Prices in real estate are subject to the location of the property. The more posh the address is more is the cost of land, The quality of infrastructure is also a crucial factor in the determination of property’s prices. There are many more price determinants that decide the cost of the property. Here we shall take a review of such elements.
As discussed above the prices of land in a posh locality are subject to the demand of the seller. Here, the buyer has very fewer chances of price negotiation. Resultant, buyers opt for an upcoming location that offers lower rates. But, buyers should also consider the potential and price appreciation, habitability of the area and its infrastructure before making an investment.
Rapid urbanization 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. Often, apartment projects in an upcoming region, come with inaugural discounts to lure early investors. Prospective buyers can strike a good bargain here. 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. There could be multiple reasons for this, such as delay in the construction of a connecting road or surrounding infrastructure. It is a big risk for those putting in their money. Usually, it is advisable to put money into established properties and localities.
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, the constant movement of heavy construction vehicles, dust and poor road conditions may make such areas inhabitable. A Person who buys a flat in an upcoming area always plans to shift only after one or more 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. Thus he prefers to live on rent for such period.
Out of the many developers in an upcoming area, very few developers complete and offer possession to buyers. Many real estate brokers state the upcoming areas will take around 4-5 years to have the quality basic infrastructure, similar to developed areas.
What should you do?
While there are risks and challenges, there is a price advantage when it comes to making a real estate a viable investment in an upcoming area.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 homeowners.
