Gram panchayat areas Vs municipal limit locations: Pros and cons

[] Home buyers can find properties in gram panchayat areas that are affordable and also have good potential for appreciation. However, there are also certain drawbacks. We analyse how they stack up against areas within municipal limits

When Viraj Momaya, a sales professional, was looking for a home in Dombivli, a northern suburb in Mumbai, he was intrigued by the difference in prices within the location. He discovered that this suburban real estate market had areas in the gram panchayat limit, where property prices were significantly cheaper than any property inside city limits.

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“A home in Gandhi Nagar, which falls in the municipal limits, costs Rs 8,000 per sq ft, while it is possible to find a decent home in PNT Colony, which is under the gram panchayat limit of Dombivli, for Rs 5,000 per sq ft. Both areas are a mere 100 metres apart,” Momaya shares. “Properties falling in gram panchayats can be a very lucrative opportunity. The initial investment is invariably low, while its growth potential can be quite high, as the locality may be included within municipal limits in the foreseeable future,” he explains.

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While some parts of it may look like a village, a gram panchayat may witness rapid development due to increasing construction activity. “Developers have managed to get land at a low cost from these areas, which mostly have countryside living. The land is converted from agricultural to non-agricultural usage. The growth prospects in these regions are quite promising,” says Rajendra Kalan, a broker who assisted Momaya in buying the home.

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Such areas attracts buyers who have budget constraints and do not mind the inherent drawbacks that gram panchayat areas often have. “These areas are not connected to the municipal water supply. In most cases, developers will make their own arrangements via tankers or borewells. Though these provisions may suffice for a while, especially in the case of smaller projects, they are much less reliable,” reveals Ashwinder Raj Singh, CEO – residential services of JLL India.

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Compromise on quality of infrastructure

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“Provision of infrastructure, such as roads, is also vested solely in the gram panchayat authorities. So, it tends to be of a much lower quality than in municipal areas. The population in such areas comprises mostly of the original inhabitants, which means that the cosmopolitan flavour is usually missing. Shopping outlets, healthcare facilities and schools, may be of a lower grade, although this is not always the case. Much depends on how a particular gram panchayat is juxtaposed with better-established and therefore, more upscale localities in the municipal limits,” explains Singh.

However, when the property gets included in the city (municipal) limits, the quality of services start improving rapidly and the property prices surge steeply. “Gandhi Nagar was also previously under gram panchayat. Developers realised its potential and built high quality homes. After a large number of people moved here, the area was pulled into the municipal limits,” says Kalan.

“There need not be any bias against purchasing property in a gram panchayat area, but more caution is certainly called for,” maintains Kishor Pate, CMD of Pune-based developer, Amit Enterprises. “Buyers should verify that the developer has a clear title for the plot and that there is no litigation related to acquisition,” he advises.

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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