On the Delhi-Ghaziabad border, the price point on either side of the divide is a case study in urban housing economics. A 2-BHK property on Delhi’s side costs Rs 1.25 crores while the same property on the opposite side, is priced at Rs 60 lakhs. Doesn’t it make financial sense to go to Ghaziabad in that case? However, any home buyer who can afford it, will pick Delhi over the other. It definitely suggests how important an address is, and to what extent the clichéd ‘location matters’ adage is true.
Right questions to ask
There are certain fundamental questions that the global real estate market has tried to answer. From a buyer’s perspective: How to evaluate a property in the given micro-market in the right context? Is it just land competence or do certain projects have something special that makes them investment magnets? Analysts across the realty spectrum maintain that these questions cannot be easily answered. The dynamics of land cost cannot be the only evaluation metrics. The social profile and aura of the location; physical and social infrastructure; connectivity and proximity to offices, are some of the other determining factors. Additionally, land becomes more expensive when it is not becoming stagnant with infrastructural bottlenecks. The future potential of realty development is also cited as one of the metrics to evaluate the price of a location.
Pranay Vakil, chairman of Praron Consultancy, is of the opinion that location traction of any given city, has always been due to its connectivity. He points out that in most cities, the southern areas are home to some of the best bungalows and apartments. In fact, they’re also extremely well-connected to the central business districts (CBDs). “I agree that physical infrastructure in some of these south locations are not up to its positioning but I think that is only one aspect to evaluate a property market,” states Vakil. “There are other equally, if not more, relevant issues to be considered.”
Ashutosh Limaye, head – Research & Real Estate Intelligence Service, JLL India, believes it is also a matter of social prestige to buy a residence in these parts. Albeit, with time, new areas are competing with these legacy locales, and are attracting the younger and nouveau riche. “Different cities are seeing this happening. Extremely limited, new supply of residences in prime neighbourhoods, is the most influencing reason the rich are looking elsewhere for contemporary luxury homes,” explains Limaye.
Devina Ghildial, former managing director, RICS, South Asia, points out that budget, location, type of property, objective of buying and choice of property are the determining factors for an investment. “Real estate has become a popular investment avenue. Location plays an important role in selection of the property,” she elaborates. “However, certain projects attract investments due to the reputation of the builder. It goes without saying that if a developer is well-known, he must have taken care of all the requisites.”
In a nutshell, the cliché, ‘location, location, location’, is a combination of many inherent catalysts like connectivity, distance from CBDs, social infrastructure, etc. The projects in such areas up the ante and offer amenities to invite a richer segment of home buyers; thus, making the given location a genuine investment magnet.
(The writer is CEO, Track2Realty)