25 Aug 2014

Understanding the impact of Mumbai's Metro on the Real Estate Market

Metro rails in India are a part of rapid transit. Other forms of transportation that include rapid transit are bus, monorail and light rail systems. The first in India was the Kolkata Metro which had started its operations long back in the year 1984. After that the Chennai Mass Rapid Transit System (Chennai MRTS) became operational in 2002 becoming the second mode of rapid transit in India. The Delhi Metro is the first modern metro rail system which had a huge impact on Delhi overall. The following article talks about the impact of Metro rail on the real estate market of the city.

Studying the Impact of Delhi Metro
The first and foremost impact of Delhi Metro is on its transportation services. It has changed the perception of public transport in Delhi which was earlier not a very convenient mode of travel. Delhi metro has given the commuters the gift of time as the one thing they do not have to worry about is the uncertain traffic conditions. Thanks to Delhi metro, the scenario has changed drastically. Take a look at the following facts:

·         1.2 lakh vehicles go off road daily
·         There is an 1.06 lakh tones annual reduction of fuel consumption
·         It leads to 1.4 crore of daily savings of fuel costs
·         There is an annual reduction in the number of accidents
·         Lastly, it has brought down the pollution level in the city

The Effect on Real Estate Market
Delhi's real estate market has been hugely impacted by its metro, with prices touching the skies.  In the year that the Delhi Metro was launched, Delhi saw prices go up by 22% in the post-construction phase, i.e., after December 24 2002, when its first line went operational.  Spread all over Delhi, the Delhi Metro currently has six working lines that are inter-connected to each other except the airport line. The red line that was the first operational line connected Shadra and Tis Hazari but today covers 25.09kms between Dilshaad Garden and Rithala. The following table summarizes the Delhi Metro:



Line
First Operational
Terminals
Red Line
December 24, 2005
Dilshaad Garden – Rithala
Yellow Line
September 3, 2010
Jahingpuri-Huda City Center
Blue Line
December 31, 2005
Noida City Center – Dwarka Sector 21
Green Line
April 3, 2010
Inderlok – Mundka
Violet Line
October 3, 2010
Central Secretariat – Badarpur
Airport Line
February 23, 2011
New Delhi – Dwarka Sector 21

The construction of the Delhi Metro started on October 1, 1998 and still is in the construction phase in many parts of the Delhi (Ring road).
Hence, according to the associate director of CEPT (Center of Environment Planning and Technology), property prices rose only minimally during the pre-construction and "under construction" phases.
And the Delhi Metro has not only benefitted the residential real estate market.  Commercial properties appreciated even more.  Properties within 1 kilometer of the metro appreciated most.

2014 – The Changing Face of Mumbai Real Estate
First Delhi - now Mumbai! The Mumbai real estate market was sluggish till the last quarter of 2013. But 2014 saw prices up by 2% in the first quarter, according to a report by leading real estate portal, 99acres.com [ read the entire report here- http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=1006964&num=0  ] The rental values have gone up by 3%, compared to last quarter of 2014.
The Mumbai Metro is now in its construction phase. The first line of the metro spread across the Versova Andheri-Ghatkopar (VAG) covers a distance of 11.4kms with 12 stations.  The other three lines of the Mumbai metro are either in the construction phase or in the planning phase. The connectivity of all four lines of Mumbai Metro is as follows:

Line
Terminals
Line 1
Versova-Ghatkopar
Line 2
Dahisar-Mankhurd
Line 3
Colaba-SEEPZ
Line 4
Wadala-Kasarvadavali

The projects near the metro stations have initially seen a rise. According to Amit Sathe, the Business Head of Commercial Business of the Pheonix Mills Limited, the prices for residential and commercial properties after the opening of Line 1, have already seen a 20-25% rise than last year and predicts that the areas that are very close to the metro like the Bandra Kurla Complex (BKC) and Secondary Business District (SBD) will see an immediate price movement of about 35-40%. The next 4-5 years expect to see a 100% price increase especially for these areas.  

The SBD and BKC have always been one of the favorite spots for the investors as these areas have always given the investors a fair rate of return. The rental values of properties in these areas have been on the higher side and are expected to go up by 47% by 2017.


Other Infrastructural Projects that have boosted the Realty Market of Mumbai
There is no doubt about the booming market of Mumbai due to the Metro, but there are other infrastructural developments that have added to the property market of Mumbai.

Some of these include

Ø  The Monorail
o   The Mumbai Monorail is a transportation system in Mumbai that services between Wadala Depot and Chembur. This expansion of the public transport system in Mumbai is divided into two phases out of which the first line of the first phase was inaugurated on February 1, 2014.
o   The Monorail has affected the micro markets of Chembur and Wadala.

Ø  Mumbai-Santacruz Link Road
Ø  Jogeshwari-Vikhroli Link Road
Ø  The recently launched line 1 of the Mumbai metro has added good cheers to the realty market and the market that was stagnant has an infused life with these developments.  

Metro in the lives of Mumbaikars have surely made the difference.  Other than easing the transportation, the metro has shown a considerable effect on the real estate prices. 

Author:

Akansha Arora is a professional writer and blogger. She is happy to pen down her views for various that interest her. The above article talks about the effect of Mumbai metro on the real estate sector.  Follow her at akansha.arora2112@gmail.com

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