INFRASTRUCTUREA FULCRUM OF CHANGE IN REAL-ESTATE FORTUNES

BY Remona

As we move towards ‘India @100’, the significance of infrastructure and real estate in this journey can’t be understated. A strong infrastructure serves as a backbone for nation building and it’s not just mode of transportation but also development of India’s real estate sector that is interlinked.

While it is well established that investment in infrastructure has a multiplier effect on growth and employment, a focus on real estate is required to meet the rising demand for office space and residential housing. There are several mega infrastructure projects shaping India which are not only fuelling economic growth but also indirectly driving the real estate demand in the country.

When there is a boom in infrastructural development, the real estate sector automatically gets a boost with connectivity playing a vital role. The infrastructural amenities give a strong ground to the real estate sector to invest in housing and shopping complexes. Real estate buyers no longer hesitate from buying houses and apartments even in remote cities because travel has become easy. Any region fraught with iconic residential and commercial projects made by well-known developer can’t witness lucrative prospects if not supported by sound infrastructure and connectivity facilities.

NEW AIRPORTS A BOOSTER SHOT

Airports have always played a pivotal role in changing the fortunes of a place. Not only do they shape the real estate prosperity of the region and promote commercial and industrial development but also shape the economic and social growth. The examples across India include the proposed airport at Navi Mumbai and Jewar airport at Greater Noida that have already led to an increase in real estate prices in and around the developments.

The upcoming Greenfield airport at Bhiwadi, which will be the second airport in the National Capital Region (NCR), Rajiv Gandhi International Airport Expansion, Hyderabad, Multi-Modal International Passenger And Cargo Hub Airport, Nagpur, Maharashtra, Mandi Greenfield International Airport, Himachal Pradesh, International Greenfield Airport, Chennai are all set to improve connectivity to Tier II and Tier III cities, and in turn increase demand and the cost of real estate in the areas around the new airports.

METROS AND PROPERTY VALUES

Mobility and accessibility are two major factors that influence daily life. The faster the mode of transportation, the better. Nobody wants to spend hours on the road just to get to work or home. The advantages of good transportation mean organised and convenient way to commute for work where metros have proved to be useful. It has helped to reduce travel time, lower vehicle cost, increased transit options, improved connectivity and better quality of life.

The metro has made commuting easier and faster, increasing the attractiveness of these places for inhabitants and investors alike. The metro has had a substantial impact on residential property values. Residential property prices throughout the metro corridor have risen by up to 30% in the last three years.

Metro stations act as catalysts for urban growth and development, leading to the emergence of new commercial, residential, and mixed-use projects in the surrounding areas. Metro connectivity opens up previously inaccessible or underdeveloped areas for real estate development, creating new opportunities for investors, developers, and homebuyers.

Transit Oriented development considered to be a practical and realistic model is equipped to tackle multiple issues such as inhuman commutes, fuel wastage in traffic jams, pollution, and overall enhanced quality of life for citizens.

The Indian government has proactively explored TOD with its draft National Transit Oriented Development (TOD) Policy. Already, many initiatives to enable TOD are underway, including metro rail deployment, ring roads but no matter whatever the format mass transport facilities are the backbone of transit-oriented development. It is up to individual states and Union Territories to adopt and implement it at the local level. As for metro corridors are considered they directly impact the real estate sector as they increase the land value, land-use change and population density alongside the corridor.

Cities show a uniformly positive change after the implementation of metros along their metro corridors. Delhi NCR is a good example, where the metro connects the peripheral urban centres of Gurgaon, Noida, Ghaziabad, Dwarka etc. The metro corridor was planned to interconnect these existing peripheral urban centres, following their growth pattern. In Delhi, for instance, residential property in South Delhi area appreciated by 15-20 percent in the last five to six years.

Chennai’s real estate market has seen an aggressive push due to its metro lines. When the Chennai Metro Phase I started operations, areas closer to the metro line witnessed a 15 to 35 per cent increase in land prices.

Hyderabad Metro Rail directly impacted the real estate cost in the city. The metro connected the city’s major business districts, making travel more accessible and convenient for people. Properties located within a radius of 1-2 km from the metro stations have witnessed an increase in prices, ranging from 10% to 25%.

In the micro markets of the city Corridor-I—from Miyapur to LB Nagar —saw price growth of 15-20 percent. HITEC City/ Raidurg on Corridor-III micro-market saw the highest CAGR growth of 20-25 percent between 2019-2021 followed by Miyapur in Corridor-I and Nagole in Corridor-II with 2 percent growth in commercial land rates. Areas like Raidurg and Gachibowli, which were previously considered remote, have now become prime residential and commercial destinations.

The metro rail’s connectivity has not only made it easier for people to travel but has also made these areas more attractive to investors and developers, leading to an increase in real estate development in these areas.

In Bengaluru some of the emerging areas influenced by metros are Bannerghatta Road, Kanakapura Road, Whitefield, Hosur Road, Tumkur Road, ORR and Bellary Road under phase II (including Phase IIA and Phase IIB) and are expected to witness an increase in price by 8-10 percent compared to other areas in the city.

Property rates along the Kochi metro on the Aluva-Thrupunithura stretch (25-km) shot up by 20-30%, where realtors received numerous inquiries (from residents and non-residents) for buying land along the metro corridor. Prime areas like Edapally, Vytilla, Aluva, Palarivattom, Panampilly Nagar, Kakkanad and Companypady witnessed a rise in the number of upcoming residential/commercial projects.

Mumbai Metro project is the biggest game changer for the island city. Besides solving the traffic congestion issues, the metro plays a huge role in reducing pressure on the suburban rail network and provide a fillip to the realty fortunes. Transportation infrastructure economics have proven to have positive impact impact on real estate values residential and commercial properties.

The Jogeshwari-Vikhroli link road (JVLR), the Santacruz Chembur Link Road (SCLR) and the Wadala- Chembur- Monorail-the VAG corridor has given a big boost to already boyant real estate developments. JVLR is vital in providing east-west connectivity also this belt has an established social infrastructure and other lifestyle avenues. Also, Monorail has pumped the property prices in Chembur and Wadala by more than 100 percent in short span of time of 4-5 years. These transportation initiatives had the tonic effect on the realty micro markets.

The upcoming Metro Line-3 also known as the Mumbai Metro Aqua Line or the Colaba-Bandra-SEEPZ Line will lead to a reduction in vehicular trips by 6.65 lakh/day and reduced fuel consumption of 3.54 lakh litre/day. The corridor will reduce 2.61 lakh tonnes of CO2 emissions per annum.

Pune's real estate market is widening its spheres and engaging in new and innovative possibilities. Hinjewadi, the hub for employment, is located near Pimpri Chinchwad, and with the developments in Maha Metro, there is a rise in demand for 2 BHK and 3 BHK flats in Pimpri Chinchwad. The goal of Maha Metro is to create an energy-efficient metro rail system by utilizing green energy. The Pune Metro aims to reduce traffic congestion, pollution, and road accidents, as well as travel time and costs.

Concluding to this fact that metros and monorails make a significant contribution to easing traffic congestion. Real estate projects planned in the surrounding areas see an increase in value, as consumers are willing to pay more for the convenience.

The metro route has a significant impact on property prices throughout the city. The Maha Metro's impact on the Pune real estate industry is clear, as land values have skyrocketed. The density of commercial establishments and city consumers surrounding the metro route will gradually increase the value of flats in Pune. In conclusion, where there’s a metro, there’s realty.

CHALLENGES AND CORRECTIVE MEASURES

Infrastructure and real estate go hand in hand as these sectors are the major contributors to the overall economy. However, projects in these sectors are risky, capital intensive and are long gestation in nature, and so their implementation and execution need to be managed with high caution.

The increased FSI reflects in the increased prices for land along the Metro corridor and leads to an increase in population density near a metro station. Reduction in premium FSI charges along the metro corridor will further encourage many existing or proposed developments to avail these benefits and thereby enhancing the growth of the city along the corridors and offering a better quality of living due to the emerging developments.

Some other challenges are political instability, institutional incapacity, lack of private participation, absence of proper assessment of projects for technical and financial viability, absence of finance, social apathy for infrastructure demand, no clearances, long tendering process, focus to preserve the environment lost in the race to develop world-class infrastructure, private sector, no rational competition, cartelization by players and cost over-runs.

To expedite infrastructure development along with maintaining the ecological and political balance, the government must give high focus on addressing the challenges. If negligence towards such factors is continues, the sector which is expected to fuel the overall economic growth of the country and generate employment opportunities will lose its shine which will thereby hamper the economic growth of the country.

FOR UNINTERRUPTED PROGRESS IN THE REAL ESTATE SECTOR INFRASTRUCTURE CONNECTIVITY PLAYS A SUBSTANTIAL ROLE

METRO CONNECTIVITY HAS A DIRECT IMPACT ON PROPERTY PRICES, DRIVES REAL ESTATE DEVELOPMENT, AND PROMOTES SUSTAINABLE AND INCLUSIVE URBAN DEVELOPMENT.

Tags : infrastructure real estate property urbanization market developments location impact investments projects nation residential commercial invest shopping complexes apartments prospects cities airports Navi Mumbai National Capital Region Rajiv Gandhi International Airport Expansion Hyderabad Multi-Modal International Passenger Cargo Hub Airport Nagpur Maharashtra Mandi Greenfield International Airport Himachal Pradesh International Greenfield Airport Chennai