How does infrastructure development impact the real estate market?

The development of infrastructural facilities is crucial for any city or region since it positively impacts the economy. It has a multiplier effect as it leads to increased investments, trades and employment generation. In terms of connectivity, infrastructure projects like roads, flyovers, and metro projects are instrumental in connecting different regions, facilitating the movement of vehicular traffic and goods.

The expanding infrastructure of an area also has a significant impact on the real estate market. The demand for housing and commercial spaces increases, and this results in an increase in property prices. For example, a house close to an upcoming metro project or airport is likely to sell at a higher price than a property with fewer location advantages. In this article, we discuss how infrastructure and connectivity influence a region’s property values and overall growth.

What is infrastructure in the context of real estate?

Infrastructure can be referred to as the facilities and systems required for the operations of a society. In real estate, infrastructure can be classified into:

• Physical infrastructure: This includes roads, flyovers, highways, airports, railway stations, public transportation and utilities.
• Social infrastructure: Schools, healthcare facilities, parks, banks, shopping complexes, etc.

Nowadays, digital infrastructure has become an integral part of human lives. This includes the internet and smart technologies (smart grids, lighting systems, etc.) that aim to enhance urban living.

Infrastructure development and its impact on the property market

Enhanced accessibility

One of the ways in which upcoming infrastructure projects directly impact a location is by improving connectivity. An expressway or a metro corridor will reduce the distance between the two regions and commute time for commuters. This will also contribute towards the reduction of traffic congestion on the roads.

Home seekers looking to buy or rent homes consider areas that are easily accessible by road or metro.

Thus, properties situated close to such infrastructural facilities usually sell at higher prices, owing to the high demand. Similarly, the rental rates are also high for such properties. This is why many people prefer to invest in areas with good infrastructure, as it provides them with a high rental income.

Urban development and expansion

The growth of infrastructure contributes to a city or region’s overall growth. New roads and upgraded public spaces and utilities pave the way for new developments. With increasing congestion and saturation of the property markets in cities, the scope for the development of suburban areas increases. This implies new real estate developments in the region, especially housing options that are more affordable than those in the cities. A key example of this trend is the growth of the satellite cities of Delhi, such as Gurgaon and Noida. Years ago, these were rural areas with a lack of modern facilities. However, over the past few decades, Gurgaon and Noida have transformed into one of the sought-after real estate destinations with advanced infrastructure facilities. These cities witness an increasing demand for properties as the infrastructure continues to develop. Hence, property prices are seeing an uptick.

Shifting patterns of property buying and renting

Infrastructure development bolsters the growth of economic activities in the region. This includes the creation of retail outlets, business hubs and special economic zones (SEZs). In many cities, infrastructure projects push the growth of new manufacturing hubs and IT parks. Hence, a significant rise in commercial or office spaces is witnessed in the surrounding regions as companies look to set up operations. Some examples include the Whitefield locality in Bangalore and Gachibowli in Hyderabad.

Similarly, the residential segment also sees a positive effect owing to these developments. As more and more people come to these localities for employment opportunities, the demand for housing increases, both for buying and renting. Developers capitalise on this demand and come up with new projects catering to the homebuyers’ needs.

Increase in property prices

The growth of infrastructure and enhanced connectivity in a region impacts property values. With the ongoing development of an infrastructure project, the demand for properties typically sees a steady increase. As a result, property prices increase. This presents excellent opportunities for those purchasing properties for investment purposes, as they can expect high returns. Homeowners can rent out their homes to earn good rental income as the demand is likely to be constant. Moreover, improved infrastructure and easy access to amenities such as banks, shopping hubs, etc., are other factors that lead to high property prices.

Research insights by Housing.com

According to the latest report by Housing.com titled ‘Realty check with Housing Price Index March 2025’, the price rally in the NCR is expected to continue as Haryana and Uttar Pradesh drive efforts to boost infrastructure. Some upcoming infrastructure projects in the region include the Noida International Airport in Jewar and the proposed extension of the Gurgaon Metro network.

The report highlights a sharp increase in property prices in Bangalore, especially in specific pockets. The reason for the price rise has been attributed to the development of the second airport in the city. Further, the Karnataka government plans to infuse Rs 1.31 lakh crore to transform the city’s infrastructure, which will further fuel the increase in property prices, the report suggested.

Furthermore, the research report suggests a similar trend for Hyderabad. The city is also witnessing ongoing infrastructure development and policy reforms, which is shaping it into a global investment hub, the report said.

It is clear how infrastructure developments significantly impact property prices in a city or region.

Key infrastructure projects in India

Delhi-Mumbai Expressway

The Delhi-Mumbai Expressway is a 1,380-km access-controlled highway, connecting the two cities, covering five states (Delhi, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra). New real estate hubs have emerged in the region, including Sohna near Gurgaon. Property prices along the expressway have increased by about 60% to 70% in the recent three years.

Click to read about Delhi Mumbai Expressway

Jewar Airport

The Jewar Airport, formally known as the Noida International Airport (NIA), is an upcoming airport located in Jewar near Noida, which will serve Delhi, Noida, Ghaziabad, Faridabad, Aligarh, Agra and neighbouring areas. Besides enhancing air connectivity and decongesting the Indira Gandhi International Airport in Delhi, the upcoming airport project is expected to boost real estate developments in the region.

Click to read about Jewar Airport

Mumbai-Ahmedabad Bullet train

The Mumbai-Ahmedabad High-Speed Rail Corridor (MAHSR) was developed to connect two major cities, Mumbai and Ahmedabad. The project is expected to steer new real estate developments along the route.

Metro projects in key cities

The expansion of the metro rail network in key cities such as Delhi, Mumbai, Bangalore and Chennai has significantly impacted the real estate market, resulting in an increase in property prices. For example, property prices in North Bangalore have nearly doubled in recent years owing to the new metro routes being developed under Bangalore Metro Phase 3.

Housing.com News Viewpoint

When investing in a property, it is crucial to understand how the infrastructure in the area influences the property values. The price appreciation in the region is expected to continue as these projects near completion.

Whether you are buying a property for investment or end use, it is essential to track the market trends and be aware of the infrastructure developments. This helps a buyer make an informed decision in two aspects – first, it enables one to choose the right location. Buying a property close to an upcoming expressway or a metro project is better in terms of convenience, commuting and future returns. Another aspect is budget planning. The price appreciation helps a buyer plan the budget and negotiate effectively during a property transaction.

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