In 2011, real estate consulting firm Colliers International indicated that with the encouraging performance of the Indian economy, better control over the recessionary trend, and big ticket hiring by IT/ ITeS industry, the feel-good factor was creeping back.
The effect was immediate: rentals on an average increased by 20-30 per cent in most areas in Bangalore where residential and commercial markets coexist. The trend continues in South Bangalore (J.P. Nagar, Jayanagar, Banashankari), Sarjapur Road-belt, north Bangalore and the central business district.
Up, up and away
With Namma Metro’s launch, albeit on a tiny stretch, there has been an extra impact in the rental scene in areas along this rail route? Says Vineet Singh, business head, 99acres.com, “Indiranagar has witnessed large residential houses being demolished and reconstructed into commercial complexes that have turned the residential hubs into commercial districts. With CMH Road reopening for commercial activity, rentals are bound to go up even more, for residences as well as commercial spaces.”
In general, the Bangalore residential market has shown an upward trend with regard to capital values as well as rentals in these areas, says Goutam Chakraborty, director, Integrated Services, Colliers International.
“Rentals have increased by 10-12 per cent. The functioning stretch of Namma Metro is definitely a key but not the only reason for the present trends. Rental of a 3 BHK flat in an apartment with all amenities on Old Madras Road behind Big Bazaar used to be Rs. 30,000. In a matter of six months, it has gone up to Rs. 35,000,” says Mr. Chakraborty.
Metro route is key
Says Mahesh Khaitan of Sattva Real Estate Solutions, a real estate research group: “With the metro line restricted to the Byappanahalli and M.G. Road route, it is but natural that the real estate surrounding these areas saw fluctuations.
“When construction was first proposed, large tracts of land exchanged hands to facilitate it and this led to a change in value. There was demand for commercial plots closer to the metro and residential plots a little further away.
“These plots were sold at premiums. Today with Namma Metro being functional, Old Madras Road will continue to be in demand and rentals are up by around 15 per cent. M.G. Road, on the other hand, is saturated and remains largely static.”
With all the corridors of metro rail in place, Bangalore will finally see a changed definition of “convenient locations” for residential pockets, feels Mr. Chakraborty. “We need to understand that during this initial stage of Namma Metro, (which was a high demand location with effective road transportation) the impact was not heavy. But with all corridors in place, residential rentals and capital values across the city will increase by 15 per cent because it obviously becomes a convenient, faster and cheaper way to reach remote locations that were never in demand because of commuting problems,” he says.
Thrust of the impact
The impact of the metro is more in commercial than residential spaces in general when it comes to the areas around it right now. Says Mr. Khaitan: “Once all the routes are functional, there will be little difference between prices on the outskirts and in the centre of the city. Over the next five years or so an increase of 25 per cent can be expected in all sectors.”