HOUSING

HOUSING
Factors affecting cost of housing

Submitted to:
Ar. Meenu Chaudhary
Submitted by:
Himani Gupta
Manisha
Factors affecting valuation of
property in India
Location and amenities
• Location
Buildings, real estate and properties, located in commercial
and market areas, hold higher value than their counterparts in
the residential areas. It is common to find brokers quoting a
higher price for buildings in well developed and approved
colonies and areas as against those in the lesser developed
and upcoming areas. Similarly buildings which are
constructed on freehold land tend to command a higher
valuation than those on leasehold plots.
Amenities
The valuation of properties with better infrastructural
capabilities and modern amenities are costlier than those
which fail to provide proper electric connections, telephone
lines, water sewerage facilities and all other infrastructure
such as community centers, children parks, swimming pools,
gymnasiums, parking lots or general stores. Valuation of
property is clearly based on the availability of necessities and
facilities connected with comfortable housing.
Infrastructure
• Infrastructural development is one of the most
important factors which influence real estate prices in
India. The presence of roads, airports, flyovers, malls
and bus terminals and other facilities in the vicinity of
the property, helps in value escalation of the same.
It is a known fact that connectivity is one of the most
important requirements for investors looking towards
purchasing land or property. This leads to the concept
which explains a rise in the valuation of property which
is well connected to entertainment hubs, medical
facilities, educational institutions, retail markets and
business centers, along with other day to day facilities.
Commercial real estate
• Places such as Noida, Gurgaon, Pune, Hyderabad, Navi

Mumbai and Andheri-Borivili in Mumbai, are striking
examples of commercial development which have
affected the valuation of property in these areas.
The development of malls, IT offices and Special

Economic Zones near residential areas help in cutting
down the time and energy wasted in commuting to
workplaces and increase the price of real estate in the
area.
Disposable income and availability of
land
• Disposable Income
Properties which are located in agricultural areas or
those dominated by manufacturing units attract a lower
price than those situated near the IT hubs. The valuation
of property is in direct proportion to the quantum of
disposable income in the hands of the purchaser or the
majority of population in that area.
Availability of land
In places where there is ample land available for
residential purposes or development of real estate, the
graph reflecting the valuation of property shows a slower
rise than in areas where land is comparatively scarce.
Demand and Supply
• Demand for real estate in a particular area is

inversely proportional to its supply. As the
supply or availability of real estate decreases, the
valuation of property increases.
Changes in population are the key drivers for

demand. Along with an increase in the number
of people inhabiting a particular area, the
popularity of a particular locality in terms of
people wanting to be a part of the locality also
increases its price.
Affordability
• Affordability refers to the cost incurred by the

owner in the process of enjoying or retaining a
property. In layman's term, it is the term which
establishes a relationship between interest rates,
property prices and wages.
If any of above three variables reach their

maximum level in a particular area, then the
inhabitants start looking towards a better
lifestyle elsewhere.
Structure
• The valuation of property is dependent on the

specifications of materials used, layout, design,
durability and life cycle of the building.
The quality and cost of materials during
construction, size, current rates of labor, frontage
and other physical attributes such as roof covering,
height of the building, type of foundation ,
waterproofing and plinth level, also affect the price
of a particular property.
Customization
• The cost of real estate becomes higher in the event of builders

undertaking customization of residential space on the lines of
the purchaser's requirements. For example, some investors
may want landscaped terraces or verandahs connected with
their apartments, upgraded kitchens, specifically designed
internal stairways in duplex apartments, higher quality paint
and flooring, or other user defined changes.
This leads to an escalation in the ultimate price charged to the
buyer. Before making their real estate purchase decisions,
investors should conduct an analysis of these drivers to get a
fair valuation of the property that interests them. Careful
investigation and homework can lead to better returns, easy
liquidity and more lucrative investments.
Market Trends
• The rising or falling of the market and the time
the property has been on the market.
Pricing and Presentation

• If the property is typical of what sells in that
suburb, it is likely to experience good demand
and will sell. Maintenance, garden care,
suitability and cleanliness all contribute to the
value of the property.
Government Initiatives
• Budget 2016-17 has proposed that service tax
will not be charged on the construction of
affordable houses upto 60 sq. Mt. Moreover,
agencies such as the Confederation of Real
Estate Developers’ Associations of India are
making diligent efforts to promote affordable
housing in the country. This private body of real
estate developers is focusing on launching
affordable projects on a large scale in the
country.
Growing Urban Population
• There has been a substantial rise in India’s
urban population, that is, there has been a
steady increase in the number of people living in
cities and towns. With more people relocating to
urban areas, the demand for affordable housing
in cities has also risen.

HOUSING

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HOUSING

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Factors affecting cost of housing

• Places such as Noida, Gurgaon, Pune, Hyderabad, Navi

The development of malls, IT offices and Special

• Demand for real estate in a particular area is

Changes in population are the key drivers for

• Affordability refers to the cost incurred by the

If any of above three variables reach their

• The valuation of property is dependent on the

• The cost of real estate becomes higher in the event of builders

Pricing and Presentation

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