Real estate basics: What is a Greenfield Project?

[] What is the significance of a greenfield project and what are its advantages and disadvantages? We explain

One may often hear projects being described as ‘greenfield’ or ‘brownfield’, lading one to wonder what the basic difference between the two is. While we will talk at length about the nitty-gritty of this concept in this article, it is best to start off by saying, a greenfield project is another name for a new project while a brownfield project is a project that is being upgraded.

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Greenfield projects: Key aspects

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A greenfield project is one, where the land on which the project is developed, has never been used and there is no need to rebuild or demolish an existing structure. A greenfield project is built from scratch and lacks the constraints of prior work on the site of the project, that is, there is no existing building or infrastructure. It can include infrastructural, industrial, manufacturing and urban development projects, built on greenfield land with no existing development. A project that requires demolishing, remodelling or upgrading an existing or older project, is called a ‘brownfield’ project.

Advantages of a greenfield project

Flexibility: The main attraction of a greenfield project, is that it offers developers the option of starting from scratch and designing a project that meets not only current but also future needs. They also have complete flexibility while designing the project, without needing to demolish or remodel anything on the site.

Development: Greenfield sites are rarely available within congested cities like Mumbai and Delhi. So, most greenfield projects are on the outskirts of towns and cities. This, in turn, creates an opportunity for infrastructural and economic development, as a direct result of increased business activity in that area.

High livability quotient for home buyers: Residential greenfield projects are often made as self-sustained townships, have smart homes outfitted with the latest in home automation and offer community living with new residents, as opposed to sharing the premises with old tenants, as in the case of a redevelopment project.

Disadvantages of a greenfield project

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Environmental impact: One of the main disadvantages cited for greenfield projects, is the encroachment on green areas and the destruction of natural green cover found in sparsely populated areas, where virgin land is usually available.

Cost of development: On greenfield sites, development of a new project has to start from scratch, including the application for various permits and licences required to start constructing on a new piece of land. This, coupled with the development of basic infrastructure in the area, significantly drives up the cost of development.

Long completion time: The time required to undertake a new development on a greenfield site, right from the initial approvals stage, to the final construction stage can be significantly longer than in a brownfield project. While the absence of existing infrastructure on a new site can be seen as an advantage and a design opportunity, it also means that the developer must obtain a whole host of approvals for the new site, from several government agencies. If these approvals are not granted in a timely manner, it can stall a project for several years.

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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