Infrastructure project and property value
It is natural for an infrastructure project propelling some people to buy a house. In 2007, the central government approved a plan to build an international airport at Navi Mumbai. Some people quickly snapped up a house in the area just a few days after the announcement. It was a wise move as property prices have been skyrocketing since then.
Though work on the airport is yet to begin, property buyers have already made huge profits on their investments. In fact, the announcement of the airport led to an overnight increase in property values in and around Panvel, Kharghar, Ulwe, southern parts of Navi Mumbai and Mumbai's eastern corridor.
It's undeniable that a scheduled infrastructure project leads to an increase in the value of property in its vicinity since the project becomes a USP for the developers or property owners. There have been instances where the property prices have increased by 50-70% after the announcement of an infrastructure initiative till it becomes operational.
In 2006, the residential sale rate at Essel Towers, Gurgaon, was around Rs 5,000 per sq ft. In the same year came the announcement that the Delhi metro would be extended to Gurgaon. The rates shot up immediately and, by 2010, when the metro actually started, the rate was about Rs 9,000 per sq ft. In comparison, the other areas displayed a lesser increase of 40-50%.
So, is it a good idea to purchase a property purely on the basis of an announced infrastructure project? This depends on various factors and you should take these into account before buying such properties. You should consider certain things.
Your buying decision should depend on whether the property is for self-occupation or only an investment. Infrastructure projects usually come up on the outskirts of the city, where basic amenities, such as well-laid out roads, power and water supply may be missing. Even the environmental and other clearances needed to set up the project may take years.
So never make haste in the matter of buying properties at places which have been chosen for infrastructure project.
It is natural for an infrastructure project propelling some people to buy a house. In 2007, the central government approved a plan to build an international airport at Navi Mumbai. Some people quickly snapped up a house in the area just a few days after the announcement. It was a wise move as property prices have been skyrocketing since then.
Though work on the airport is yet to begin, property buyers have already made huge profits on their investments. In fact, the announcement of the airport led to an overnight increase in property values in and around Panvel, Kharghar, Ulwe, southern parts of Navi Mumbai and Mumbai's eastern corridor.
It's undeniable that a scheduled infrastructure project leads to an increase in the value of property in its vicinity since the project becomes a USP for the developers or property owners. There have been instances where the property prices have increased by 50-70% after the announcement of an infrastructure initiative till it becomes operational.
In 2006, the residential sale rate at Essel Towers, Gurgaon, was around Rs 5,000 per sq ft. In the same year came the announcement that the Delhi metro would be extended to Gurgaon. The rates shot up immediately and, by 2010, when the metro actually started, the rate was about Rs 9,000 per sq ft. In comparison, the other areas displayed a lesser increase of 40-50%.
So, is it a good idea to purchase a property purely on the basis of an announced infrastructure project? This depends on various factors and you should take these into account before buying such properties. You should consider certain things.
Your buying decision should depend on whether the property is for self-occupation or only an investment. Infrastructure projects usually come up on the outskirts of the city, where basic amenities, such as well-laid out roads, power and water supply may be missing. Even the environmental and other clearances needed to set up the project may take years.
So never make haste in the matter of buying properties at places which have been chosen for infrastructure project.
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