Why Urban Planners Should Mind Real Estate Price Trend

Urban infrastructure is not built anywhere in the world purely according to the valuable information that real estate prices provide. However, infrastructure and land use regulations generally reflect real estate prices in world's major cities. While planners rarely ignore real estate prices across the world, the same can not be said about India.

Here is an example to show. A technical committee in Mumbai recently rejected a barren plot of land in the Bandra- Complex (BKC) for building -III's car depot because real estate values are high in that area. The Rail Corporation Limited (RCL) wants to build a car depot in Aarey colony but environmental agencies have been protesting the move because that would involve cutting down 446 trees. RDA claims that building a car depot elsewhere will cost authorities Rs 750 crore more.

A look at why transit networks should reflect real estate prices: 

When real estate prices in an area are high, it means that demand for floor space there is also high. To meet this demand, metro lines, railway lines, road networks and other forms of infrastructure will have to be built. Building infrastructural networks where real estate prices are low is like building a large super market where no one lives. 

Infrastructure should be built in areas where density is high. A higher density also indicates high real estate prices of an area. Prices send out a valuable signal that a great number of people are willing to pay for such and such land. BKC is one of the most expensive real estate markets in India.  In most cities, when there is such demand, urban local authorities raise the FSI. If the floor space index of FSI is 3, a 3,000 square feet building can be built on a 1000 square feet plot. 

The land use policy which is required to optimise a metro network will be very different from the land use policy which is required to optimise a water or sewage network. Usually, planners try to decide what the optimal mode of transport is and then decide how land should be used in a city. But, if we already know that people would pay a fortune to live in BKC, not allowing metro lines in such areas may hinder growth. 

It is not only metro lines should be allowed in areas where density and demand for real estate are high. By allowing a higher FSI in areas near metro lines, authorities will enable more people to access these metro lines easily. If the government builds metro lines where real estate prices are already not high, that would compel many people in the long run to relocate to areas where authorities have built metro lines. This would impose greater costs on people.