Chennai's real estate market may get back on track with the city's first metro. Experts say prices may rise by 10 percent once the metro comes into operation this October.
Developers are hoping to ride to richer fortunes as the city gets its first metro this October. Delayed by many years and costing almost Rs 45,000 crore the metro may result in property prices rising by almost 10 percent in the short-term. Poornima Murali of CNBC-TV18 has all the details.
Chennai's real estate hotspots are going to change tracks with Chennai’s first metro. In the first phase the elevated line runs from the city's bus depot in Koyambedu to Alandur in the south near the airport. It will be a 20 minute long ride versus the one hour ride by car and that's on a good day.
The first corridor covers Central Chennai and the second corridor covers the North Chennai. These corridors cover not just the developed areas including Anna Nagar, Koyambedu, Ashok Nagar, St. Thomas Mount, Alandur, Vadapalani and the airport but also lesser developed areas in the North Chennai.
Property prices have already appreciated. We had seen a similar phenomenon in the national capital region (NCR) when the metro was announced and with the monorail in Mumbai.
Prices in these areas currently range between Rs 6000 and Rs 15,000 per square feet and property developers are confident there's scope for prices to rise by another 10-15 percent.
Ganesh Vasudevan, CEO, India Property Online says, "We can expect prices to go up in the 700-800 meter radius of each station; that is likely to happen which is a reasonable walking distance at the same time not too far from the station."
According to Sanjay Chugh, Head – Residential Services, Jones Lang LaSalle, the Chennai metro rail is going to be operational very soon probably in the third or fourth quarter of this year. "We see that the market around and on the corridors of metro will start seeing a lot of traction for sales because once people start using this facility realising the convenience it offers to them as far as mobility goes it will push the prices up by about 10 to 15 percent in the immediate future," he said
Vasudevan says, "Typically if you see in NCR or Bangalore where the metro is fully functional, we have seen a good increase in resale property values, even for new property values there has been an up tick in rental values, there has been slightly increased demand for small commercial outlets in the footprint of each metro station. So, that kind of an impact is likely to be seen."
With the metro on track for a launch in October, the Jayalalithaa led state government is on onboard for the second phase connecting Chennai's city centre to suburbs like Madhavaram and Perambakkam. Needless to say real estate developers had sniffed out this new opportunity and have already started launching new projects.
The second phase covering 76 kilometers will be underground and will take at least 10 years to be fully operational. However, that's not deterring builders from launching new projects. A few of the new launches in the developed areas and suburbs include TVH Quadrant, Czar, Panache and Newry Park Towers.
As per Chugh, what is happening is metro rail was something that was supposed to come and now we know it is come and it is going to be operational very soon and that is driving a very positive sentiment. "People who are home buyers are looking at this as a convenient option to live where they can commute to work in mass rapid transportation system. That being in place very soon I think in the next two quarters we will see a huge traction and escalation in prices in those areas,"he adds.
"Transaction volumes across the city are down. So, it is not that these projects have had any specific demand or incremental sales just because it is closer to metro. There is definitely increased interest in these properties because they are closer to metro but for transactions to be significantly different from other projects we are not seeing that yet but maybe once the metro becomes operational we will see a difference," says Vasudevan.
Builders see a mouthwatering opportunity even before the metro hits the rails. However, only time will tell if it is going to be a smooth ride for consumers buying into all these new projects.