Buying property in areas close to infrastructure development is always a smart move to with an eye to gaining higher value for property in the future. But investment in such areas also comes with its risks.
HappyKeys talks to industry experts to gain an insight about some of the aspects that buyers need to keep in mind when investing along development corridors.
“Buyers (NRI or otherwise) today do a high degree of due-diligence before investing in properties. However, they also need to keep in mind that local government projects in India are different from how the ones in mature markets,” says Anirudh Khanna, land overseer and evaluate for several developers in Ghaziabad. “And this has a key influence on the value and development of the projects in the vicinity, which in turn impacts investment opportunities.”
Some of the factors that one needs to keep in mind when investing in development corridors include:
“Delayed infrastructure is generally the norm in India, more so when it is mired in controversies,” says Virath Mani, a consultant with Swara Real Estate Financial Advisors. “When investing in these aspirational corridors, one needs to factor in delays that may act as impediments for quick escalation in property values.”
An irresolvable delay in infrastructure project can have a negative impact on the potential of the location in the short term.
“A prospective buyer must take a look at the procedures undertaken to acquire land even at the planning stage,” says Khanna. “This is one key issue that can either stall escalation in property prices.”
A JV with a reliable global party
“Several roads, flyovers and bridges today are being developed in collaboration with international private parties. The advantage that these have is that they do not get into agreements unless the papers and processes are not checked,” says Mani.
“Several project directors today are emphasising on greater transparency. This with the development of commercial and social infrastructure in the vicinity generally is a sign of sub-market development which can have a positive impact along development corridors,” says Khanna. “Researching enough to identify such pockets can prove to be a smart move.”
“The improving macro-economic conditions and transparency in the proposed project and the scale of investments are expected to impact the real estate market in the coming years,” says Genesan.
Experts recommend targetting locations that have been earmarked for the next phase of development. Though slightly riskier with regards to ownership, if this key aspect is addressed, one can hope to book good profits even before completion of the corridor projects.