The subway effect

The advent of Delhi's Metro has had a dramatic effect on property prices.

Property dealers in south-west Delhi's Dwarka area can't wait for Delhi Metro Rail to reach the inside of this large housing society, developed by numerous co-operative societies.

The big event is slated for the end of March, and property dealers are expecting an immediate escalation of prices of two-to-three bedroom flats by 15-20 per cent.

But hold on, these dealers are still giving a conservative figure, because most of these transactions are done in black and white, with black comprising up to 50 per cent or more.

So, when Praveen, a Dwarka-based property dealer says a two bedroom flat can cost Rs 20 lakh once the Delhi Metro enters Dwarka, you can assume it may even fetch over Rs 35 lakh.

Kamal Kant, an IT entrepreneur and resident of this happening residential complex is proud about his investment in a three bedroom flat. He bought his flat in Dwarka's sector 10 with an investment of Rs 8 lakh. This sector is a stone's throw from the Delhi Metro station, inaugurated in December 2005.

Today, Kant claims his flat is worth anywhere between Rs 25-30 lakh. His neighbours in adjacent colonies also say property prices have suddenly risen by as much as Rs 5 lakh in the last eight months "" since the Delhi Metro Rail Corporation (DMRC) announced its intention to reach Dwarka Mor by December 2005.

"Property prices have risen from the grave since the advent of the Delhi Metro in Dwarka," says Chandra Mohan, a freelance writer. He bought his floor on a plot in Dwarka's sector 23, but sat on it till three years back, when he took a loan and started building a three-bedroom apartment.

His total cost was around Rs 18 lakh and he is all set to move in once the Metro's second phase is complete. He is even tempted to sell it because the asking price, he says, is around Rs 35 lakh.

The same, however, is not true for commercial properties. "The rate of commercial properties haven't gone up proportionally. Here, rates have only increased by 10-20 per cent in the last year," says V Suresh, chief executive officer, Aerens Gold Souk India.

Yes, the Delhi Metro has changed the fortunes of people who bought plots and flats in Dwarka, which was discarded by many as a dead investment 6-7 years back.

"A 900-1,200 sq ft two-bedroom accomodation which cost Rs 15 lakh before the Metro now costs anywhere between Rs 35-40 lakh, depending on the proximity to the line," says Suresh. He also adds that residential properties within a radius of one kilometer of the line are more expensive than those further away.

Sunder Lal, senior advisor, Sahara group, goes a step further. "It's not just the Metro, the four-lane road connecting NH 8, a flyover and peripheral developments have all contributed to the rise in prices," he says. According to him, next to escalate will be the neighbouring Nazafgarh area.

In fact, the entire Metro corridor on Barakhamba Road-Dwarka Mor, comprising Jhandewala, Karol Bagh, Rajouri Garden and Janakpuri has seen rising prices for both residential and commercial complexes. But Pitampura and Rohini have been major beneficiaries.

Says a west Delhi-based property dealer: "In Pitampura, prices of independent plots in prime residential areas have risen from Rs 40,000 per sq yd to over Rs 1 lakh a sq yd in the last one-and-a-half years. Again, in Rohini, similar plots have risen from Rs 30,000 per sq yd to over Rs 80,000."

He also says that because of the saturation of commercial prices and the recent demolition drive, it is difficult to comment on commercial property prices, but he cites the example of Netaji Subhash Place near the Wazirpur depot, where property prices have doubled from Rs 4,000 per sq ft to Rs 8,000 per sq ft, all because of the Metro effect.

Connaught Place, where property prices remained stagnant before the Metro was announced, has seen a major escalation as well.

"Even for old dilapidated buildings that commanded a price no higher than Rs 4,000 per sq ft, the asking price today is Rs 8,000 per sq ft. And the better ones, which were at Rs 8,000 per sq ft, are now fetching Rs 12,000-14,000 per sq ft, thanks to the Metro," says Lal.

With the government's intention to connect Noida and Ghaziabad through the Metro before the Commonwealth Games in 2010, along with broadening the National Highway and constructing shopping malls and cineplexes, prices are seeing a constant northward swing in east Delhi as well.

Areas that already have the Metro, like Shahdara and Dilshad Garden have seen a 50-100 per cent rise in prices in the last two-three years.

But Lal says Metro or no Metro, prices in east Delhi are on a rise. "Areas like Indirapuram have flats selling at Rs 3,000 per sq ft and now plots are not even available at Rs 20,000 per sq yd, so you can see the difference is there because of the connectivity, rail or road." He also says Sahara's decision to develop townships along NH 24 was governed by connectivity.

Mohit Singh, managing director, Shipra group, however, is very upbeat about the Delhi Metro. "The Metro is the best thing that could have happened to Delhi. However, while Rohini and Dwarka have enjoyed a very positive effect, it's now the turn of east Delhi, and also areas in the east of Delhi, like Indirapuram. While work has begun to connect Anand Vihar to central Delhi, the Metro is likely to come up to Indirapuram as well in the near future," he says.

According to Singh, property rates in Indirapuram have already registered a 70 per cent appreciation in the last one-and-a-half years due to strong infrastructure changes, its strategic location, proximity to central and south Delhi and the growth of malls and entertainment hubs.

"Some of Shipra's prime properties in Indirapuram, which cost Rs 1,400 per sq ft 1.5 years back, now cost over Rs 2,600 per sq ft," he says, adding that by the time the Metro actually enters Indirapuram, there will be little to bid for. But he adds that he won't wait for that. "At the end of the day, we are not catering to investors but users."

South of Delhi, thanks to the government's announcement that they will connect Delhi airport through the Metro, developers like Omaxe are also hoping their property prices will appreciate.

"With farmhouses being disallowed from holding weddings, we are looking at a huge demand for Omaxe's Wedding Mall. And when the Metro comes the prices may just shoot up," says Amitabh Bhattacharya, vice president, Omaxe, adding that its other properties, like Omaxe Plaza and House to Home Mall, will see good times too.

The prices of Omaxe's recently handed-over Gurgaon properties like Suncity Floors have risen by 133 per cent, Mayfield Villas by 112 per cent and Designer Floors by 135 per cent, and Bhattacharya claims that the prospect of the Metro does have a bearing.

While most are riding high on increased property prices because of the Metro, others are banking on commuters and are buying properties on Metro stations to make the best of footfalls.

For instace, Guardian Lifecare, a premium chain of pharma retail stores, has six stores, one each at Shahdara, Pratap Nagar, Keshavpuram, Rohini East, Rohini West and Pitampura.

The company got these deals at prices higher than those available outside of the Metro. "But it makes sense for us, as the Metro offers tremendous footfalls," says Ashutosh Garg, chairman and managing diretor, Guardian Lifecare.

Again, Sahara's Big Bazaar in Rohini is buzzing with activity thanks to Metro commuters. Step outside of Rajouri Garden Metro station and you will see City Square Mall and Lifestyle Mall. Premium brands like Westside have come up along with any number of restaurants and banquet halls after mowing down old structures.

Says Suresh, "Real estate prices in what is called Metro corridors have escalated phenomenally ever since the network became operational."

According to him, more stratified development will take place now in commercial property. "Large scale demolitions of big ticket shopping malls on MG Road have created a sudden demand for legal commercial properties with sound statutory approval," he says. "No doubt buildings with MCD approvals are fetching a higher premium."

Since the Metro effect is here to stay, new buyers for flats or plots need to check out the overall benefits. For instance, in Dwarka and Indirapuram, residents complain about incidents of chain snatching and robbery, and with the international airport being right next door, noise pollution levels are high.

One also needs to decide whether to be an original allotee or buy under power of attorney. "There is perpetual war between original allotees and those who have bought properties under power of attorney, as the latter cannot become part of the management of the society," says Kamal Rastogi, a Dwarka resident of five years. In Pitampura and Rohini again, it's worth checking out if the property can fall prey to the demolition drive.

Additional reporting: Prakriti Prasad