Impact of the infrastructure development on the real estate sector

The infrastructure of any place plays a key role in the development of real estate prices in any of the locality. As and how the development takes place in any particular locality the need for better & broader quality roads increases also the need for underground drainage and adequate supply of water becomes a necessity. There is also a need for the construction of flyovers and bridges and the construction of new peripheral roads to ease the traffic. Post to that the need arises for the construction of skywalks, metro rail, monorail, and bud transport. In the current times, the construction of metros is going on in a lot of places like the metros as well as tier-II cities across India to ease the vehicular traffic and also to improve the connectivity of the cities. The adjoining places near the metros are also connected with the help of metros. Thus when the population of the city increases the demand for all the infrastructure development increases. Also, some more civic amenities add value to the development of the city like the footpaths, trees planted at the corner of the roads, and the development of gardens that beautify the city is a necessity.

The development of infrastructure & basic civic amenities help in the development of the city and impacts the real estate sector adversely. The prices of real estate go on increasing due to the development of infrastructure projects. As the development takes place the demand for housing in those particular localities increases. The development of the locality leads to a surge in prices as the preference of the people for staying in those localities increases and also the ready reckoned rates also increase due to high demand. The ready reckoned rates are being purposely being increased in the localities where the expenditure of the government is high as the government needs to recover the cost incurred in the development of the infrastructure projects.

The demand for home loans also increases when the property prices increase as it becomes impossible for the flat buyers to buy the flats without the home loans. The major focus on the infrastructure development is on the metros and also the penetration of the banks & NBFC’s is high in case of the disbursement of loans. Also due to high property prices, the amount of loans to be taken is high. Thus it becomes a good opportunity for the lenders to tap the potential for the disbursement of loans at prime localities.

Impact of the infrastructure development on housing projects:

  • Improved connectivity for the flat buyers:

The improvement in the connectivity of the houses helps in easy transportation of goods & passengers. Also, it becomes easy for people to commute to workplaces where there are better quality roads and well-developed infrastructure. Also, improved connectivity helps in the overall development of the locality and also improves the quality of life of the people.

  • Increase in prices of the locality:

The improved infrastructure leads to the increase in ready reckoned prices of the place. As the government increases the ready reckoned prices of the real estate deal also increase accordingly. And thus the government to recover the infrastructure cost sells or auctions the plots at higher prices and also collects higher registration & stamp duty charges from the flat buyers.

  • Greater scope for disbursement of home loans:

The requirement of the flat buyers for the home loans increases as and how the property prices increase. Also making a full down payment for the property gets reduced when the prices of the property increase. The home loans can be obtained at attractive interest rates and can be easily be approved for the right customers to avail loans to buy a house in well-developed localities.

  • Better opportunity for investors:

The investors get a better opportunity to invest in the rapidly developing localities with better infrastructure development. The investors can gain higher returns on investment of the localities with higher development prospects and also can gain higher returns on rentals due to the increased property prices.

Better infrastructure development leads to better connectivity and also improves the quality of life for flat buyers. Also, the property prices increase rapidly due to the better infrastructure development due to higher demand and also due to increased rates by the government of sale deed transactions. The infrastructure development increases the status of the locality and provides convenience to people who reside in those localities.

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