The Malad-Goregaon region, a growing suburb of Mumbai has transformed into a residential, commercial and information technology (IT) hub. A key factor was the opening in January 2023 of the Metro Line 2A from Dahisar to DN Nagar and Line 7 from Dahisar to Gundavali, Andheri (East) in the western suburbs. Across the country in Bengaluru’s eastern peripheral IT hub of Whitefield, the first leg of the Baiyappanahalli -Whitefield metro extension project (Purple line) from KR Puram to Whitefield became operational in March 2023 and the complete line will be functional from July 2023.
Metro lines have been known to push property demand and values even earlier. In the most mature metro market of the Delhi NCR, Uttam Nagar was a case study on what metro connectivity can do to an area. A neglected, partly unauthorised locality in South West Delhi, Uttam Nagar was in the influence zone of the Janakpuri Blue line of the metro. It had three metro stations nearby - Uttam Nagar East, Uttam Nagar West and Nawada. That lifted demand for property in the area as the line connected to key commercial and office hubs in Karol Bagh, Connaught Place and Noida. Owners demolished existing structures and built modern multi-storey apartments, which tenants and potential owners clamoured to buy about 2006-08. When the Magenta line started in 2018, it also connected Janakpuri and by association, Uttam Nagar to South Delhi, Nehru Place and Noida. The demand then escalated once more.
Demand Jumps in Bengaluru’s CBD
International property consultant Colliers has found a similar trend in Bengaluru’s central business district of MG Road and now Whitefield. In 2017, the MG Road metro was made fully operational and connected to key residential hubs. This drove up the demand for retail and office spaces in the CBD as the commute became a lot easier for the staff in these offices. By Colliers' estimates, the CBD area now has over 7 million square feet of premium A Grade office space with a mere 3.2 percent vacancy. It draws an average rental value of Rs 142.5 per square foot per month. In 2017 when the first phase of the purple line was commissioned, the locality witnessed a 25 percent jump in property rentals as compared to the previous year.
When the KR Puram leg of the Whitefield metro corridor was inaugurated in January 2023, a similar excitement was felt in this eastern peripheral location. It was already an established IT hub with large campus-style facilities of companies such as Capgemini, SAP and GE. It also has a large variety of residential options from luxury villas and apartments to smaller units to house large workforces. Today it has 40.4 million square feet of Grade A commercial space with a 17.2 percent vacancy and a lease rental of Rs 57.5 per square foot per month. Just the announcement in 2011 of the metro to Whitefield caused property prices to jump 2.6x, says the Colliers report. Now that the first leg is connected and the second leg connectivity is expected in about six months, there has been a 17 percent increase in Grade A office stock by 2024 and 6.7 million square feet of premium commercial space is expected to hit the market in the next two to three years.
Rush to Malad-Goregaon Area
Mumbai was another city with no metro experience for a long time. About two years ago when I spoke to a prominent developer in Borivali and asked him about its prospects once the Dahisar line would be operational, he was taken aback and fumbled with an answer. Now the Malad-Goregaon region of the western suburbs has become a destination of choice for homebuyers. After all, the metro has reduced commute time to Andheri West by half. Little wonder then that the western suburbs constituted 62 percent of the market share of sales registrations in March 2023.
So, what is the fatal attraction of the metro to residential property consumers? A study I did in Magicbricks about a decade ago showed that properties less than 500 metres from the metro station commanded the best rental rates. About six months after the metro line was commissioned, the sales increased. Now commercial property occupants have realised the value of being near metro nodes. Workforces can easily come and go and therefore it is easier to attract good talent.
Building Along The Corridors
Policies too favour the densification of metro corridors. Typically, cities have started giving enhanced floor area ratios of 3-4 along transport corridors. This allows developers to create dense development with more people per square foot. This allows the metros to earn more and therefore remain viable. As more cities opt for metro networks, this feature will become more and more prominent. Earlier to enjoy a premium city lifestyle young workers had to head to cities such as Delhi and Mumbai. Now with Jaipur, Lucknow, Kochi and Hyderabad boasting their own metro lines, the small cities too are attracting good talent. Here the property formats are larger and smaller commute times leave space for lifestyle entertainment.
Metro now has started determining the quality of life of the workforce. Both employers and employees have understood it and have responded positively to the metro march.
E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.
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