Upcoming Metro Corridors To Push Up Land Prices By 10-15%: JLL
The value of land within 500 meters of a metro corridor increased by 15-20 percent in Bengaluru, Delhi, Hyderabad and other cities, a trend that will continue as the network expands in these urban centres as well as in other parts of the country. A 20-25 percent growth has also been observed in the retail and commercial prices due to reduced commuting costs and job generation opportunities, an analysis by JLL has said. “The real estate market has seen a steady growth along the metro corridors, owing to an increase in developments alongside the routes. Furthermore, on average, the land value within 500 m of metro corridors has increased by 15-20 percent, especially in residential and commercial areas," said A Shankar, Head, Strategic Consulting and Valuation Advisory, India, JLL. According to data shared by the ministry of housing and urban affairs, the metro rail network is operational in 18 cities, covering approximately 702 km. Work on metro rail or Regional Rapid Transit System is on in 27 cities. The approved network, including RRTS, is 1,718 km. The increase in land value is on account of enhanced connectivity to the suburbs of the city that enables a wider distribution of the population resulting in a drop in congestion in the city. “Additionally, it has been observed that appreciation in land value has been on a rise after the metro operation and increased by 2-5 percent annually over other locations compared to the construction and planning phase,” Shankar said. Metro corridors directly impact the real estate sector as they increase the land value, land-use change and population density alongside the corridor. Mass transit systems such as metros and monorails significantly contribute towards solving traffic problems. Thus projects that are planned around the vicinity witness an increased urban real estate value since consumers are willing to pay more for convenience, it said. Cities show a uniformly positive change after the implementation of metros along their metro corridors. In Delhi, for instance, residential property in South Delhi area appreciated by 15-20 percent in the last five to six years.The land value of the metro on the Nirman Vihar stretch, which got operational in 2010, saw a substantial increase from Rs 150,000 per square yard to Rs 200,000-250,000, the analysis said. The transit-oriented development corridors such as metro corridors will have an influence zone of 500 m on either side. The government usually addresses the specific needs of housing development by granting extra FSI (Floor Space Index) along the corridor. This increased FSI reflects in the increased prices for land along the Metro corridor and leads to an increase in population density near a metro station. Reduction in premium FSI charges along the metro corridor will further encourage many existing or proposed developments to avail these benefits and thereby enhancing the growth of the city along the corridors and offering a better quality of living due to the emerging developments, the analysis said. Cities such as Kochi, Chennai, Bengaluru, Nagpur and Nashik have seen a significant expansion of new metro lines. Further, two new technologies MetroLite and MetroNeo are being planned to provide affordable connectivity options to tier-II cities and peripheral parts of tier I cities. In Hyderabad, the micro-markets of Corridor-I—from Miyapur to LB Nagar —saw price growth of 15-20 percent during 2018-Q1 2021. The Corridor-III, which starts from Nagole and ends at Raidurg/HITECH City, too, saw a similar jump. HITEC City/ Raidurg on Corridor-III micro-market saw the highest CAGR growth of 20-25 percent between 2019-2021 followed by Miyapur in Corridor-I and Nagole in Corridor-II with 2 percent growth in commercial land rates. The micro-market of CBD along with few SBD locations like Indiranagar, CMH Road, Jayanagar, Malleswaram, Yeshwanthpur, Rajajinagar in Bengaluru saw prices go up by 8-10 percent as soon as the East-West and North-South corridors opened for public use. Among the country's major real estate destinations, Bengaluru saw the development of a metro rail network that covers over 42.30 km under phase I. Some of the emerging areas influenced by metro are Bannerghatta Road, Kanakapura Road, Whitefield, Hosur Road, Tumkur Road, ORR and Bellary Road under phase II (including Phase IIA and Phase IIB) and are expected to witness an increase in price by 8-10 percent compared to other areas in the city. In Chennai, as soon as the Metro Phase I got completely operational in 2019, land prices in the areas closer to metro stations saw a 15-35 percent increase. There is a considerable increase in demand for retail and office spaces around metro stations. The commercial and retail rental prices along 100 feet road saw about 50-70 percent increase and few properties saw a 100 percent rise, JLL found. Residential prices were at Rs 3,600 per sq ft a decade before the launch of the metro and have surged to Rs 7,000 per sq ft in the year of operation of the metro, the analysis said.