Infrastructure development is one of the trends that is revolutionising the Indian real estate industry and goes beyond mere construction and property dealings. Infrastructure like highways, metro, airports, rail links, logistics, and urban infrastructure is influencing the development of Indian cities and impacting their growth.
As India urbanises, there is an increasing need for infrastructure development to influence the future of emerging real estate markets. Connectivity improvements may lead to new areas becoming easily accessible, thus attracting business and population, which leads to the development of new residential, commercial and industrial centres.
For real estate developers, such information regarding the impact of infrastructure developments on future real estate demand becomes very vital in making real estate decisions.
How Infrastructure and Real Estate Are Connected
Real estate markets do not develop in isolation. The attractiveness of a location depends on several factors, including accessibility, employment opportunities, social infrastructure, economic activity, affordability and quality of life. Infrastructure can influence many of these factors at the same time.
A new metro line can reduce commuting time and make an emerging residential location more accessible. An expressway can connect smaller cities with major employment centres. An airport can encourage hospitality, retail and commercial development, while logistics infrastructure can attract warehouses and industrial businesses.
This creates a powerful relationship between infrastructure and property markets. As accessibility and economic activity improve, demand for real estate can increase.
However, infrastructure alone does not guarantee real estate growth. A successful market requires a combination of connectivity, employment, social infrastructure, affordability and liveability. Infrastructure announcements may generate interest, but long-term real estate value is ultimately influenced by actual economic activity and end-user demand.
Infrastructure Is Creating New Real Estate Growth Corridors
Among the many impacts of infrastructure developments is the creation of new growth corridors.
In India, with the increase in the number of expressways, metro railways, airports, and other forms of transportation infrastructure, previously remote places are becoming closer to major cities. With increased access and decreased time, development activities are beginning to occur outside the existing limits of the cities.
This is especially the case with the metros, where increasing prices of land and scarcity of land within the city have led to development activities in areas around it.
With transportation infrastructure being complemented with industrial zones, retail activities, educational facilities, medical facilities, and housing, it leads to creation of an entire urban ecosystem.
The outcome is the gradual change in the real estate landscape, as places which were previously marginal can become key real estate markets.
How Infrastructure Is Influencing Residential Real Estate
Connectivity is one of the primary concerns in the minds of potential purchasers. More and more consumers expect their houses to have convenient connectivity to their places of work, educational institutes, healthcare, retail, and entertainment facilities.
Better infrastructure would therefore increase the appeal of the newer residential destinations.
Good metro connectivity, construction of new roads and highways would ensure faster commutation, thereby making it possible for consumers to live further out and still work at the main employment hubs. This would increase the possibility of creating housing demand at locations that were till now poorly connected to the main centers of economic activity of the city.
However, modern-day consumers go well beyond thinking just about connectivity. They give due consideration to other aspects of a neighborhood, like schools, healthcare, retail, open spaces, and civic amenities.
This makes it imperative that the infrastructure-based residential development should be complemented by planned urbanization, as failure to provide proper social and civic infrastructure could lead to congestion and lack of livability at such locations.
Commercial, Industrial and Logistics Real Estate Are Also Benefiting
Infrastructure plays a crucial role in both commercial and industrial real estate. Businesses need access to employees, customers, suppliers, and markets. Infrastructure development like good roads, good airports, ports, and railway systems may make certain areas suitable for office spaces, manufacturing, logistics, and warehousing purposes.
The expansion of logistics and industrial networks in India provides a good example of this connection. As logistics and manufacturing continue to expand, there is an increasing need for warehouse and distribution facilities in strategically positioned areas.
Such locations as those close to highways, freight routes, ports, and airports have logistics benefits that may affect the choice of real estate.
Global Capability Centres (GCCs) expansion provides another factor impacting the commercial real estate market. With business expanding into India, there is a need for quality office spaces, which creates opportunities in various business districts.
It shows the importance of knowledge of not only the basic real estate aspects but also economic infrastructure.
Infrastructure Is Opening Opportunities Beyond India's Major Cities
Infrastructure development would help in stimulating the growth of Tier-2 and Tier-3 cities of India.
Connectivity could allow smaller cities to integrate themselves well with bigger economic centres. With the improvement in transport facilities and business enterprises exploring markets outside their metropolitan regions, these cities could get investments and draw new economic activities.
This would present an opportunity in all segments of real estate, which include residential, commercial, retail, hospitality, logistics and industrial.
There is a possibility that growth in developing cities would bring about balanced growth in cities by relieving pressure from the major metropolitan cities.
But infrastructure-driven growth would require careful planning in which transport infrastructure would require complementing services like water, sanitation, health care, education, housing, etc.
The end goal should be not just to interlink cities, but to make them economically productive and sustainable urban environments.
How RICS SBE Is Preparing Professionals for Real Estate and Urban Infrastructure
The rising connection between the two sectors requires the presence of individuals capable of understanding both these sectors.
RICS School of Built Environment (RICS SBE), Amity University concentrates its efforts on providing specialized education in the realms of real estate, construction, infrastructure, and the entire built environment sector. It uses an academic framework that combines technical knowledge with management and practical knowledge to help professionals be well-equipped to work in the dynamic realm of the built environment sector.
Some of the subjects taught under the MBA in Real Estate & Urban Infrastructure in RICS SBE are real estate economics, market research, real estate development, real estate valuation, data analytics, sustainability, and real estate project management. The multi-disciplinary curriculum helps them understand the connection between the real estate market and the infrastructure sector.
The Certificate Program in Real Estate Management includes among others subjects like real estate and urban infrastructure policies and practices, market research and transactions, real estate valuation, financing, and real estate asset management.
Frequently Asked Questions
1. What is the effect of development of infrastructure in real estate?
It may lead to better connectivity, business and residential attraction, improved accessibility and development of new growth corridors for residential, commercial and industrial use.
2. Does development of infrastructure always result in an increase in value of properties?
No, because the effect of infrastructure is dependent on other factors like connectivity, employment, demand, social infrastructure, affordability and other market factors.
3. What kind of infrastructure affects real estate the most?
Metro links, highways, expressways, airport facilities, rail corridors, port facilities and logistics infrastructure can affect real estate markets.
4. Why must real estate professionals be knowledgeable about infrastructure?
Knowledge of infrastructure enables real estate professionals to analyze new locations and market opportunities.
