03 June 2020



The newly launched metro route for Mumbai is expected to be a real estate game changer,says RAMESH NAIR.


Several years after New Delhi, the country’s political capital, witnessed a transformation with the implementation of the Delhi Metro, the financial capital of Mumbai is set to experience a similar phenomenon with the commissioning of the Versova Andheri-Ghatkopar (VAG) corridor of the Mumbai Metro. With equity participation from Reliance Infra and Veolia (a French transportation major), this PPP initiative has all the hallmarks of a game-changer for the city’s transportation and realty landscape.

Many facts about the VAG have already been well documented: a project investment of $720 million, a fleet of  16 rakes with 4 fully air-conditioned coaches with an individual capacity of 375 passengers, travel time reduced to 21 minutes from the current 90 minutes between Versova and Ghatkopar —and of course, improved East-West connectivity. However, the impact on the Mumbai realty market is likely to be far more pronounced. Transportation infrastructure economics have historically proven to have a positive impact on real estate values in a city like Mumbai – residential and commercial properties located close to transportation infrastructure tend to command a premium. Independent analyses of pricing reveal that proximity to a Metro station can single-handedly account for a 22 per cent variation in land values, the other factors being location, distance of the land from the central point and income groups. On the back of the execution of a string of surface transport infrastructure projects—viz. the Jogeshwari-Vikhroli Link Road (JVLR), the Santacruz-Chembur Link Road (SCLR) and the Wadala-Chembur Monorail—the VAG corridor will further stoke the already buoyant Mumbai realty market. Each of these transportation infrastructure initiatives have had a tonic effect on the adjoining realty micro markets – for example the expected implementation of the Monorail had pumped up property prices in Chembur and Wadala by more than 100 per cent in a short span of 4 to 5 years. This also applies to the SCLR, with which the Chembur micro-market again witnessed a perceptible price rise due.

The areas which will benefit from Metro connectivity have already seen price rises of 400 per cent over the past eight years, and this trend is set to continue with this imminent launch. A more detailed impact analysis follows below:


Near term impact:  Developers’ interest in projects near the Metro has been increasing since the start of construction. With the commencement of the project, the surrounding region will definitely experience a certain boom in terms of new offerings and price hikes. Rates on both the commercial and residential market will increase, as the properties of northern Secondary Business District (SBD), BKC and Secondary Business District (SBD) central are the most preferred locations for investors.


Medium term impact: Intra and inter-connectivity in SBD North and the Eastern suburbs will increase tremendously, given the capacity of 7 lakh passengers per day added by the Metro. Concurrently, East-West connectivity will benefit the maximum by this project, which will  red-uce the burden on JVLR and SCLR (the current East-West corridors). Travelling to the Eastern suburbs and Navi Mumbai from the Western suburbs and SBD North and 
back will become faster and more convenient. Among the series of mega-projects such as the Eastern Freeway, SCLR and Monorail in the past one year, the Metro is the biggest so far.

The combined effect reflect positively on Mumbai’s real estate market—the residential and retail markets in Andheri, Jogeshwari and Ghatkopar will witness tremendous growth, especially those near the Metro stations.


Long term impact: Long-term value capture would be possible through increase in FSI. If the proposal of granting FSI of 4 to areas near the Metro is approved, it will have a far-reaching impact and potentially transform the entire landscape of areas surrounding the Metro.

Micro-market wise impact:


CBD – Already losing out to BKC and SBD Central, SBD North will now also pose a strong contender as a business destination alternative to Central Business District (CBD). Absorption could reduce due to the trend of shift-
ing away from CBD, which will lead to a correction in prices.


SBD Central – SBD North might not be able to compete with BKC, but it will pose a challenge to SBD Central. Residential and commercial spaces in SBD North may start becoming preferred over SBD Central, especially when favourable prices are found in SBD North.


SBD BKC – BKC will remain largely unaffected, even factoring in the effect of the Metro on SBD North, the advantages that BKC already has will keep it firmly in the #1 position. Absorption and prices will remain steady.


SBD North – The maximum positive effect will be seen in SBD North, as the Metro runs across its entire width, covering practically all the important destinations. Absorption and supply are set to increase rapidly along with capital and rental values. The residential market in certain key areas will see a boost in activity, especially in Andheri West.


Western Suburbs – The Metro will also have a positive impact on the Western suburbs due to the faster connectivity to the Eastern suburbs. Absorption rates and supply will increase marginally. Residential markets will also take off in areas closer to the Metro.


Eastern Suburbs – Besides SBD North, this micro-market is going to see the maximum impact from the Metro. Rental and capital values are set to increase as absorption rates move up. The residential market in areas like Ghatkopar will derive the maximum benefit.


Thane-Navi Mumbai – If at all, Thane and Navi Mumbai will see only a marginal positive impact, as commuting to the Western suburbs and SBD North and back becomes faster. Otherwise, these markets are and will remain largely unaffected. The commissioning of the VAG corridor of the Metro is likely to transform the dynamics of the Mumbai transportation, as well as its realty market. In conjunction with the SCLR and the Monorail, the Metro is certainly poised to become a major game-changer for realty investments in Mumbai.


The author is COO–Business, JLL India


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