Moneycontrol
Jul 25, 2016 02:56 PM IST | Source: Housing.com/news

The essential checklist for investing in an upcoming area

Rapid urbanisation has led to the emergence of new suburbs and peripheral areas around metropolitan cities. These newly-created residential markets have their own set of development types (apartments, row houses, villas and plots), price R

The essential checklist for investing in an upcoming area

Rapid urbanisation has led to the emergence of new suburbs and peripheral areas around metropolitan cities. These newly-created residential markets have their own set of development types (apartments, row houses, villas and plots), price points (affordable, mid, premium and luxury) and buyer-investor categories. However, the moot question is whether these new destinations offer a safe option for property investment.

The biggest advantage of buying a house in an upcoming residential destination, is the relatively affordable price of units, points out Ashish Anand, managing director of Neo Developers, a Gurgaon-based development firm. “Often, apartment projects in an upcoming region, come with inaugural discounts to lure early investors. Prospective buyers can strike a good bargain here,” he explains. However, investing in such locations also has its own set of risks.

Negligible appreciation for a few years

An upcoming area is likely to lack certain necessary basic infrastructure. Hence, appreciation in property prices may be zero or negligible for several years, cautions Anand. There could be multiple reasons for this, such as delay in the construction of a connecting road or surrounding infrastructure.

Case in point is Faridabad. In early 2008, upcoming projects along the Neharpar area were charging a certain premium on account of the proposed connectivity in the region. However, as the laying of proper road infrastructure got delayed, a number of investors and buyers exited the projects, resulting in a drop in prices. Another such region in the NCR, is Yamuna Expressway, which has a number of announced projects. However, the rates have not moved much in the last four years.

“It is a big risk for those putting in their money. Usually, it is advisable to put money into established properties and localities,” advises a consultant at Realistic Realtors, a New Delhi-based real estate consultancy, requesting anonymity.

See also: The buyers’ guide to investing in upcoming locations around metros

Construction hassles and habitability

An upcoming region where a number of developers are constructing their projects, may not be habitable for several years. While apartments may be ready, constant movement of heavy construction vehicles, dust and poor road conditions, may make such areas inhabitable. Mitin Raj Singh bought a flat in Noida Extension area but plans to shift only after a year due to these problems, even though his flat is ready. “While a few towers in the project are ready for possession, towers and projects nearby, are still under-construction. I will prefer to live on rent for a year or so,” he explains.

Out of the 50-odd developers in the Noida Extension region, just two developers have offered possession to buyers. According to real estate brokers in the region, the area will take around 4-5 years to have quality basic infrastructure, similar to Noida.

What should you do?

While there are risks and challenges, there is a price advantage when it comes to making a real estate investment in an upcoming locality. If you are undertaking a property search, weigh your options before investing in an upcoming suburb that is far away from established localities. While the house may cost less, you may have to spend more on your daily commute.

Also, check the proximity to amenities and other developed localities. Localities that have a supermarket, a school, access to a major expressway or a train line, and local shops within a four-five kilometer radius, are likely to become future hubs for home owners.

By: Housing.com/news

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