Wednesday, 1 March 2017

Roads in Bihar and real estate prices in Patna….

real estate prices in Patna

Source: RBI, Ministry of Roads, JLL REIS
The correlation between building road infrastructure and restricting house prices to moderate levels in Indian metros is shown in the above graph.

Length of road construction is known to have a direct bearing on real estate anywhere in the world and our Patna is no exception. But what is the correlation of Roads and prices in Patna real estate market? Does road building check property prices in Patna or they help them to rise?

As road lengths increase and there quality improves , connectivity improves across a wider geography – thereby attracting new project launches at lower price points away from the centre of Patna. An example is the connectivity of Bihta with Patna through the road. Another example is the flyover built above the Raza Bazaar area; it has made western Patna, Danapur, Khagaul, and Shaguna Mode more accessible as residential property market option. This has reduced or better say checked prices in central Patna. This would also help increase affordable housing projects near Patna in areas like Sampatchak, Bihta and Phulwarisharif.

This holds for intra city connectivity but what about roads built to connect Patna with other areas of Bihar?

If more roads are constructed to connect the state capital, Patna, with other parts of Bihar, property prices rise in Patna as the demand for property in Patna increases from people all over Bihar. The very best example has been the construction of Gandhi Setu in 1980s. It led to introduction of APARTMENT culture in Patna.

Currently, the only solution to the problem of urban housing shortage in Patna is building new infrastructure to connect more outer areas to the city centre. We at feel that when new roads are constructed across rural and urban areas in Patna, the spread of development happens over a wider geography. These potentially bring down the premium that certain urban centres in Patna command for having better connectivity. This is particularly true for our infrastructure-starved city, Patna.

Fortunately, road infrastructure has emerged as a key focus area for the current state government. The young Deputy CM of Bihar, is keen on improving connectivity in and around Patna at a greater pace. According to media reports earlier this year, he has an ambitious plan to connect Patna with the most distant part of Bihar within Five hours. This is expected to improve freight movement, ease traffic bottlenecks and improve inter-city connectivity in the state. It will be interesting to watch residential property price movements in the coming years in Patna after completion of a number of road highways and bridges in and around Patna. We say so because as soon as roads are laid the adjacent land owners start demanding prices in multiples of previous price, and real estate prices in Patna are driven therefore more so by land component than construction and other soft costs. Strict restriction in land usage in Master Plans with no change permitted later would help set right the property prices in Patna.