Due to rapid urbanisation and changing lifestyle, the Indian real estate witnesses the growth of apartment culture and high-rise gated communities in cities. Apartment living comes with a lot of benefits, including greenery and open spaces. Following the trend, more and more developers are launching contemporary and landscaped residential projects, especially in city suburbs. Such projects command a premium, park-facing apartments within the project are also priced higher than those which are road-facing or towards a corner. The additional amount buyers pay is known as preferential location charges (PLC).
What are preferential location charges?
Preferential location charges refer to the extra money that homebuyers pay to get access to certain amenities, features or views in a project, which are not available to other buyers. Preferential location charges (PLC) increase the overall cost for buyers.
For example, a well-known developer’s residential project in Gurgaon, has a base rate of Rs 5,500 per sq ft. Within the same project, each flat carries an additional preferential location charge (PLC) of Rs 300-500 per sq ft. The ones facing the park have the highest PLC. A similar scenario can be found in neighbouring Noida and Faridabad, as well. Nevertheless, the percentage of green cover, differs from one city to another.
Why do buyers seek park-facing apartments?
Parks and open spaces have always been an integral part of housing development. It is quite common to see fenced, community parks, offering shared spaces for the local residents. However, with the rise in gated communities, the design of these urban spaces has evolved. Landscaped projects with strategically-designed parks and open spaces are gaining popularity.
Park-facing properties, whether an apartment in a gated community or a standalone house, command a higher price compared to similar properties in the same area. Buyers prefer to invest in such properties due to a few reasons. Firstly, these features imply uninterrupted city views, comfort and prestige, improving one’s quality of life. Besides being aesthetically appealing, parks and open spaces are useful in creating a sustainable and calm environment for the residents. Parks and gardens enhance air quality by reducing pollutants. They also reduce noise pollution. More importantly, the presence of parks in a residential community offers a safe place for recreation and outdoor activities.
Confusion over the extent of greenery
A number of national-level government agencies, have indicated the importance and significance of parks and open spaces. For example, the National Building Code says that open spaces should be 15% of the area of the layout, or 0.3 to 0.4 hectares per 1,000 persons. For low-income housing, the open space shall be 0.3 hectares per 1,000 persons.
The manual on norms and standards for environment clearance of large construction projects by the Ministry of Environment and Forests of the Government of India, also states that parks and green cover are important for several reasons – to provide a balanced climate, to control noise and to be used as a hedge on the outer limits of aerodromes and railway tracks.
While parks and open spaces may have distinct definitions, various authorities and state-level bodies have clubbed the two into the same category. For example, Punjab Urban Development Authority says that in a residential development of 100 acres, land use for parks/open spaces should be 5.7 acres. This has led to confusion.
The rationale behind the premium
Nitin Chaddha, a Gurgaon-based realtor, maintains that “The premium that is charged for park-facing apartments, is related to the benefits of living next to green areas.” Developers too, continue to incorporate landscaped parks in their projects, although these may or may not fulfil the needs of a larger population.
See also: Preferential location charges: How it impacts the price of your property
Owing to the design of the entire project, a premium is levied on park-facing apartments. The difference in price, between a park-facing apartment and one that does not overlook a park, is 10% to 20%, depending on the price that is finalised for the deal.
A similar trend exists in the resale market. In the established markets, properties located near a district park are costlier than the ones that are far away from the park. According to industry experts, during the boom period, the difference between the two types of properties, was almost 50%. However, it is also crucial to have a clear distinction between the two types of properties. “For now, due to the high demand, parks have turned more into open spaces, especially in Noida” points out a broker from Noida, who wishes to remain anonymous.
Park-facing properties have higher resale value
Properties offering park or garden views tend to attract prospective buyers and benefits sellers. So, the resale value of such properties tends to be higher. Even in the rental market, park-facing homes command a higher rental rate.
The new fad
Of late, there has also been a surge in demand for properties near water bodies or even commercial developments, such as airports or a golf course. For example, when the work on the proposed golf course in Dwarka began, there was a surge in property transactions in the neighbouring sectors.
In coastal cities such as Mumbai and Chennai, the sea-facing homes are quite expensive and sought-after, especially among the high-end buyers.
What should one do?
With the growing trend of apartment living, the demand for park-facing properties will rise and attract additional charges for prospective buyers. If the demand for a specific apartment feature is high, the prices of park-facing properties will draw a higher price.
It is crucial for property buyers to stay aware and ensure proper planning to manage the additional expenses better. Buyer must note that the premium for park-facing properties varies based on park quality, unit type, and specific market context.
Book parks-facing flats, only if you see a real benefit, cautions Arun Kumar, a channel partner and a consultant in Noida. It makes no sense to pay the premium, if one is going to live on the 20th floor and opt for a park-facing apartment. Buyers should also try and negotiate on the price with the builder, he suggests.
