Land prices in tier-II cities such as Lucknow, Patna, Jaipur, Ahmedabad, Pune, Kochi, and Coimbatore have gone up by almost 8-10 percent following the introduction of a metro corridor in these cities, an assessment by JLL has said.
The successful implementation of any metro corridor always has a direct impact on real estate as it leads to an increase in land value besides a change in land use and increasing densification along the corridor. Metros and monorails, for example, make significant contributions to traffic congestion reduction. Thus, projects planned in the surrounding area see an increase in urban real estate value, as consumers are willing to pay more for convenience, it said.
“We analysed the rate change or the value change of land over a period of time. Rates undergo a change at the time a metro project is announced, while it is under construction and once it is operational. We observed that on an average the land increase is around 8-10 percent across these tier-II cities,” A Shankar, Chief Operating Officer and Head, Strategic Consulting and Valuation advisory, India, JLL, told Moneycontrol.
Apart from metropolitan cities, the metro rail transit plays a significant role in intracity transportation, which prompted the central government to propose Metro Lite, Neo-Metro, and Water Metro in tier-II cities such as Lucknow, Patna, Jaipur, Ahmedabad, Pune, Kochi, and Coimbatore, which will provide an efficient mass public transportation system.
“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 percent and localities already well connected with metros can command a premium of 8-10 percent. 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 percent annually over other locations, compared to the construction and planning phase," he said.
As per the JLL assessment, prices of residential properties in South Delhi rose 15-20 percent in the past five to six years, while the micro-market of Corridor-I and Corridor-III in Hyderabad saw rates rise 15-20 percent from 2018 to the first quarter of 2022.
Anna Nagar second avenue and Thirumangalam pockets of Chennai saw an increase in land prices closer to metro stations by 15-35 percent. The micro-market in Bengaluru of CBD along with a few SBD locations like Indiranagar, CMH Road, Jayanagar, Malleswaram, Yeshwanthpur, and Rajajinagar, saw rates rise 8-10 percent as soon as the east-west and north-south corridors opened for public use.
Patna Metro Phase 1 has begun the construction of a 32.92 km metro line in 2020. Nagpur Metro has also approved a DPR for the expansion of a 48km Metro line. Coimbatore metro is also at the DPR preparation stage.
According to the Union Budget 2022, Agra, Meerut, Kanpur, Ahmedabad, Kochi, Pune, and other cities will have metro services by 2025. Kochi Metro Railway Phase 2 of 118.9 km and Chennai Metro Railway Phase II of 118.9 km would both receive central funding. The Bengaluru Metro Project- Phase 2A and 2B will receive Rs 14,788 crore in funding. While the Nagpur Metro Project Phase II and the Nashik Metro Project would each receive Rs 5,976 crore and Rs 2,092 crore, the assessment noted.