When Debashish Ray, a software professional, moved to Mumbai about two years ago, he was shocked at the price of apartments.
Shocked because, despite being no newcomer to the metropolis — he spent his childhood in Mumbai before moving to Kolkata and then Gujarat — he never thought that even a highly-paid job would not be enough to afford a house at Lower Parel, where his office was.
That was two years ago. Now, Ray’s hit upon a solution that not only combines affordability but also ensures the price of his house will appreciate. He’s set his eyes on Sewri, which is close to Lower Parel but commands far lower rates — Rs 13,000 per sq ft to Lower Parel’s Rs 25,000 per sq ft.
The reason: Poor transport infrastructure.
It’s a familiar story in many areas across Mumbai — Chembur, Chandivli, Ghatkopar to name a few. Poor transport connectivity means lower prices.
But that’s set to change, said industry experts. The Metro and monorail, which will provide badly-needed east-west connectivity and pass through hitherto poorly connected areas, are cranking up property prices along their routes. It’s a trend that is here to stay, added the experts.
Anand Narayanan KB, national director of the residential segment at real estate consultancy Knight Frank, said the “poor cousins” of elite real estate hot spots are set to undergo a makeover. “Some locations such as Sewri, Sakinaka and Chandivli are close to areas such as Lower Parel, Andheri and Powai. However, houses there do not command as high a price tag. That’s because the transport infrastructure is poor. However, with the monorail and Metro providing connectivity, we are bullish about these localities.”
Powai got its premium tag after Hiranandani Developers built a township there, and houses there now sell at Rs 16,000 to 18,000 per sq ft. However, houses at Chandivli, which is just a kilometre away, are priced at only around Rs 8,000.
Industry trackers said prices at Chandivli would head north once the proposed Metro passes through the area.
Although there is no specific data on the appreciation of prices in areas along the Metro and monorail routes, Narayanan said: “There has been a 15 to 20 per cent rise in prices in the past two to three years where the transport projects are coming up. These locations are still undervalued. You may see a tremendous rise in prices once projects start being built.”
Many developers are now betting on locations along the Metro and monorail routes. Raheja, DB Realty, Lodha, Nahar and Indiabulls are among those that have either already bought land in these areas, formed joint development agreements or are set to invest in these areas.
Most developers were guarded when it came to talking about where they might buy land. “If that is known, sellers will jack up prices,” explained a leading Mumbai developer who specialises in affordable housing.
He asked not to be identified for this story.
Abhisheck Lodha, who heads Lodha Developers, said: “We have a land bank in Sewri and we may launch projects there. Prices will improve in Sewri and other areas where monorail and Metro connectivity comes up, but this rise will still be less than in areas such as Lower Parel and Mahalaxmi.”
The first phase of Metro will go through Versova, Andheri, Ghatkopar, Colaba, Bandra, Charkop, Bandra, Kurla and Mankhurd. The monorail will pass through Sant Gadge Maharaj Chowk, Wadala and Chembur.
Some analysts said the next phase of real estate growth would be in new pockets, not in already congested areas where prices are sky high. “Prices in some areas have risen 49 per cent in the past year. These areas may either see a fall or almost no increase for a while,” said Pankaj Kapoor, managing director of Liases Foras, a real estate research firm.
Prices along Jogeshwari-Vikhroli Link Road rose from Rs 6,200 per sq ft last year to Rs 10,000 per sq ft now, said Kapoor.
Wherever infrastructure improves, analysts said, house prices will rise.
Apart from the new projects, many redevelopment opportunities will also be created. Many of the areas along the transport routes have old buildings and clusters, which could see a lot of redevelopment over the next few years. Builders such as Orbit and DB Realty have a strong presence in the redevelopment segment, especially in Central Mumbai.
Recently, the government cleared 18 redevelopment proposals in Mumbai. DB Realty and Avighna India were among those who will implement the proposals.
Apart from this, there are about 16,000 buildings, most of them in Central Mumbai, which may be redeveloped soon.