Why Social Infrastructure Is Key to Sustainable Land Value

Factors outside of roads and metro lines can also increase the land value of a location.

Investors tend to overlook fundamental factors that evaluate the potential of a location, factors that enhance the livability of a location such as schools, trusted hospitals and daily conveniences.

A statistic that is worth noting is that properties located near high-quality schools may command a market premium of up to 10-20% over comparable properties in other areas [1].

Let’s take a closer look at social infrastructure and why it should be one of your first points of investigation when purchasing land.

What is Social Infrastructure?

Social infrastructure consists of locations and services which enable us to live our lives. This includes schools and hospitals, parks and playgrounds, markets and shops, community centres and other places. While roads and highways are built to facilitate travel, the real value of a piece of land is also its value for daily life.

Why Is Social Infrastructure the Real Growth Factor?

The value of land is generally discussed with reference to roads and highways. These factors can affect the value of land, but there are other factors which need to be taken into consideration in order to arrive at the long-term value of land. Social infrastructure is only one part of the picture, so it also helps to understand the other factors that give land its value before evaluating a location.

• People move to a new area for work, but remain in the area where their children can walk to quality schools. Thus, social infrastructure creates a reason for families to remain in an area.
• Even as investors come and go, families purchasing homes, leasing offices and starting up businesses constitute end-user demand that does not decline easily.
• Hospitals have clinics, labs, pharmacies, places to eat and housing for staff. An education hub is often supported by bookstores, coaching centres, and cafés within a short distance from each other, creating an ecosystem of amenities.
• While other locations in the market may be declining, locations with strong social infrastructure may hold up better than purely connectivity-based locations.

What to Watch for in Emerging High‑Growth Zones?

Look for signs that show a place is getting better such as:

1. Planned Social and Civic Projects

Schools, hospitals, parks and sanitation efforts announced under initiatives such as Smart Cities or AMRUT projects can create enhanced liveability.

2. Micro-markets Near Major Infrastructure Corridors

New ring roads and expressways, such as the Delhi-Jaipur Expressway passing through Jaipur, the Purvanchal Expressway through Lucknow or the Samruddhi Mahamarg through Nagpur, are expected to form transport corridors and create clusters of social infrastructure around them. Colliers estimates that Nagpur, supported by the Samruddhi Mahamarg, could see expected returns of 5.2x by 2035 [2].

3. Integrated Lifestyle Offerings

Spaces designed with beautiful landscaping, pedestrian ways, shopping, retail and commercial areas, to name a few, can make the space more community-oriented and create a strong pull for families.

4. SEZs with Institutional Townships

A Special Economic Zone (SEZ) that is integrated with an institutional township and offers life amenities shows good compound planning.

Conclusion

Connectivity to a location will draw people to it, but it is the social infrastructure of a location that will keep people there in the long term. In real estate terms, this means that a location with staying power is more valuable than a location that can be reached quickly.

When evaluating a site for development or for long-term investment, look for schools and hospitals that are planned for the area. In the end, infrastructure can move vehicles, but social infrastructure moves lives. The smart money pays attention to real estate’s social infrastructure.

Sources:

https://www.opendoor.com/articles/how-school-ratings-impact-home-prices

https://www.colliers.com/en-in/news/press-release-colliers-highlights-top-3-emerging-cities-within-india

https://www.telegraphindia.com/india/price-graph-100-times-in-10-years-bihta-fertile-belt-transforms-into-industrial-zone/cid/1578844

https://www.moneycontrol.com/news/business/real-estate/the-rise-of-the-township-model-and-the-fall-of-mumbai-7337751.html

https://www.constructionweekonline.in/people/property-prices-indian-realty

https://www.colliers.com/en-in/news/press-release-colliers-rapid-infrastructure