Anticipate the next hot spot - simply follow the metro!

Over the next 5 years the metro will have a profound impact on the NCR's RE map. The development of the metro will alter the way its residents define a locations importance and this will have a significant impact on price movement in various parts of the NCR.

In this blog, I will cover some of the micro markets in South Delhi. Currently the prices in Vasant Vihar/Anand Niketan are between Rs.25000-Rs.27000 psf for newly constructed builder apartments. In Shanti Niketan/Westend prices are in the range of Rs.29000-Rs.32000 psf. However,the prices in Panchsheel/Anand Lok are in the Rs.20000to Rs.21000 psf range. GK is about Rs.14000 psf and Maharani Bagh at about Rs.17000 psf.

As the metro expands its wings across the city, I feel there will be a convergence in prices across some micro markets. Simply put, the psf price premiums that currently exist between, let's say, Vasant Vihar and GK will diminsh over time. As per current rates, the price premium between Vasant Vihar and GK is 86% (Rs.26,000 v/s Rs.14,000 psf). By the end of 2012, when a majority of the metro expansion and implementation would have been completed, I expect prices in areas such as GK, East of Kailash, Kailash Colony, Chittaranjan Park to move up very rapidly. This will also have a positive price impact (on whatever limited top quality housing supply is available) in areas such as Kalkaji, Kailash Kunj, Malviya Nagar, Geetanjali Enclave. I do not see a similar psf upward spike in areas such as Vasant Vihar, Anand Niketan and Panchsheel. However, I do feel areas such as Shanti Niketan, West End, Jor Bagh, Malcha Marg, Chankyapuri, Golf Links will continue with their significant price premiums for the forseeable future.

Therefore, as an investment opportunity, I would be very inclined to enter micro markets such as GK, East of Kailash, Kailash Colony, Chittaranjan Park, Hauz Khas, Friends Colony, and Maharani Bagh. The following is my prediction for prices end 2012for some of the micro markets:

1. Vasant Vihar/Anand Niketan -Rs.45,000 - Rs.47,000 psf
2. Panchsheel/Anand Niketan- Rs.39,000 -Rs.41,000 psf
3. Friends Colony/Maharani Bagh -Rs.33,000 -Rs.35,000 psf
4. GK/EOK/Hauz Khas/Chittaranjan Park -Rs.29,000 - Rs.31,000 psf

I'll try and translate what the numbers mean if you are an investor. Over the 5 year period ending 2012, I am predicting a premium compression between A+ (VV), A (Panchsheel), B+ (Maharani) and B(GK) micro markets. This is what I would like to call the convergence of the RE micro markets in South Delhi. Therefore, as per my price prediction for 2012, the premium between A+ and B markets would erode from the current 86% to 57% (still very substantial by any standards).

In summary, if I were an investor with a 5 year horizon, I would sell VV and buy GK !! Please bear in mind that all psf rates are for apartments with top quality construction, with all modern fittings and on wide 60 feet road or more.