With the Bangalore Metro now functional for over a year, Ruth Dsouza Prabhu analyses its impact on real estate.
Though we still have another couple years to go before Phase II of the Metro starts moving, the stretch between MG Road and Byappanahalli has been functional for over a year now. Naturally, the real estate market has seen a positive impact since it was inaugurated last October. This change for the better is obvious in the micro markets that are placed close to the Metro line. Some of the main areas that surround the Metro are Byappanahalli, KR Puram and C V Raman Nagar. These are areas that have seen an approximate 25 per cent in terms of price appreciation. Karun Varma, Managing Director – Bangalore & Kochi, Jones Lang LaSalle India says, “In the areas around Phase I, the commercial and retail segments will continue to appreciate based on the market trends.
In the residential segment, the magnitude of appreciation in capital value may vary based on the construction phase of the Metro. Once the Metro is completely operational, the peripheral locations may witness incremental appreciation owing to the enhanced connectivity.”
But when the second phase of the Metro is functional in 2017, real estate will witness a very good phase explains, Bijay Agarwal, Managing Director, Salarpuria Sattva.
Property prices will go up in all of the areas that surround the Metro. This, he says, will
lead to better connectivity and a reasonably priced means of transportation. Commercial establishments will see an increase in business, especially those placed around the Metro corridor. There will be several new retail outlets that will also open up.
Karun adds another viewpoint to this saying, “The commercial and retail real estate segments have not seen any significant incremental margin because of the Metro. Rental values in Indiranagar and Jayanagar, which are well-established commercial and retail hubs have risen by between 4 and 6%. However, there is no data to support the premise that these increments are due to the interest generated by the Metro. That said, the residential property market in West Bangalore, specifically Tumkur Road, Vijayanagar, Magadi Road and surroundings, has seen an increase in capital values ranging from 12 -18%”
“Now that the MG Road-Byappanahalli Metro has been functional, there is going to be a gradual shift in demand for areas. While the earlier demand was for central locations like Indira Nagar and ITPL because of their proximity to the IT belt and the CBD, today, people are beginning to look at KR Puram and Byappannahalli thanks to the seamless connectivity offered by the Metro says,” says Preenand Premachandran, CEO, Hebron Properties.
Micro-markets like KR Puram, Thambu Chetty Pallya, CV Raman Nagar and even some parts of Old Madras Road still have land parcels that can be taken up for development. There are a number of projects going on here right now, but the scope will increase in the time to come as well as appreciation in the mid and long term.
Besides the residential market, Metro rail in its first phase has not helped the residential market alone. Commercial realty across the functional stretch has seen a 15 per cent growth.
Says Premchandran, “Retailers are yet to take advantage of the fact that the floor-area ratio (FAR) around Metro stations has been increased from 3.2 to 4. Establishments that moved out to make way for the construction are now returning and the area is witnessing a slow yet massive growth.
The actual impact of the Metro will only be seen when the second phase is operational. There are several studies to support that there will be an approximate 20-30 per cent appreciation on its completion.