Is property investment in the outskirts of the city a right decision ?

Outskirts Property Investment Right Decision

The property investment in the outskirts depends upon the future potential of that locality. For example, the locations of the outskirts from the metros like in the Mumbai metropolitan region or the Delhi NCR region can be beneficial as these are the localities that can get developed ones. While like the other ones like the places which are far from the metros and in the isolated locations may not be beneficial for the investment as in case if no development takes place in those places then the prices may not increase and also there could be no buyers for the property for the resale ones. The banks also extend the loans only for those properties which are within reach of bank branches. The places in the extreme outskirts banks do not approve home loans as the bank officials cannot reach the isolated places for physical verification of the property. But the loans can be extended to those localities wherein the places are within reach from the city or where the bank branches do exist in the vicinity. The places of the metropolitan locations are better locations to invest.

In the outskirts locations, the registration and stamp duty charges are also charged lesser as most of them fall under the Gramin localities, beyond the municipal jurisdictions’ city limits. Thus these places are charged with lower taxes, but efficient water supply and electric supply are necessary, which may not be consistent in such localities. Some newly developing areas fall under the new town planning authorities like the CIDCO[City industrial development corporation] in Navi Mumbai, the Noida town planning authority, Gurgaon town planning authority. Etc. The town planning authority ensures that the outskirt’s localities provide proper roads, water supply, and electric supply. Also, public transport is an essential part of the town planning system. Home loans are also approved easily by the banks for such projects. The prices also do increase in such localities but getting the buyers is difficult in such localities. For long-term investments, the investment in the outskirts is beneficial as it takes time for the localities to get developed. But in certain cases, the properties taken by the early buyers may fetch a very great value for the properties. Due to the excess supply of the new construction properties also the demand for resale properties is less.

Benefits of investment in the outskirts:

  • The investment may get very high returns for the early investors in the property, but the rental income can be poor in such localities.
  • The government taxes being charged are lower in the places that do not fall under the municipal jurisdiction; thus, the property buyer can save money on the investment done. Also, in the later stage, when the population increases, the locality may be merged with the existing localities, or a new municipal corporation may be formed. This may benefit the early investors.
  • The investment in outskirts have more chances of becoming the well-planned town as the areas in the congested city may not have spaces to get developed while as the places in the outskirts due to huge space available may have better scope for development of gardens, ample parking spaces, development of recreational areas, well planned commercial zones and broad, spacious roads.
  • The areas in the outskirts may get developed with all new better-developed infrastructures which the old town may not have.
  • The rate of appreciation may also be high, and the percentage growth may be high due to rapidly developing infrastructure.

Disadvantages of the investment in the outskirts:

  • Getting a buyer for the resale properties may be difficult in case of emergency funding required by the investor through the sale of the property. As the number of buyers is less and new construction properties are available in ample thus the resale buyers may be less for the properties.
  • There could be a problem with basic facilities like consistent water supply and electric supply in the outskirts region, which falls beyond municipal jurisdictions.
  • If the property is at an extremely isolated location or the ones inaccessible from the cities, then, in that case, the banks may not extend the loans as it is not possible for the banks to do the physical verification of the property.
  • The time taken for the development of the localities may be exceptionally high. Thus, getting returns on investment may take time. Thus, the investor should have a long time of patience for waiting to get handsome returns.
  • The outskirts places may sometimes lack good transportation facilities, thus making it inconvenient for the people residing in those localities.

Thus the investment in the outskirts has both advantages and also the disadvantages. The investment in the planned city may have better returns on investment and is also a recommended investment. At the same time, the other places that are extreme in the outskirts may not be recommended as the loans also may not be approved for the projects. The investment location should be so that the places should be accessible from the main city.