Metro routes in Tier II cities raised land values by 8-10%

01 Aug 2022 CW Team

Real estate is always directly impacted by the effective deployment of any metro corridor since it raises land value, changes in land use, and increases densification along the corridor. Examples of transportation systems that significantly reduce traffic congestion include metros and monorails. Due to consumers' increased willingness to pay more for convenience, urban real estate values are increasing for projects planned in the neighborhood. Empirically, it is anticipated that the value of properties will increase by 10-15% from existing prices with the opening of a metro corridor, depending on the location, land use, and overall use of the micro market.

The Central Government proposed Metro Lite, Neo-Metro, and Water Metro in Tier-II cities like Lucknow, Patna, Jaipur, Ahmedabad, Pune, Kochi, and Coimbatore to provide an effective mass public transportation system. Outside of metropolitan areas, metro rail transit plays a significant role in intracity transportation. It will give people easy access to mobility, so they can travel to inner-city places with the least amount of discomfort.

A Shankar, COO, and head, strategic consulting and valuation advisory, India, JLL, said, “The residential, as well as commercial market, has seen a steady growth along the metro corridors in Tier-II cities, owing to increase in developments alongside the routes. On average, the landowners with land near metro corridors under construction can command a premium of 5-7% and localities already well connected with metros can command a premium of 8-10%. Additionally, it has been observed that appreciation in land value has been on a rise after the metro operation and increase on an average by 5% annually over other locations, compared to the construction and planning phase.”

According to a JLL assessment, residential property prices in South Delhi have increased by 15-20% over the last five to six years, while rates in Hyderabad's micromarket of Corridor-I and Corridor-III have increased by 15-20% from 2018 to the first quarter of 2022. Land prices in Chennai's Anna Nagar second avenue and Thirumangalam neighbourhoods increased by 15 to 35% closer to metro stations. Rates increased 8–10% in Bengaluru's CBD micromarket as well as a select SBD areas like Indiranagar, CMH Road, Jayanagar, Malleswaram, Yeshwanthpur, and Rajajinagar as soon as the east-west and north-south corridors were made accessible to the general public.

A 32.92 kilometre metro line in Patna, India, is being built as of 2020. A DPR for the expansion of a 48km metro line has also received approval from Nagpur Metro. The Coimbatore metro is also preparing its DPR.

By 2025, metro services will be available in Agra, Meerut, Kanpur, Ahmedabad, Kochi, Pune, and other cities, according to the Union Budget 2022. Both the 118.9 km Kochi Metro Railway Phase 2 and the 118.9 km Chennai Metro Railway Phase II would receive finance from the government.