Infrastructure and connectivity serve as the backbone for the real estate sector. Mumbai's landmass is well connected via various public transportation systems but it is the local train network, running from northern to southern areas, which is touted as the lifeline of the city.

While connectivity boosted in these parts due to the presence of the local train network, eastern suburbs of the city lacked behind. The Mumbai Metro plan was initiated to foster connectivity in these areas.

The Mumbai Metro Line 1 [Versova-Andheri-Ghatkopar (VAG)] was the first metro route in Mumbai, which was opened for public use in 2014. More lines are under construction.

Reports suggest that the impact of the metro development on line 1 in Mumbai can be seen on residential market like Andheri East, which has been favourably impacted by the VAG metro corridor. The state government approved the project plan in 2004, and after several delays, the construction commenced four years later, in 2008. During this period, the Andheri East residential property appreciated by 18%, moving from ₹2,800 per sq ft to ₹8,000 per sq ft.

The construction phase lasted six years, from 2008 to 2014. During this six-year period, residential property in Andheri East appreciated by 94%, from ₹8,000 per sq ft to ₹15,500 per sq ft. A favourable property market cycle, coupled with the expectation of the benefits that would accrue to the residents, translated into a significant appreciation in the property prices in Andheri East.

The micro-market of Andheri East witnessed a price growth of 638% between 2000, when the feasibility study was undertaken, and 2014, when the VAG corridor opened for public use.

Real estate sector is considerably impacted by the development of metro lines. It plays the role of a dual demand driver. While metro line development directly brings in more convenience, it also generates jobs which lead to an increase in the demand for houses. Both these factors directly affect pricing in this sector. However, studies show that commercial property market boosts significantly due to the presence of metro as businesses prefer to have an office close to the stations to make it convenient for employees to commute.

Residence owners do not generally prefer houses very close to the metro station due to traffic snarls and congestion, but properties considerably close to the station do appreciate as it makes commute easier for the working class.

Experts believe that when a metro project is announced, there is generally a spurt in the capital values of localities that fall on the metro route, making it the right time for someone looking to sell a property as they can capitalise on the price hike. However, once the construction starts, it is generally noted that the price witnesses a drop. Both capital as well as rental values take a hit due to the traffic snarls and inconveniences caused because of the construction work. Prices again tend to rise when the metro line becomes operational.

Knight Frank believes that the upcoming metro corridors in Mumbai will accrue similar benefits as to the VAG corridor for the residential pockets in their influence zones. However, the intensity of the impact will vary across the corridors and depend on a host of factors, such as residential pricing, social and physical infrastructure, and employment opportunities.