The Metro railway project and real estate

market in Mumbai

Mumbai is the financial capital of India and one of the most crowded metropolitans in the

world. There are millions of people who travel by public transport everyday. To cater the

needs of those people, the government of Maharashtra is taking various positive steps. One of

them is the introduction of metro railway project in Mumbai. A detailed study was done in

this area under the guidance of Indo-German Technical Co-operation by assigning the

consultancy work to TEWET in alliance with DE-Consult and TCS in the year 1997-2000.

Meanwhile, DMRC (Delhi Metro Rail Corporation) chalked out the master plan for Mumbai

metro, suggesting an extension of Andheri-Ghatkopar route to Versova. Subsequently, the

construction work of the metro system in Mumbai gained pace and is being performed under

the Public Private Partnership (PPP) format.

Now the construction of metros in Mumbai will have its direct or indirect effect on its real

estate prices. Moreover the effect will be felt differently in different areas. Let us see some of

the facts before discussing its effect on the real estates of urban areas.

1. Flat sales in Mumbai are down by 30-50% due to very high pricing.

2. Developers are still keeping high price.

3. Builders may have got high holding capacity i.e they can wait for the buyers to

purchase at a higher rate.

4. The prices of residential properties are surging up and has reached beyond the

purchasing power of the middle class segment.

5. Land owners holding exorbitant prices.

6. Even the RBI Governor prompted a warning “In Mumbai and Delhi, real estate prices

have overshot their pre crisis peak”.

7. Prices residential area surged by almost 40%. This upward trend does not apply to the

commercial properties. The commercial properties have got an oversupply.

8. Builders can’t afford to hold the debt.

9. The proposed commitment of land and projected flats and buildings are still very high

10. The R.B.I has since asked banks to be cautious about lending to real estates.

These above factors prompt that the real estate prices and the living cost in the posh areas are

too much for a middle class family to afford. Moreover ironically, although the demand for

the real estates have decreased but still the prices have been surging up in these areas.

This is because, although the demand has decreased but not enough to effect the increasing

prices of the real estates. Consequently after the construction of metro railways people will

have accessibility to these areas. Though, they stay at a far up area, they can reach anywhere

with these metros.

Therefore the prices in the urban areas will decrease

.

Demand in posh areas like Nariman point, Andheri and Vile parle will decrease after the connectivity

of metro to these areas from suburbs.

.

The effect of construction of metros on suburban areas.

Lower property prices have played a major part in the growth of eastern suburbs. The new office

complex in Kurla rents of Rs.100-150 per sq ft compared to Rs.350—325 at area which is just a 15

minutes drive from Kurla.

So, with the arrival of metros in these suburban areas, these areas will be more accessible. Moreover

these areas are cheaper than those posh areas. So, more property dealers and people will be interested

in investing in the real estates I n the suburbs of Mumbai.

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Consequently more no of people will demand for properties in these areas. Therefore the demand will

be more and therefore the prices will surge in these areas.

In the graph, shift in demand in suburban areas like Versova, Kurla and Thane is shown. The demand

will increase in these areas after the arrival of metro.

Bibliography:

http://abodesindia.wordpress.com/tag/real-estate- in-mumbai/

http://blog.propertynice.com/metro-rail-jaipur/

Submitted by :

Abhishek Singh(Roll no 22)

Vaibhav Chauhan(Roll no 6)

Vineet Jain(Roll no 12)

Vineet Thirani(Roll no 23)

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