In real estate lexicon, market drivers are developments in an area that increase the value of living there. It is a well-established fact that infrastructure is by far, the most important driver for real estate demand and property appreciation.
Infrastructure can take many forms: road development, civic, and social. Infrastructure must be put in place either before or along with other real estate development. Attempts to put it in place retrospectively, create the kind of mess that we can see in many cities today. Developing infrastructure is like growing trees – there needs to be enough space for them to grow, and sufficient opportunity for a root network to deploy.
Guidelines for home buyers and investors
1) A location’s infrastructure is a major focus area for property investors. They want to attract end-users, either as rental or purchase clients. They know that an area without sufficient infrastructure, will be unattractive to their clients because the quality of living quotient is low.
2) Properties in areas without good infrastructure, tend to go for a cheaper rate. Developers with such projects know that the area has little or nothing to show in terms of quality of life. They can try to sell their projects by offering very attractive rates.
3) Buyers should place infrastructure availability prominently on their checklist while scouting for suitable homes. Road and rail connectivity, water supply, proximity of schools, hospitals and shopping outlets, are of paramount importance.
4) Infrastructure can be of secondary importance if one is buying a property purely as a long-term investment and primarily for capital appreciation. After all, it’s not intended for self-use and one does not expect quick appreciation. As long as there is a reasonable assurance that it will arrive in the foreseeable future, it makes sense to invest in a property located in an emerging area where infrastructure is in its nascent stages.
5) However, if one is buying the property in order to generate rental income, existing infrastructure is far more important than upcoming infrastructure. People looking for rental options are also looking for a certain standard of life.
6) When choosing a township, ensure that the project is located in areas supported by good infrastructure. Most large Indian cities now have township projects coming up.
7) In Pune, the Pimpri–Chinchwad Municipal Corporation is attracting buyers and investors. In other parts of the country, Navi Mumbai and the Kalyan–Dombivli and Vasai–Virar belts in Mumbai, are becoming important township hubs.
(The author is chairman, Pharande Spaces)