Any major infrastructure development that promises to improve connectivity and accessibility has a positive impact on real estate in the surrounding area. It’s especially true of Metros – the lifeline of commute in increasingly congested cities. Global mass-transit systems have proved effective in solving traffic issues and have demonstrated substantial increase in real estate value along the transit corridors. In India, Delhi and Kolkata are great success stories of metro led transformation and boom in real estate. Proximity to metro has become a key value proposition for real estate developers.
A Metro impacts real estate prices in 3 cycles:
- Prices increase as a Metro project is announced. This is a good time to sell and capitalize on the Metro mileage
- Prices drop when the construction starts. Inconveniences due to the construction work lead to a fall in sale and rental prices. This is a good time to buy if you are looking for long-term gains
- Prices rise (especially rents) when the Metro becomes operational, as there is increased connectivity and convenience. This is a good time to let properties out on rent
Bangalore’s Metro network is steadily building up. In June 2017, the Phase I connecting central and off-central areas became fully operational resulting in increased residential activity on Kanakapura Road, Mysore Road etc. Phase II (expected to complete by 2022) and Phase II A would be connecting the key economic hubs and micro markets of Electronics City, Whitefield and ORR. These areas housing 90% of the IT /ITeS jobs will see a boost in real estate activity as the Metro work gets underway.
Let’s take a look at how Bangalore Metro’s construction is shaping the real estate market along its corridor.
2014- 2017: Phase I announced and under construction
As expected, the announcement captured developer interest and this time period saw an increased number of new launches (~20% over previous years) along the Metro corridor. There was also almost 30% appreciation in prices as compared to similar projects not in the vicinity of the Metro. Kanakapura Road, Tumkur Road and Mysore Road, till then being side lined, saw several large scale, premium, and luxury residential townships being announced by Grade A developers. Even the industrial areas of Magadi Road and Yeshwantpur saw increased redevelopment activity. Commercial construction is also witnessing a boost with several office spaces and malls coming up along the Metro lines.
2017 – 2022: Phase 1 completed, Phase II underway
The Phase I connected areas will benefit as an operational Metro means lesser traffic on the roads, lesser commute times, and more convenience from an economical mode of transport. New residential launches will continue to be announced along the completed route and a 5-10% appreciation in prices is to be expected. Rental housing, student accommodation, service apartments etc. will see a rise within walking distance of the Metro and even commercial rentals are expected to see a rise of around 20-25%.
This will be a tough
time for the areas affected by Phase II construction as connectivity remains
non-existent and traffic snarls get worse due to construction work. However
there will be new upcoming real estate projects in Whitefield and E-city – plan
to invest if you are looking for long-term price appreciation.
2022 and beyond: Phase II completed and other phases planned
Completion of Phase II will even out the playing field for the rental markets in Whitefield, E-City, and ORR with rents in E-city and Whitefield to increase by 20-25%. Phase II A will see sustained developer interest in the ORR area. From 2025 onwards we can expect Phase III metro construction connecting Bangalore North and a surge of developer interest in that area.
The planned Metro phases give us a good indication of where to put our money based on expected gains. There is a lot of value for long-term investors in the E-city and Whitefield areas. It’s also a good time to put in commercial bets and investments in service apartments and other professional housing options that could give you regular income as rentals. However, snags and project delays are inevitable and must be kept in mind while making the property purchase decision.
Metro connectivity definitely improves a neighbourhood and adds that extra incentive to invest in Bangalore’s real estate haven. You cannot go wrong in picking your dream property in a Metro corridor!