Published On: Thu, Aug 11th, 2016

A good infrastructure will arrest rising Real Estate in the country

sanjaychaturvedi

By Dr. Sanjay Chaturvedi,

Executive Editor

Take an example of Ahmedabad. For last four years, the property rates are not rising. No capital appreciation recorded. Reason? Reason being Ahmedabad had witnessed a very good infrastructure developed in almost all developing zones. One can reach any corner of the city within 30 minutes by roads. BRT bus lanes, Good motorable roads, water and power, these are basic need for any developing zone to sell quickly.

One can find a cheaper home where land price is less and at the same time good amenities including good infrastructure gives value to the money. CBD areas and congestion in city centre often create chaotic situation besides no place to accommodate more people hence property price rise. When one can find a good reach to CBD or city centre within 30 minutes and with affordable housing option with good infrastructure, the demand diverts from city centre or CBD to new developing zones in the city.

This phenomena gives a sustained society with no property rise because these are too many options for buyers and it becomes buyers market. The same case can be applied in Delhi where NCR has absorbed the demand in various small cities and towns. Noida and Gurgaon being adjacent to Capital have successfully arrested rising price in Delhi.

When in Pune municipal corporation limit was increased and 32 villages were included besides Pimpri Chinchwad areas developed as settlite township for Pune, the rates stagnated for last ten years and only good localities and convenient areas seen little rise.

Investors and speculators do give rise to rise in property rate but huge supply now making them rethink their strategy to have capital appreciations. Investors are now keen to finance builders instead of in their stocks. Project specific investing are in offing instead of booking of stocks or apartments in initial stages. Pre-launchs are just an example of investments in apartments. But now since pre launches are risky and people are not interested in apartments but in projects and IRR with 30 to 40 % returns, rising price have almost stopped.

Region to region, property price are stagnated and fixed. Buyers do not want to go higher than area limits. They want discounted flats with 2011 price level being 100%. The tendency of arresting price rise have got support from good infrastructure.

In Mumbai, the infrastructure is too bad. Extended suburbs are not selling because of poor infrastructure. Trains are over loaded and reaching CBD areas have become almost 6 hours commuting every day with rush. Areas like Badlapur, Dhanu, Kalyan, Dombivali, Panvel, Nerul, Titwala , Shil Phata and many other extended suburbs are having no takers from city. These areas are having only local demands. The problem being poor infrastructure.

In premium categories like Pedder Road, Worli, Bandra West etc, poor infrastructure making people to leave the localities. The density of polulation is going to increase in Worli, Prabhadevi, Lower Parel, Bandra West, Andheri west and Juhu which do not have any up gradation plan for infrastructure. Thousands of vesicles are going to ply and park in these areas without any application of town planning principles and infrastructure.

Property rates are having direct proportionate ratio to condition of infrastructure. It is now governments who will have to arrest rising property price in the country.

 


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