Can Upcoming Infrastructure Impact Demand For Housing Negatively?

We all have been witness to the fact that infrastructural developments always push up the property prices, but, how reasonable is it to say that only such development is a guarantor of housing success? The housing sector offers a wide range of properties to different segments of the society while upcoming infrastructure is a unanimous phenomenon available to all these segments without any differentiation. Announcement of a new railway station, Metro, bridges, or a flyover may excite low-to-mid-income property segments, but, are less likely to influence the buying trend of high-end residential areas.

In fact, it is widely noticed that a majority of infrastructure announcements are made for areas that are apt for affordable housing. Thus, turning them into a premium location even if these are away from the city centres.

However, market experts believe that one needs to take a good look at the property appreciation dynamics involved before investing in a certain property if infrastructural development is the prime factor.

Here are some things you should keep in mind:

• Time frame for prospective implementation, including the phasing of important segments
• Development and land-use plan of the locality
• How the project fits into the larger development plan and sets aside growth sectors
• Growth in business
• Job outlook

Price appreciation is defined by various factors and market dynamics one of which is the quality of both physical and social infrastructure in and around the residential project. Let's see some of the archetypical factors that led the growth of a location:

Metro: Residential sale rates near Gurgaon, increased from around Rs 5,000 per sq ft (2006) to around Rs 9,000 per sq ft (2010) after Gurgaon was connected to the national capital via Delhi Metro. While other areas in Delhi-NCR showed an increase of 30-40 per cent in the same period.

Expressways: Yamuna Expressway, which opened in 2012, has emerged as one of the great real estate destinations. The 166 km-long six-lane expressway runs through an untouched area for economic development and expansion of NCR. It includes six localities, i.e. Gautam Buddh Nagar, Bulandshahr, Aligarh, Maha Maya Nagar, Mathura and Agra.

Airports: Development of any new airport will result in increased employment opportunities. In terms of logistics, hospitality and official sectors. The residential property demand will certainly surge as the people employed at the airports will need to reside in the direct neighbourhood. For example, property prices in and around Panvel, Kharghar, Ulwe and most southern parts of Navi Mumbai have shot up due to the new international airport.

Though, the property calculus is shifting. There are several potential buyers who may take a back seat towards the areas which are adequate with good upcoming infrastructure.

What are the reasons?

Constant noise: Professionals those who spend maximum hours of a day in their office want to go back to a calm and quite environment. Areas which are near to a busy road, a highway, an airport or a railway station can be a cause of constant noise, making home an unpleasant place. Not necessarily, growing infrastructure will boost property prices and sales at the same time. Developers need to be cautious before announcing for any project as which segment from the society they are focusing upon and what infrastructures are announced near to the locality.

Crowded: Residential areas are meant to be built in areas which are scattered in large open space. But, if the locality is crowded, it might leave a negative impact. Retail markets, bus terminals or railway stations for that matter, each account for large number people. These are a cause of noise and also, huge crowds, making dwelling difficult for the residents.

Air pollution: Living in the urban part of a country has its own pros and cons. Development of any infrastructure in the urban areas calls for air pollution, too. The rising amount of air pollution is a concern for every single human being residing in metropolitan cities. Policy announcements and implementation of these infrastructures sounds positive for the growth of the locality. But one should also consider the fact of getting affected by the air pollution caused by the construction.