Impact of Metro Railway on Plots in Cities with Upcoming Metro Service

The inception of the metro railway in India’s metro cities has not only enhanced the standard of living but also impacted real estate growth in a big way. The land value near metro rail corridors has drastically increased, owing to the convenience and reduced commuting costs. Proximity to the Metro attracts home buyers, developers and investors, and these areas are expected to undergo significant appreciation in the future as well.

How has Metro Catapulted the Real Estate Scenario Near Metro Corridors?

There has been a steady growth in the real estate market along the metro corridors because of major developments along metro routes. In the last five years, the value of land near metro corridors has seen an increase of 15 to 20% in different cities. For example, in Pune, upcoming metro corridors are expected to increase the land value by 10 to 15%.  

Commercial and retail rates along the metro corridors have also witnessed a 20-25% rise due to the generation of job opportunities, easy accessibility and lesser commuting costs. As a Mass Rapid Transport System (MRTS), the metro railway reduces traffic congestion significantly, thereby benefiting the projects planned along the metro corridors. Locations that are at a distance of 4-5 kilometres from the metro stations have also witnessed a surge in land prices and housing demands. 

Rates of Appreciation for Plots Before and After the Announcement of Metro

It has been observed that the land value goes up considerably post metro operations, with an annual increase of 2 to 5% recorded in different locations, as opposed to the planning and construction phase. However, many cities have witnessed a sudden demand and rise in land prices soon after the announcement of the metro rail project. 

Some of the upcoming metro projects in India include Pune Phase-I Line 3, Chennai Metrolite, Nashik Metro Neo, Bangalore Metrolite, Kozhikode Metrolite and Trivandrum Metro. Read on to know how the land prices in different cities were impacted by pre- and post-metro announcements.

Kochi

Before 2016, when Kochi metro Phase-I was just in the planning stage, the property rates on the Aluva-Thrupunithura stretch (25-km) shot up by 20-30%, and realtors received numerous inquiries (from residents and non-residents) for buying land along the metro corridor. 

Prime areas like Edapally, Vytilla, Aluva, Palarivattom, Panampilly Nagar, Kakkanad and Companypady witnessed a rise in the number of upcoming residential/commercial projects. Once Kochi metro began operations in 2017, the city’s real estate prices greatly increased in different areas, with a further rise by 40 to 50% post-2017.

Chennai

Before the construction of Chennai Metro in 2015, the housing prices were around Rs. 3,600/sqft, which increased to Rs. 7,000/sqft in areas along the metro corridors, such as Ashok Nagar, Saidapet, Guindy, Washermenpet, Arumbakkam and Perungudi, post the commencement of metro operations. Apart from other factors, easy accessibility offered by the metro played a major role in the price surge.

Many areas of Chennai close to metro stations saw a 15-35% increase in land prices post metro Phase-I operations in 2019. Additionally, the retail and commercial rental prices along the 100 feet road or Jawaharlal Nehru Road witnessed around a 50-70% increase. Some property rates witnessed even a 100% increase. 

The Metro has also improved the popularity of micro markets like Anna Salai and increased real estate prices in various parts of the city.

Nagpur

Nagpur, Maharashtra’s third-largest city, saw a depreciation in land prices from 2016 to 2019, reaching approximately Rs. 1,900/sqft from Rs. 2,800/sqft. Nevertheless, Nagpur Metro’s north-south corridor that was launched in 2019, as well as the Outer Ring Road (ORR) and Multi-modal International Passenger and Cargo Hub Airport at Nagpur (MIHAN) SEZ projects, are expected to greatly enhance land rates in the city.

Pune

In 2016, permission was given to begin construction for the Pune Phase-I metro project. Pune’s real estate market, transport and accessibility faced major problems before the launch of metro services. 

However, when the metro services began, the three main corridors from Pimpri-Chinchwad to Swargate, Vanaz Corner to Ramwadi and Hinjewadi Phase-III to Shivaji Nagar gave a ray of hope to the city. Pune witnessed a substantial increase in investment in plots along metro corridors.

The land value in the vicinity of Pune’s metro corridors and in the extended areas has improved significantly as the demand for residential/commercial plots in and around the corridors went up. Areas like Sant Tukaram Nagar, Pimpri-Chinchwad, Shivaji Nagar, Swargate, Ramwadi and Vanaz along the metro corridors greatly benefited from the connectivity and appreciation in land prices. Property prices increased approximately 38% between 2013 and 2020 due to various factors, of which the metro project is a major contributor.  

Ahmedabad

The property rates in Ahmedabad remained stagnant and declined by about 3 % in 2013, showing a minimal rise of 2 % in 2014. With the announcement and construction of the metro, the demand for purchasing land along the metro corridor increased by huge proportions, which led to massive real estate appreciation. 

Areas such as Vasna and Paldi have witnessed high demands for properties from 2017 to 2019. Before the launch of Metro, the property prices in these areas were somewhere between Rs. 5,000/sqft to Rs. 6,000/sqft. Post the beginning of metro operations;  the prices have increased to Rs. 9500/sqft to Rs 10,000 per sqft.

Bangalore

Bangalore’s prime locations like Indiranagar, Jayanagar, Malleswaram, Rajajinagar, Yeshwanthpur, CMH Road and others have witnessed a price growth of 8 to 10% since the North-South and East-West metro corridors opened for the public. 

With the upcoming metro rail projects being announced and the launch of the Mysore Road-Kengeri Line, nearby land prices are expected to witness substantial appreciation. Post the launch of the Bengaluru Metro, within 12-18 months, a price surge of around 25% was witnessed in areas near the metro. 

Mumbai

The sought-after locality of Goregaon East is located between Andheri and Borivali, close to the airport, film city, IT hubs, schools, restaurants and hospitals. The property prices in this locality stand at Rs. 17,250/sqft. The Metro Line 2A is expected to be fully operational by January 2022, post which the appreciation rate would be approximately 10-15%.

The Versova–Andheri–Ghatkopar metro route was inaugurated in 2014, and since then, these areas have witnessed a 10-20% appreciation in land value. 

In Malad (West), the ongoing metro construction is slated to increase the commercial/residential demands, and therefore, land prices, post the completion of the project in 2021. The land prices at Kanjurmarg is also expected to go up by 10 to 12% post the completion of the metro line.

Gurgaon 

Gurgaon’s Rapid Metro offers connectivity between HUDA City Centre, Cyber City, and the remote corners of Gurgaon, including Sectors 55, 56, Golf Course Road, and so on. This has had a positive impact on the surrounding areas, and land values have increased considerably along the metro corridors.

As of now, the average prices of plots in areas near the metro are between Rs. 6,000/sqft and Rs. 10,000/sqft. Experts predict that with the upcoming expansion plans of the Rapid Metro, land prices might see a 10-15% appreciation in the near future.

Jaipur

With the announcement of the metro, there was not much appreciation in the land prices and remained within the range of Rs. 2,500/sqft to Rs. 3,500/sqft. Once Jaipur Metro began operations in 2015, the property prices appreciated by approximately 15 to 25%, making it ideal for investing in land in Jaipur. 

Jaipur Metro Rail enhanced connectivity across the city and, in turn, boosted land rates along the metro corridors from Mansarovar to Chandpole Phase–I Part A (East-West corridor) and Mansarovar to Badi Chaupar Phase-I Part B (East-West corridor). The Metro Phase-I covers posh localities such as Shyam Nagar, Mansarovar, Civil Lines, New Aatish Market and Sindhi Camp. 

Owing to metro rail connectivity, the popularity of areas such as Mansarovar, Tonk Road, Bani Park, Jagatpura and Civil Lines have increased substantially. Investing in land in these areas guarantee excellent returns as they’re in high demand and are expected to witness high appreciation in future.

Delhi

Delhi Metro has been operational for over 15 years now, significantly impacting the real estate market in the region. In 2009, the average property rate in Dwarka was Rs. 5,000/sqft. The prices appreciated in the subsequent years and rose to Rs. 9,500/sqft in 2018, owing to its proximity to metro stations. 

The Nirman Vihar Metro service in Delhi started operations in 2010. The stretch along this route witnessed a significant surge in land prices (a 15 to 20% surge) from Rs. 16,667/sq ft to as high as Rs. 22,222/sq ft - Rs. 22,778/sq ft. 

Hyderabad

Land prices in localities like Kukatpally, LB Nagar and Miyapur along the metro line stretch were around Rs. 2,433/sqft before 2017. The metro operations in Hyderabad began in 2017, post which the prices in these areas increased to approximately Rs. 6,753/sqft.  Furthermore, the micro-market areas of Corridor-I and Corridor-III saw substantial price growth of about 15 to 20% from 2018 to 2021.

Land Pricing Along the Corridor and in the Rest of the City

While most land buyers go for properties along the metro corridors and their vicinity, homebuyers tend to look at properties a few kilometres away from the metro corridor. A primary reason is that traffic and noise pollution is lesser in these areas without connectivity being affected. 

Plots or properties along metro corridors have witnessed increased demands by commercial/ housing projects, because of better connectivity and accessibility. This has led to an increase in property prices as well.

Factors Other than Metro Connectivity Influencing Popularity of Plots

The ongoing metro projects in India have caused housing demands and property prices to increase immensely. Apart from the convenience offered by Metro, additional factors that affect the popularity of plots include:

• Infrastructure development

• Existing and upcoming amenities

• Proximity to IT parks and offices

• Ease of commuting

• Proximity to recreational centres and markets

• Clean environment

• Lesser traffic and noise

• Good civic amenities

• Proximity to hospitals, parks and shops

Metro Rail is a boon to metro cities with traffic congestion issues, as well as to the tier 2 cities in terms of their growth. With the announcement of upcoming metro services, cities witness a growing demand for mixed-use land in and around the metro corridors. It leads to a good percentage of appreciation of land rates, thus boosting the growth of the real estate sector in the city.