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Analyzing Capital Appreciation in Land Prices around Chandigarh

Navrattan Roshan MBA (UIREM)

What is Capital Appreciation


An increase in the market price of an asset.

Real Estate : an increase in the value of the property after it has been adjusted for capital improvements and partial sales. Capital appreciation refers to the value of a property as the capital gain realized when the property is actually sold.

Reasons for capital appreciation


Supply and demand can cause the value of real estate to go up or down The demand for real estate is affected by

the availability of jobs,


availability of land,

proximity to shopping, schools, parks, churches, etc.,

infrastructure improvements, desirability of an area, crime levels Changes in the infrastructure of an area can have a large impact on the demand for property

Cont..
Property values appreciate in value over time due to inflation also.

Inflation is caused by an increase in the amount of money in circulation. The value of money declines when the supply of money increases and the end result is increased retail prices. The cost of the land, construction materials, labor costs, building permits and fees, etc. go up over time making it more costly to replace an existing property

Chandigarh
Population exceeds 1 million whereas it was planned only for 5 lakh people HDI is 0.892 which is very high as compared to other cities. 60% of the population is living in rental houses even when their earning capacity is much high.

It provides opportunities to the surrounding areas to provide housing to these people.

Greater Mohali Area Development Authority


GMADA appointed JURONG Consultants Pvt. Ltd. to complete a comprehensive Integrated Master Plan for its six Local Planning Areas (LPAs): Banur, Dera Bassi, Kharar, Mullanpur, S.A.S Nagar and Zirakpur. This project has involved the cooperation of several agencies namely -

Punjab Urban Development Authority (PUDA), Centre for Computational Engineering (CEC) at the Punjab Engineering College (PEC), and

GMADA.

6 LPAs planned by GMADA

Reasons for appreciation in Mullanpur


A well planned city. Infrastructural developments as planned by the authority International cricket stadium

97 acres medicity project started 450 acres township allotted by the government to the public. Promising hands of the government Many big and small developers are coming with their residential projects. Close proximity to The City Beautiful.

Mullanpur - Strengths
Greenfield Site - The foothills of Shivalik are full of greenery. Mullanpurs locational proximity to the Shivalik hills and forestland is a key attraction.

Scenic beauty - The strategic location of the Mullanpur LPA at the foothills of the Shivalik range and a number of intertwining rivers and waterbodies provide an exceptional scenic quality to the entire area.

Location - The Mullanpur LPA is bounded by both Chandigarh and S.A.S Nagar. It is also nearby to the industrial town, Baddi, in the state of Himachal Pradesh. Once the GMADA expressway is constructed, the Mullanpur LPA will be made more accessible to towns like Baddi and Anandpur Sahib.

Weaknesses
Villages - The rural villages in Mullanpur LPA are scattered. The LPA has about 32 odd large and medium size rural settlements scattered all over the LPA region.

Brick kilns - There are 17 brick kilns found in Mullanpur LPA. These brick kilns are a source of pollution to the area.

Unauthorized developments

Threat - Rapid urbanization may result in massive environment degradation if it is not carefully carried out. This threat can be overcome by conducting EIA for all the environmentally sensitive areas.

Reasons for appreciation in Zirakpur over last 5 years


Infrastructural development has taken place at high levels in the region Flyovers have been constructed to provide good connectivity to the other cities Many shopping malls are developed Huge residential and commercial developments can be seen in the region. Good connectivity with Chandigarh.

Zirakpur - Strengths
Relatively un-encumbered Greenfield Site Existing major commercial establishments particularly along major transportation routes Proximity to Airport and FEZ

Existing natural attractions


Close proximity to the tourist spots in Himachal Pradesh.

Weaknesses and Threats


Scattered rural settlements

Limited social infrastructure provision

Land locked under defence related services

Incompatible uses like brick kilns

Reasons for appreciation in Derabassi


The planning strategy for Derabassi is set out to provide effective infrastructure and become a sustainable industrial town with adequate residential facilities and ecofriendly recreational areas.

In the earlier years, the town has not shown much development in the residential sector but it promises to be one of the best industrial towns of the punjab.

Future Scope
Good business opportunities coming in the town as the most of the area is taken under FEZ ( Free Enterprise Zone).

Good connectivity with the upcoming Panchkula IT park.

Prices are comparatively less as compared to other cities.

Strengths
There are ready clustered pharmaceuticals and heavy industries and more established industrial base in Dera Bassi. There is already a well connected road system to Zirakpur, and Ambala through the existing highway NH 22. There are established residential developments in the central region of Dera Bassi where most of the existing built-ups are located. The presence of riverfront is advantageous for residential and areas earmarked for future residential use.

Weakness or Threat
The presence of the heavy industries in the north such as brick kilns and stone crushers emit air and noise pollution to the surrounding areas. Some measures would have to be imposed on these activities to mitigate the pollution impact.

Kharar
Favorite destination for the people whose business units are set up in Mohali. Good connectivity with the cities like Chandigarh and Ludhiana. Prices are quite low in this region, so good investment options for the middle income groups.

The city is lacking entertainment industry therefore good options for developers in this segment.

Conclusion..
For the developer, the best location at this time to launch a project would be Zirakpur No doubt, the land prices are high in this area as compared to others but selling potential is also much higher than the other locations, because of good

connectivity to other regions at the present time


and also close proximity to the hills of Himachal Pradesh.

Whereas for the investment point of view, the best location to invest would be Mullanpur, as the investment would be less and returns are expected much more than the other regions.

Thank You..