Impact of Infrastructure on Real Estate in 2024
By 2024, the development of new highways, airports, and metro lines will substantially influence housing demand. These infrastructural advancements will continue to shape housing trends throughout the year. The construction of new metro connectors, motorways, and airports, both operational and under construction, is expected to play a decisive role in the prosperity of the residential and commercial sectors.
Residential Boom Predicted Near Infrastructure Projects
The planned infrastructure renovations are anticipated to stimulate residential activity within their respective zones of influence. The capital value of catchment areas along the project corridors is projected to experience substantial growth, attracting both investors and end-users.
Colliers India CEO Badal Yagnik observes, “peripheral areas will become integrated with central and suburban areas as infrastructure projects get completed throughout 2024, resulting in homogenization of activity across key residential pockets of respective cities.”
This infrastructural development is also likely to encourage real estate developers to expand their operations into new territories.
Emerging Markets
Organized residential real estate in markets such as Vadodara, Nashik, Lucknow, Jaipur, Chandigarh, Coimbatore, Mysore, Kochi, Indore, Bhubaneshwar, and Guwahati is poised for the next growth phase. This is attributed to the untapped potential and increasing demand for integrated offerings in these Tier 2 and 3 markets, which boast gated communities. Investors are increasingly drawn to these cities due to their superior growth potential compared to Tier 1 cities. Yagnik also anticipates developers introducing high-quality inventory in these emerging markets, in addition to the peripheries of major metropolitan areas. Homebuyers and property investors alike should keep a close watch on these developing locales.
Key Markets to Observe
Gurgaon
Gurgaon’s Dwarka Expressway presents an attractive opportunity for prospective real estate buyers. New sectors burgeoning around the expressway include sectors 113, 112, 111, 110, 109, 108, 107, 106, 104, 103, 102, 99, 88B, 37D, 36A, and 36B. The Union Cabinet's 2023 decision to extend the Dwarka Expressway near sectors 101-104, coupled with the metro line extension, is slated to finally connect old and new Gurgaon.
A diverse range of upscale and mid-range housing complexes are situated along this corridor. Local real estate brokers indicate that property prices in these sectors fluctuate between Rs 8,000 and Rs 20,000 per square foot, contingent upon the project and its precise location. Rental prices in this area commence at Rs 20,000 per month.
Savills India, the international real estate consultancy, reports that in Gurgaon city, average capital values have reached their zenith within the past five years, recording year-over-year growths of 36% for completed properties and 25% for under-construction properties. Overall, the yearly average capital value increase for both completed and under-construction properties ranged from 12% to an impressive 45%. New Gurugram and Dwarka Expressway led the growth, showcasing a year-over-year increase of 45% and 21%, respectively, in the average capital value of properties currently being developed.
Noida
Prominent markets in Noida include Sector 150, Greater Noida West, and various residential zones along the Yamuna Expressway, conveniently located near the upcoming Noida International Airport. These areas are attracting attention from both potential homebuyers and investors in 2024. The prevailing price range in Noida Extension or Greater Noida West, for a 2BHK unit, is estimated to be between Rs 60 lakh and Rs 80 lakh, whereas the cost of a 3BHK unit can exceed one crore rupees. Monthly rental rates for 2BHK units are estimated between Rs 15,000 and Rs 20,000, depending on the unit's size and location. According to local real estate agents in the area, 3BHK apartments command monthly rentals ranging from Rs 17,000 to Rs 25,000. The area will also witness a few serviced apartment projects.
Mumbai
With the recent commencement of the Navi Mumbai Metro operations, several areas of Mumbai have become attractive to prospective homeowners and investors. Key micro-markets along the metro route include Taloja, Pendhar, Kharghar, and Belapur. Average property prices in Taloja currently range between Rs 6,000 and Rs 8,000 per square foot, and this figure is expected to continue to elevate due to enhanced metro connectivity. Local brokers reveal that rental costs in the vicinity start at approximately Rs 10,000 per month.
Ulwe, a premium locality in Navi Mumbai, is another attractive area. The 22-kilometer Mumbai Trans Harbour Link (MTHL), which conveniently joins Mumbai and Navi Mumbai, passes through Ulwe. This infrastructural addition has propelled capital values higher, with 2BHK apartments often exceeding Rs 1 crore. Rental prices, as per local brokers, fluctuate between Rs 10,000 and Rs 20,000, depending on location and building type. The proposed Navi Mumbai International Airport is projected to exert a substantial influence on property values throughout Navi Mumbai.
South Mumbai, renowned for its high-end apartments and bungalows located in areas such as Malabar Hill and Walkeshwar, concluded a high volume of luxury transactions in 2023. This trend is expected to continue through 2024. Several redevelopment projects also punctuate these areas, with prominent industry participants such as K Raheja Corp, Kalpataru, Lodha, and Godrej Properties leading the charge. The average cost for luxury residential apartments in South Mumbai ranges from Rs 35,000 to Rs 1.50 lakh per square foot, with rental prices in these locations starting from Rs. 1 lakh per month, dependent on individual property factors such as location and amenities.
The inauguration of metro lines 2A and 7, connecting Dahisar and Andheri, has spurred an increase in demand for rental properties, particularly in the Western Suburbs micro-market. According to Savills India analysis, the student demographic utilizing the metro to access educational institutions in Andheri and Vile Parle has created a significant demand for rental properties in areas such as Kandivali and Borivali. In response, rental values have risen by 8% year over year.
Bengaluru
Bengaluru witnessed the Purple Line becoming fully operational in 2023, with the segment between Whitefield and Kengeri, West Bengaluru, opening in October. Local brokers indicate that properties along this corridor are now prime investments for personal use and rental income generation. Price appreciation of approximately 20-30% is already evident in prominent areas such as MG Road, Whitefield, Koramangala, and Indiranagar. Experts suggest considering the outskirts of KR Pura and Whitefield given the increasing popularity of these areas subsequent to the metro line's launch.
Finally, from Savills India, rental growth in high-end or premium residential developments in both South and North Bengaluru has demonstrated the strongest performance, exhibiting 6-7% year-over-year growth. Average rental values across the city have seen a 5.8% year-over-year increase.