Resurgence of Magadi Road

The completion of Namma Metro Phase I and the inter-connection between the East-West and the North-South lines of the metro rail at majestic has revived real estate interest in the locations along the Metro corridor, especially in Bangalore West. While IT/ITeS developments have been strong in South, East and North of Bangalore, the west has been an industrial location. As a result, job creation has been limited and so has real estate activity. With improved connectivity on account of the completion of Metro Rail Phase I, this micro-market is witnessing renewed interest both from developers and end-users.

One of the key micro-markets that has benefitted from the completion of Metro Rail is Magadi Road. Magadi Road or SH-85 which connects Bangalore to the town of Magadi – a town with historic importance as the bastion of Kempegowda clan. This road starts behind Bangalore City Railway Station and runs along locations like Binnypete, Rajajinagar, Vijaya Nagar, Basaveshwarnagar, Kamakshipalya to reach the Outer Ring Road and beyond.

Improved connectivity, availability of re-developable land parcels and strategic location have revived developer interest in Magadi Road

Land Availability: The area in the immediate vicinity of railway station along Magadi Road developed as an industrial location during the British Rule. Cotton Textile Mills such as Binny Mills, Minerva Mills, Mysore Mills and SV Global Mills dotted the area. Post liberalization, these mills ceased to produce and the mill lands were available for redevelopment. Several real estate developers acquired these lands or entered into joint development agreements with the mill owners to come up with high end residential and mixed-use projects. Some of the key projects completed or under-construction on mill lands include Mantri Greens and Mantri Square Mall on Mysore Mills land, Sobha Indraprastha on Minerva Mills land, Shapoorji Pallonji and ETA Star on Binny Mills Land. Godrej Properties has recently entered into a JV for a project on Magadi Road, near West of Chord Road.

Location Advantage: This micro-market is located in the city centre within a KM from the railway station. Its location is strategic due to its proximity to both West Bangalore (areas like Malleswaram, Sheshadripuram, Rajajinagar, Basaveshwarnagar and Vijayanagar) and to South Central Bangalore (areas like Chamrajapet, NR Colony, Hanumanth Nagar, Girinagar and Banashankari to the South of Mysore Road).

Buyer profile: The population in this location is largely trading community and business men from the Sindhi, Marwari and Gujarati communities concentrated in areas like Sheshadripuram and Gandhinagar) and native Bangaloreans concentrated in areas like Rajajinagar, Malleswaram, Chamarajapet, Hunumanth Nagar and Basavangudi). Growing families and upgradation to better residential units are the key drivers of residential demand in this location.

Infrastructure Development: The ongoing metro construction was another major factor that promoted buyers’ interest in the area. This location is well connected to all parts of the city owing to its proximity to the railway station, the city bus terminus and the Metro Station.

Social Infrastructure: Areas in the immediate vicinity of these projects lack social infrastructure. Although Government Hospitals and smaller schools are within 5 KM distance, one has to go to Malleswaram or Rajajinagar locations for good private medical care as well as well-known schools. The neighbourhood being industrial is quite lonely at night and the surrounding areas also consist of industrial worker housing.

Economy: Although this micro-market was an industrial location in the past, currently this location has wholesale trade and commerce as the key activity. As a result, this location is not yet suitable for office space developments.

High-end residential projects to suit the trading and business community of Bangalore are under-construction in the Magadi Road micro-market.

Key Projects: Most of the projects being developed in this location are purely residential developments albeit on large land parcels. These are not mixed-use developments which is the norm in most large-scale developments such as Brigade Gateway. Only Sobha Indraprastha has a mall as part of the development. There are 2 major completed projects in this micro-market namely ETA Star – The Gardens and Mantri Greens. Under Construction projects include:

Most projects in this micro-market cater to upper middle class or high-income segment due to the high land values.

Market Size and Growth Rate

• Between 2013-2016 this micro-market has witnessed an annual absorption of 400-500 units.
• Large units, preferably 3 and 4 BHKs in the size range of 2,000-2,500 sqft are the most sought-after sizes.
• Base prices range between 7,500/sqft to 9,000/sqft for projects near city centre and in the range of 4,500/sqft closer to ORR.
• Limited price appreciation in the range of 2%-4% due to large ticket size.

This erstwhile industrial pocket will be a vibrant neighbourhood housing 5,000-6,000 families over the next 2-3 years.

Way Forward: The completion of the above-mentioned projects along with excellent connectivity will make this location a sought after residential neighbourhood. An industrial neighbourhood with very little residential activity in the last decade or so will be a vibrant neighborhood housing nearly 5,000 – 6,000 families. Social infrastructure is likely to improve in response to the demands of these households. In the long term, this micro-market may also witness office space development for niche segment of professionals.