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In November 2017, the first phase of Hyderabad Metro was inaugurated by Prime Minister NarendraModi. The 30-km elevated stretch from Miyapur to Nagole comprises of 24 stations including some of the prominent locations such as Secunderabad, Amerpet, and Begumpet. Phase 1 has been functional since then with a daily ridership of over 65,000. Once completed, the total metro project will involve 72 km, at a cost of slightly less than INR 19,000 crore. Developed by L&T, the project also holds the distinction of being the world’s largest PPP project.
Besides reducing the commute time by over 50%, the metro project is going to make an enduring impact onHyderabad’s realty dynamics. If not a boom, the ambitious metro project is already set to make the real estate industry in the city bloom. Post-inauguration of the metro project, the housing market is already upbeat in Hyderabad with an upswing in new launches. The city continues to grow at a noteworthy pace. As per the research by JLL, residential investment in Hyderabad has climbed by 32% in 2017, from 2013-14. The growth has been driven by lower property prices, healthy demand from a growing IT/ITeS sector and restoration of political stability after the Telangana crisis was resolved. In this regard, the metro project that is set to transform the logistics within the city is going to further catalyze the market.
Capital and Rental Rates are Soaring
The elevated metro project has infused further momentum in Hyderabad’s real estate market. Capital values and rental rates have already started soaring high in and around the existing and proposed metro line.The ascending tendencies are justified as examples of other cities in the past have showcased that real estate and infrastructure feed into each other. With the metro in the vicinity, the commute is becoming very smooth and fast and hence buyers are willing to pay a premium to book an apartment in such locations.
Besides, L&T will develop 18.5 million sq. ft. of commercial projects, namely,Transit Oriented Development (TOD) in and around the metro line. The phased development project will be marketed as Hyderabad Next. This will involve world class entertainment and retail facilities includingshops, malls, education institutes, hospitality and other projects. With the advent of top notch facilities close by, the demand for residential projects will further get a thrust around the transit line.
Besides end users, the transit lines will also invite the investor fraternity to make meaningful buying decisions. Statistics showthat the property prices grew by around 5% in 2017 in areas such as Miyapur and Kukatpally. Likewise, rental rates have also moved up sharply in the face of high demand. Going forward, as the project further develops, it will continue to be a natural pull for investors looking out for risk-adjusted returns.
Shift in Preferences
Metro is now making property purchases feasible in the economical locations of North and East Hyderabad. Earlier, due to the absence of mass commute facilities, the IT/ ITeS workforce preferred to book accommodation near their employment bases which were mostly concentrated in the western parts of the cities.
However, as the metro can facilitate hassle-free commute, buyers have started considering other locations in eastern and northern parts of the city. 2 and 3 BHK apartments in Miyapur could be bought for 35 and 55 lacs, respectively. Such attractive rates are impossible in areas such as Gachibowli, Madhapur and HITEC City, which hitherto have been the first choice of IT/ITeS workforce. As demand dynamics aretransforming, lot of grade-A quality developers have started to enter into these relatively virgin markets. To matchthe inflow of the workforce, the social infrastructure in the form of good quality schools, retail options, malls, etc., are also ramping up.
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