Why You Should Buy Property in Upcoming Areas of Metro Cities

Mumbai’s Malad, Delhi’s Dwarka, Bangalore’s Whitefield and Chennai’s Velachery all have one thing in common. They were all considered off-radar localities a decade ago, and are now some of the most popular places for property investment. For example, Chennai’s Velachery now projects an average year-on-year appreciation of 3.5% and Mumbai’s Malad foresees an average growth rate of 8.3%.

Each of these areas now features a range of premium to mid-range residential and commercial real estate options. How did these previously unpopular real estate choices manage to rise up the ranks, and grab a substantial share of the market for themselves? Here are a few factors that may have influenced their upswing.

The Demand and Supply of Property Investment

The property investment market reflects Adam Smith’s quote: “Too much money chasing too little goods”. This demand-supply gap is evident in the higher income group as buyers today are ready to pay a premium for their preferred locality. Recently (in August 2015), a 17,000 sq. ft. flat in Mumbai was sold for a whopping ₹202 Crores – an outlier, but a good indicator of the current trend. So what happens when the competition heats up for upcoming areas? The progress eventually spills over to these upcoming localities, thus ultimately increasing the demand and prices in these areas as well.

 

When there’s lower competition, there’s lower demand. When such is the case, there’s always the chance of getting to buy property more easily in the upcoming areas. In all probability, there’s more available in upcoming areas, and hence more options too. You may not get many property options in the established, popular areas – you’re left to choose from only a couple of spaces that don’t fully match your criteria.

Consider Quality of Life and Infrastructure Development

Most upcoming localities in a city aspire to reach a higher status; and, more often than not, the more affluent areas rub off on them and give a push to finer living conditions and better infrastructure of these upcoming localities.

These localities eventually find more takers once these developments come together, and once the popular areas get saturated.

 

Velachery in Chennai, for example, has seen a rise in the number of premium establishments, mainly due to the influx of IT professionals and improvement in infrastructure. A steady growth in the IT sector has also led to a boom in real estate. This fact is also no truer than in the case of Whitefield in Bangalore. With IT companies taking up huge portions of land in Whitefield for office space, there has also been a steady increase in demand for housing options in the area as most working professionals prefer to live close to their work location.

A spike in the real estate value and preference for a location is also dependent on the advantages an area presents. For example, an upcoming locality will definitely find takers from both builders and prospective residents when roads get better, and there is proper connectivity or proximity to places of importance or priority like the airport, railway station(s), schools and hospitals. An improvement in the locality’s infrastructure and living conditions will invite investment in property and more people will settle in the area. A previously suburban area draws more real estate attention when a surge in industry and commerce in the region fuels economic activity, which in turn improves aspects such as quality of lifestyle and increased access and affinity to retail.

Security is another key factor behind rising real estate trends in an upcoming locality of a particular city. A region that is well policed and guarded, with access to efficient emergency services, is bound to garner more interest from buyers.

Buy Property with Connectivity, Proximity & Commercial Opportunity in Mind

A locality that boasts of connectivity and links to the city’s most popular haunts and commercial district has a distinct advantage over others.  Metro connectivity, for example, can boost an area’s real estate value. It greatly influences the real estate fortunes of those areas that fall along the metro rail’s corridor. Studies and past patterns have indicated that the value of land is inversely proportional to its distance from a metro station. And that the value of the land nearly doubles after the introduction of a metro rail. Of course, this also depends on the land value, the use of the land and the potential of a micro-market.

The launch of a metro also triggers a demand for housing and commercial complexes in the area. The increase in population brings with it a rise in retail and office space, which then leads to economic development.

A case study of Chennai’s real estate prospects after the launch of its metro rail revealed a significant increase in demand along Chennai’s suburbs. As the metro connected suburbs to the city centre, more people were opting to settle away from the centre – far away from the hustle and bustle of city life, yet well connected.

Proximity to general infrastructure projects also generates property investment interest. Bangalore’s new airport in Devanahalli, a sleepy village on the outskirts of the city, illustrates this point. The launch of Bangalore’s new international airport in Devanahalli has triggered a spurt in residential projects in the area, particularly as it is well connected to the city through flyovers, highways and expressways. While the Outer Ring Road and Hebbal-Devanahalli Expressway provide quicker access to the heart of Bangalore, a metro rail connection, which is in the pipeline, will only boost its value further. With the airport now in Devanahalli, the area has also seen much commercial development. Industrial parks, schools, entertainment outlets and other such social infrastructure have inched closer to Devanahalli, making it a more attractive option for further development of residential and commercial projects.

 

While good transport links and connectivity to a city’s central business and commercial district can boost the real estate value of the city’s suburban localities, the increase in popularity in such a region also fuels the need for it to be self-sufficient. This, in turn, leads to the growth and establishment of a micro market. This can be seen particularly in the case of Bangalore’s Electronic City and Delhi’s Gurgaon, which are sub-cities of a sort with its own share of businesses, markets, shopping complexes, retail outlets and other such necessary infrastructure targeted towards the interests and needs of the locality’s residents. Revisiting the Chennai case study on the effect of the metro rail on the city’s real estate value, it can also be seen that the metro has brought back the micro-market of Anna Salai, which, thanks to the easy access now provided by the metro, has led to a commercial redevelopment of the area.

A New Take on Investments in Property

Let’s look at it this way: an already rudimentary area in a big city can’t really go any more downhill. It can only get better! It also has a lot of room for improvement in a modern way as opposed to the outdated plans, which older, ‘posher’ areas of a city may not be able to accommodate easily.

Property Investment – Help it Grow

As part owners of property in these upcoming areas, any upgrade in the locality will only impart a positive influence on its future growth. Keep your space spotless, grow and maintain a garden, build a tasteful home and spread the positive vibe. Invest in the property – renovate, refurbish and transform it. Make it an appealing piece of paradise and you’ll have a space worth more than the amount you had originally invested in making it what it is. It will only be a matter of time before a humble, invisible area in a city is transformed into a crowded and opulent hotspot.