Realty rocks in Micro Markets

June 16, 2008	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

Not everyone is unhappy about the way real estate prices are moving up in the country. In fact, there’s reason for cheer for some who live in the periphery! Would you have thought five years back that your property in Indirapuram in NCR, Lower Parel in Mumbai, Old Madras Road (OMR) in Chennai or Bellary Road in Bangalore would fetch you such high returns? Maybe not. These locations may not have been commanding a premium then, but today the rates here have jumped manifold.

Figure this out: A phenomenal level of growth, with residential capital values in certain areas recording a 400-500% increase, has been wit-nessed in the last five years. Locations such as Noida in NCR, Lower Parel and Parel in Mumbai and many areas in North East Bangalore such as Hebbal, R T Nagar, Bellary Road, Yelahanka and Cox Town have seen a rise of over 400% in the last six years.

SundayET com-missioned a survey to global real estate consultancy Cushman & Wakefield(C&W) to find out why certain locations have seen such a massive and unexpected rise in values.

The study attributes to a mix of different factors for the phenomenal surge in values. While the Noida-Greater Noida Expressway has largely helped to improve infrastructure facilities, a developer’s focus on middle-class housing in Indirapuram has led to a scaling up of prices.

Release of mill land in Central Mumbai locations such as Parel, Lower Parel and 7 Rasta and announcement of the 6-lane IT corridor in OMR in Chennai led to a dramatic rise in values. Areas such as Hebbal, R T Nagar, Bellary Road, Yelahanka, Dodballapur Road,Cox Town and Frazer Town in North East Bangalore have largely benefited from proximity to IT offices that fuelled demand.

Industry experts don’t discount the fact that steep growth has been witnessed in certain micro-markets. Vipin Agarwal, executive director, Omaxe feels that the high realty rates in prime areas led to a springing up of other locations.

“When core areas became non-affordable, alternative locations began to be seen as more feasible options. Now with locations such as Noida and Lower Parel also witnessing high demand and prices, people will shift to other peripheral areas in the near future. Greater Noida, Sonepat, Karjat, Navi Mumbai etc will soon emerge as the next best investment options.”

Moving to peripheral locations might make sense, especially if one sees the Delhi-NCR market where locations such as Noida and Gur-gaon have seen an astronomical rise in values. Although the real estate market in Delhi NCR has in itself seen a major growth in terms of sales values and number of transactions, it is certain micro-markets in the NCR region that have steadily climbed up in capital values. The Noida-Greater Noida Expressway has seen excellent growth in the past six years.

Average capital values that stood at Rs 1200 to Rs 1500/sq ft in 2002 have gone up to Rs 4,000-Rs 6,000/sq ft, a percentage growth of nearly 430%! In case of a plotted development, the values have gone up from Rs 8000/sqm to Rs 45,000/sqm during the same period.

The construction of the Noida Expressway has had a major influence on the swing in values. Its connectivity with South Delhi, Central Delhi, and Fakirabad & Greater Noida is another reason which won it favor. Indirapuram, that has seen a percentage growth of 230%, is another example.

The biggest reason that has contributed towards its growth has been the excellent connectivity it has with Delhi & Ghaziabad. In fact, even after the recent slowdown of the market, this area has seen a steady demand by the end-users and the prices are appreciating gradually.

Says Rajeev Talwar, group executive director, DLF, “No new supply is coming up in locations such as Nariman Point, Marine Drive or Con-naught Place. That has led to shifting of attention to other locations which are close to the heart of the city. Hence locations such as lower Parel, OMR and Noida are now thought to be much more commer-cially viable than say a few years back. Even in terms of residential options, these areas are seen as being rather lucrative.”

In Chennai, it is locations such as OMR, GST and Sriperumbudur that have witnessed a big boom. While OMR has seen average residential capital values rise from Rs 1300/sq ft in 2003 to Rs 3,500/sq ft in 2008, GST has also been witness to an almost similar rise.

In fact, a major reason for OMR springing up has been the announcement of the 6-lane IT corridor as land prices increased significantly soon after. In Bangalore, areas such as Hebbal, R. T. Nagar, Bellary Road, Yelahanka, Dollars Colony in North East Bangalore have seen a high percentage growth of 350% over the last six years.

Central Mumbai locations such as Lower Parel and Parel have re-corded a 400% increase in residential capital values over the last 5 years. Values have risen dramatically based on the latent demand for housing met by the release of mill land in central Mumbai and the launch of good quality residential developments. The destination has also attracted numerous office and retail developments thus trans-forming dead mills, little shops, slums, etc. into stunning high-rises, malls and intelligent office buildings.

News Published Under:   Real Estate India, Delhi |

Comments