After nearly eight months, is the Namma Metro signalling something positive to the real estate scenario in Bangalore? If the surrounding areas of the six stations that it passes by are looking up in land values and rentals, can this be a true indication of the phenomenal effect it could have in entirety once the whole set of the four corridors open up? The Floor Area Ratio (FAR) in a 400-metre radius of these six stations is up from 3.2 to 4, forcing redevelopments and ringing in better rentals, given the extra floor space available.
Says Meera Krishna Kumar, Member, Bangalore Realtors Association of India (BRAI) and Director, Tandem Allied Services, “Expectations of increased capital and rental values with the Namma Metro arrival is yet to get translated in the transactions. The increase has been negligible. The areas surrounding Byappanahalli have witnessed increased interest though, as it has benefited the most from Namma Metro, with better connectivity to the CBD. Also, locations that were most affected during the construction of Metro, such as MG Road and CMH Road, have bounced back and are now commanding good rental enquiries. As a matter of fact, the commercial rental values on CMH Road are still down 10 to 20 per cent from the peak values.”
But what about the rental increases? “Negligible,” contends Meera. “The operational stretch of Metro primarily covers densely developed locations and there is hardly any new supply of property. In most places, the older tenancies are in existence and when renewed, we may witness substantial increase in rental values. However, rental property are mushrooming in the CBD and CMH Road, and the suburbs of Byappanahalli are seeing rental value appreciation in the commercial and residential sectors.”
Says Mahesh Khaitan of Sattva Real Estate Solutions, a research group, “With the development of the Metro, areas that were once considered the outskirts are now connected to MG Road, increasing their value . Going forward, there will be a lot of vertical constructions. This is especially around CMH Road, 100 ft. Road in Indiranagar and Old Madras Road. Rentals right now are appreciating at around 20 per cent. There is also an increased demand for real estate space, commercial and residential, around the current active part of the Metro. In areas like MG Road and Ulsoor, the demand is for office space rather than commercial. Real estate prices will rise at around 15 to 20 per cent on the outskirts.”
The effects of FAR increase
Increasing FAR was a natural move, says Khaitan, considering the space constraints that these areas are bound to have. “This will increase commercial set-ups in the vicinity of the Metro station. Several buildings that till recently did not have any takers are being lapped up at great speed. There will also be a large bout of vertical development, especially on CMH, 100 ft. Indiranagar and Old Madras Roads.”
Says Goutam Chakraborty, Director, Integrated Services, Colliers International, “Increase in FAR will have a direct impact on the land price. This is too short a time to evaluate the impact of the increased FAR on the commercial lease rental. We should wait for new projects which will impact the overall supply-demand situation in these micro-markets.”
Meera Kumar too agrees that the FAR impact is yet to be seen on rentals. “However the real estate values in the peripheral locations such as Kanakapura Road, Tumkur Road, etc, have seen 70 to 100 per cent appreciation .The promise of Metro connectivity has helped builders in these areas sell apartments in stock and realise good values.”
Will rail connections in all directions have a rippling effect on Bangalore’s realty? Says Meera, “We expect the suburbs to witness significant increase in rentals even with Phase 1 of Namma Metro getting fully operational. Corridors such as Tumkur Road, Mysore Road and Kanakapura Road will benefit the most. However, we may not see a substantial rise till the Majestic Station is open, though the ‘spokes’ of the Metro may be ready. The concept of a CBD may even get diluted, even with Phase 1 getting ready, and each micro market will witness self-sufficiency.”
