Infrastructure growth driving Mumbai’s realty
Jun 15, 2014
Source : The Times of India


MUMBAI: Infrastructure is one of the deciding elements for finalising a property. A location that has good infrastructure development, commands high property rates and has good growth prospects and vice-versa. Shailesh Puranik, managing director, Puranik Builders, explains that “Buyers generally look out for basic infrastructure such as good and widened roads, easy connectivity to railway stations, airports, arterial roads, adequate supply of water and electricity, enough open spaces, and others. In social infrastructure, buyers look out for good educational institutes, healthcare facilities, shopping centres and entertainment zones.“

Vikas Aroraa, director marketing and sales, Runwal Group, adds that “A buyer always looks for facilities. It could be a garden, a shopping mall, a cinema theatre, schools and colleges or transport facilities. Any of these infrastructural facilities would spur the interest of the buyers, irrespective of the state, city or country. Even seeing the infrastructure activity in areas like Thane and Dombivli area, it is clear that people prefer to invest in areas where the pace of infrastructural development is fast, and offers quality infrastructure.“

Also, it is an established fact that scheduled infrastructure projects tend to increase the value of properties in the adjoining areas. This occurs because the infrastructure project becomes a part of the USP for the developers or property owners. There have been instances where property prices have increased by 50-70 per cent since the announcement of an infrastructure initiative, until the operational phase. Saugata Maitra, national director strategic consulting, JLL India, points out how “ Property values increased almost overnight in and around Panvel, Kharghar, Ulwe and most southern parts of Navi Mumbai, as well as Mumbai’s eastern corridors which are well-connected to the proposed international airport.“

Infrastructural development is a key aspect in real estate development.

Manju Yagnik, vice-chairperson, Nahar Group, shares how “In today’s world, infrastructure is not only limited to road, water and electricity but also includes social infrastructure such as healthcare, education, shopping centres and entertainment zones. Today, buyers are keen on these basic needs. All these infrastructure developments make a homebuyer’s life hassle-free and enhance his quality of life. Hence, their preference is always to opt for locations that offer proper infrastructure development.“

Chandresh Mehta, director, Rustomjee, agrees and shares that “Suburbs like Virar which have been recently developed, offer well-planned areas with a scenic, picturesque landscape. Good connectivity via the rail and road, better infrastructure facilities like shopping complexes, schools, colleges and affordability in comparison to other localities of Mumbai, are the main attractions.“

Property experts are of the opinion that on the central side, Thane is among the best places to invest in, as it can offer significant appreciation in the next five years, owing to its strategic location and growing potential. Thane has witnessed a transition from being a manufacturing industrial hub, to an economy driven by the services sector. Large tracts of industrial land have been redeveloped into meaningful townships with a surge in demand brought about by the IT/ITeS growth. Moreover, in a cosmopolitan city like Mumbai, easy connectivity to various parts of the city, is a boon.

The infrastructure boom also leads to rising commercial activities and further pushes up the demand for residential units. This is the reason areas like Andheri, are most sought after because of its easy connectivity to the domestic and international airport. Many areas in the region are logistically well-connected to the Western Express Highway, offering quick access to commercial hubs like the Bandra-Kurla Complex, Lower Parel and the eastern suburbs like Ghatkopar, Vikhroli. Moreover, the upcoming Mumbai metro and its close proximity to the Western Express Highway, will also ensure that the location will see an increasing valuation in the forthcoming years.

Mitra adds that “Property price increase may not be a common phenomenon across all property segments. For example, the announcement of a new railway station, Metro, bus terminus or even an airport while the low-to-mid-income property segments would definitely be positively affected, property prices in high-end residential areas would be less likely to experience a steep rise with the announcement of a major infrastructure project. The reason is simple for the high-end segment, enhanced public transport facility would not be of major significance.“

Hariprakash Pandey, VP-finance and investor relations, HDIL, explains that “Property investment is either for end-use or for an investment purpose; either ways, the customer expects returns on investment. Therefore, home buyers prefer areas with faster infrastructure development as the price appreciation in these areas is expected to be faster and higher.“

Good infrastructure development facilitates connectivity and increases convenience, thereby, increasing the user value of the locality. Santosh Naik, managing director and CEO, Disha Direct, agrees that “With better and faster infrastructure development, the destination grows very fast which gives faster appreciation for a customer who invests in the early stages. Also, the commercial development gets a boost where there is good infrastructure development.“

Hiral Sheth, director, marketing, Sheth Creators, also points out that “Buying a property in a location that is well-connected thanks to infrastructural development, is apt not only from the end-user point of view but also from the investment point of view. Places where major infrastructure developments are taking place and are in close proximity to the CBD and SBD, definitely see rapid growth, ensuring good returns on property investment. The infrastructure development definitely boosts up the land prices, thereby, making it a win-win situation for the investors.“

Mitra advises that “One should take a good look at the property appreciation dynamics involved, before investing in a certain property on the heels of a major infrastructure upgrade. A proper assessment of the demand drivers around a particular infrastructure project, is of the essence to establish the genuine investment potential in the vicinity, on a case-to-case basis.“

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