kolkata Metro (Howrah Maidan to Sector V), significantly improving connectivity.
Road network upgrades: Improved roads and flyovers make commuting to Sector V smoother.
Planned metro extensions: The New Garia–Airport (Orange line) corridor will further boost accessibility for both employees and visitors.

5. Investment Case: Why Sector V Makes Sense

a) Strong demand fundamentals

Main hub for IT, BFSI, and engineering firms.
Q1 2025 leasing of 0.26 msf and fresh demand from new sectors.
Top firms (e.g., LTI Mindtree, Standard Chartered) relocating here.

b) High-quality supply

Multiple Grade A projects nearing completion.
Green and smart buildings with sustainability certifications (e.g., The Summit, Ecospace).

c) Rental premium potential

₹50–65/sq ft remains stable despite new supply.
Potential uplift in next 12–24 months.

d) Flexible workspace trend

Investors can tap coworking or managed office demand—growing ~20% by 2026.

6. Things to Watch Out For

1. Regulatory safety

Rooftop commercial use on buildings in Sector V (or Salt Lake/ New Town) is currently restricted—no separate sale of terraces for restaurants or bars.
Always check official approvals and fire safety certificates.

2. Timing occupancy

While new towers may face delays, most are expected online by late 2025.
In the meantime, premium ready-to-occupy buildings remain available.

3. Tenant mix matters

Buildings offering space for both SMEs and large corporates tend to lease faster.
Check nearby tenant profiles to assess cluster potential.

4. Due diligence essentials

Verify builder credentials, title clearance, RERA status.
Inspect actual delivery vs committed standards (e.g., green certifications, facilities, backing).
Review maintenance policies, parking norms, security, common area access.

5. Funding & Returns

Office properties generally offer 6–8% net yields in Kolkata today.
Spectrum of results depends on location, quality, tenant selection.

7. Step-by-Step Investment Guide

Define your strategy: Choose between owning to lease (rental yield) vs resale flip.
Set budget and returns goal: Consider purchase price + 75–100 bps funding + ~8% net yield.
Shortlist projects: Mix ready-to-move towers (e.g., EcoCentre) and upcoming names (The Summit, WTC).
Site visits: Analyze design, quality, amenities, and get tenant mix data.
Legal review: Engage a real estate lawyer for title, approvals, NOCs.
Finance plan: Compare loan offers and tax incentives.
Lock in & negotiate: Market active – negotiate 3–5% discount.
Leasing strategy: Decide self-manage vs tie-up with co-working player.
Execute & track: Monitor leasing, expenses; reassess after year 1.

8. Real Investor Examples

Merlin The Summit: Small offices (800 sq ft) targeting startups and MSMEs. Soon-to-open tower near full lease due to flexible layouts.
EcoCentre (Ambuja Neotia): Mixed tenant park with green offerings. Tenants are bio‑tech, IT, startup extensions.
World Trade Centre Kolkata: A flagship building expected to attract multinational tenants thanks to global brand and central location.

9. Outlook: 2026–2027 & Beyond

Supply rising: ~5.1 million sq ft of office space planned in next two years, with Sector V prominent among contributors.
Vacancy tightening: Absorption trend steady (0.38 msf in Q1) and vacancies trending down.
Infrastructure uplift: Metro and road enhancements will shorten commutes, boost appeal.
Green buildings on the rise: Demand from corporates for IGBC-certified spaces increasing.
Rise of hybrid work market: Coworking and managed offices seen as stable by large enterprises.

10. Final Takeaway

Why invest in Sector V now?

Dominates office leasing in Kolkata
Strong new supply with modern features
Competitive rental rates and tightening vacancies
Resilient demand from diversified sectors
Supportive infrastructure growth
Room for niche strategies (e.g., coworking, small office units)

For investors seeking a stable asset with good yields and long-term appreciation in East India, Sector V’s commercial office market is well-positioned through 2025–2027.

Source : fulinspace.com