By Mr. Ramesh Nair, JLL India
Many years after New Delhi, the country’s
political capital, witnessed a transformation with the implementation of the
Delhi Metro, the financial capital of Mumbai is set to experience a similar
phenomenon with the imminent commissioning of the Versova Andheri-Ghatkopar
(VAG) corridor of the Mumbai Metro.
With equity
participation from Reliance Infra and Veolia (a French transportation major),
this PPP initiative has all the hallmarks of a game-changer for the city’s
transportation and realty landscape.
Many facts about the VAG have already been
well documented :
A project investment
of USD 720 million, a fleet of 16 rakes with 4 fully air-conditioned coaches
with an individual capacity of 375 passengers, travel time reduced to 21
minutes from the current 90 minutes between Versova and Ghatkopar - and of
course, improved East-West connectivity.
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| Ramesh Nair, JLL India |
However, the impact on the Mumbai realty
market is likely to be far more pronounced.
Transportation infrastructure economics have
historically proven to have a positive impact on real estate values in a city
like Mumbai – residential and commercial properties located close to
transportation infrastructure tend to command a premium.
Independent analyses
of pricing reveal that proximity to a Metro station can single-handedly account
for a 22% variation in land values, the other factors being location, distance
of the land from the central point and income groups.
On the back of the
execution of a string of surface transport infrastructure projects - viz. the Jogeshwari - Vikhroli Link Road
(JVLR), the Santacruz Chembur Link Road (SCLR) and the Wadala - Chembur
Monorail - the VAG corridor will further stoke the already buoyant Mumbai real
estste market.
Each of these
transportation infrastructure initiatives have had a tonic effect on the
adjoining realty micro markets – for example the expected implementation of the
Monorail had pumped up property prices in Chembur and Wadala by more than 100 %
in a short span of 4 to 5 years. This also applies to the SCLR, with which the
Chembur micro-market again witnessed a perceptible price rise due.
The areas which will
benefit from Metro connectivity have already seen price rises of 400 % over the
past eight years, and this trend is set to continue with this imminent launch.
A more detailed impact analysis follows below:
** Near-Term Impact..
Developers’ interest in projects near the
Metro has been increasing since the start of construction. With the
commencement of the project, the surrounding region will definitely experience
a certain boom in terms of new offerings and price hikes.
Rates on both the
commercial and residential market will increase, as the properties of northern
SBD, BKC and SBD central are the most preferred locations for investors.
** Medium - Term Impact...
Intra and
inter-connectivity in SBD North and the Eastern suburbs will increase
tremendously, given the capacity of 7 lakh passengers per day added by the
Metro. Concurrently, East - West connectivity will benefit the maximum by this
project, which will reduce the burden on JVLR and SCLR (the current East-West
corridors).
Travelling to the
Eastern suburbs and Navi Mumbai from the Western suburbs and SBD North and back
will become faster and more convenient. Among the series of mega-projects such
as the Eastern Freeway, SCLR and Monorail in the past one year, the Metro is
the biggest so far.
The combined effect
reflect positively on Mumbai’s real estate market - the residential and retail
markets in Andheri, Jogeshwari and Ghatkopar will witness tremendous growth,
especially those near the Metro stations.
Long-Term Impact...
Long-term value capture would be possible
through increase in FSI. If the proposal of granting FSI of 4 to areas near the
Metro is approved, it will have a far-reaching impact and potentially transform
the entire landscape of areas surrounding the Metro.
Micro-Market Wise
Impact..
CBD :
Already losing out to
BKC and SBD Central, SBD North will now also pose a strong contender as a
business destination alternative to CBD. Absorption could reduce due to the
trend of shifting away from CBD, which will lead to a correction in prices.
SBD Central..
SBD North might not be able to compete with
BKC, but it will pose a challenge to SBD Central. Residential and commercial
spaces in SBD North may start becoming preferred over SBD Central, especially
when favourable prices are found in SBD North.
SBD BKC :
BKC will remain
largely unaffected - even factoring in the effect of the Metro on SBD North,
the advantages that BKC already has will keep it firmly in the #1 position.
Absorption and prices will remain steady.
SBD North:
The maximum positive
effect will be seen in SBD North, as the Metro runs across its entire width,
covering practically all the important destinations.
Absorption and supply
are set to increase rapidly along with capital and rental values. The
residential market in certain key areas will see a boost in activity,
especially in Andheri West.
Western Suburbs:
The Metro will also
have a positive impact on the Western suburbs due to the faster connectivity to
the Eastern suburbs. Absorption rates and supply will increase marginally.
Residential markets will also take off in areas closer to the Metro.
Eastern Suburbs:
Besides SBD North,
this micro-market is going to see the maximum impact from the Metro. Rental and
capital values are set to increase as absorption rates move up. The residential
market in areas like Ghatkopar will derive the maximum benefit.
Thane-Navi Mumbai:
If at all, Thane and Navi Mumbai will see only
a marginal positive impact, as commuting to the Western suburbs and SBD North
and back becomes faster. Otherwise, these markets are will remain largely
unaffected.
The commissioning of the VAG corridor of the
Metro is like to transform the dynamics of the Mumbai transportation, as well
as its realty market. In conjunction with the SCLR and the Monorail, the Metro
is certainly poised to become a major game-changer for realty investments in
Mumbai.
About the author..
Mr. Ramesh Nair is COO
(Business) at JLL India
For Media Contact..
Arun Chitnis
Head – Corporate
Communications & Media Relations
JLL India
Pune 411001.
Tele: 020 30930441
Fax: (020) 40196101
Mob: +91 9657129999
Website:
www.joneslanglasalle.co.in
Blog:
www.joneslanglasalleblog.com/realestatecompass
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