Friday, November 2, 2012

Reasons for price appreciation in real estate in the Greater Faridabad region

For the people who would have come to the Greater Faridabad region about three or four years back, when the projects were still in their infancy and not much of construction activity was visible, there is an element of surprise in store as more and more of the buildings have started dotting the skyline. The initial scepticism of the people pertaining to the development of the region fast enough to be worthy of investments has now been replaced with the certainty of growth and development. This is one of the contributory reasons for the rise of prices of the real estate projects such as BPTP Princess Park.

The 2 BHK in BPTP Princess Park, which was priced at the time of launch at Rs 18.27 lakhs has now risen to almost the double that amount, at Rs 39.15 lakhs. This price rise is not unique to the BPTP Princess Park Price List but can also be found in the price lists of most of the other societies. Some of the main contributory reasons for this appreciation can be better explained at the project level as well as the regional level. While at the regional level, the increase in demand is playing a chief role, at the project level, it is the features of the project which determine the further appreciation of the prices of the units.
Let us first look at the factors at the project level, which are influencing the prices of the residential units. The brand name of the builder, the amenities provided, the spaciousness of the residential units, the nature of fittings and fixtures and the overall ambience of the units as well as the project, determine the extent to which the price appreciation will happen for a particular project. The projects of reputed developers always command a premium and there is more rate appreciation for them, even if it is a marginal increase.

At the regional level, it is the locational advantages, the development of infrastructure facilities such as electricity, water, sewage, telecommunications and transportation and the external environment (such as the government policies) which chiefly determines the price increase since these directly affect the demand levels.
It has been seen that the extent of regional development is the main contributing factor for the price rise of the real-estate. The project level differences in rates are marginal across different properties. So, if the government initiates steps to boost the infrastructure for quick regional development, the demand levels pick up since the people expect better returns from a fast developing region rather than the one which has not been developed.

So, for the Greater Faridabad region, it is the commitment shown by the government for developing the infrastructure that has resulted in increase in the prices of project units. The fact that the 2 BHK in BPTP Princess Park is spacious and aesthetically appealing is a less important reason for the price hike.

No comments:

Post a Comment