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Wednesday, Nov 20, 2019

Take off: Are airports in smaller cities changing the real estate market?

The government’s UDAN scheme is connecting India’s towns with the world, and in the process altering the real-estate markets of these regions. But, analysts say, celebrate this real-estate spike with caution.

real-estate Updated: Aug 10, 2019 19:00 IST
Shweta Kushe
Shweta Kushe
Hindustan Times
Inaugurated in 2017, Shirdi International Airport is one of the newest tier - 2 city airports to be granted greater connectivity under Centre’s UDAN-RCS scheme.
Inaugurated in 2017, Shirdi International Airport is one of the newest tier - 2 city airports to be granted greater connectivity under Centre’s UDAN-RCS scheme.(HT PHOTO)

Whether you’re flying domestic or international, nothing beats the view of a new city as you fly into it. From the air, Mumbai’s the streetlights of Andheri glisten like gold. The grid layout of Jackson Heights just outside New York’s La Guardia offers sense of its geography. And the area around Tokyo’s Narita is so green, you’ll wonder where that famed Japanese technology went.

The government is planning close to 100 new airports around the country – in towns as far apart as Shirdi in Maharashtra, Hisar in Haryana and Durgapur in West Bengal. Many investors are considering buying up property near those airports in the hope of making the most of the location. Commercial developers hope the hotels and conference halls they build might eventually be profitable. And economies get a boost after airports start operations, many landowners hope their plots become more valuable.

Buying a house near an airport?
  • Look for a house that is near airport but is not along the flight path. It should ideally be 2 kilometres or more away from the airport.
  • If it is a new construction, check whether your developer provides soundproofing.
  • Check how low planes fly during peak flight times and especially at night, near your airport. Before you seal the deal, make sure you visit your future property during different times of the day to check on noise levels.

Should you consider investing in areas around an upcoming airport? Analysts are divided in their opinion. In big cities, a home near the airport is great for a frequent flier, but awful for anyone who lives within the flight path. In smaller towns, the variables change. Depending on the city, the local economy and the eventual air-traffic movement, your investment might sink, rather than soar.


When new airports are announced, the plans are usually met with a lot of fanfare. “There’s hope that comes along with it,” says Ashok Mohanani, Chairman of Ekta World, a Mumbai-based real estate developer. “In the realty sector, this translates to increased demand and inquiries for projects near the land demarcated for the airport.”

It’s a mere blip in the radar, says Anuj Puri, chairman of Anarock Property Consultants. “It is fairly well-known that there will be a price rise, but our observation has been that the price rise is only momentary following the announcement.”

When land values do appreciate, it is commercial real estate that offers the most hope – all airports will eventually need service quarters, cargo holds, a hotel, and allied businesses. On the other hand, luxury housing project prices plunge. Analysts say the emergence of any new public transport infrastructure comes with crowd and noise pollution, which deter luxury home buyers.

“We have observed that affordable housing is the only real estate sector that shoots up after an airport announcement in the vicinity,” says Puri.


The government scheme covers not only new small-town airports, it also plans to revive stagnated airport projects, especially those in the Greenfield category, where there is not much competing construction posing a hurdle (literally a green field). In Kerala, Kannur airport, developed in this category, became operational in 2019, after 10 years of snail-paced development. Land rates skyrocketed in the vicinity. A one-acre plot, which cost Rs 5 lakh in 2013, now fetches close to Rs 1 crore.

But if airport work is stalled, price-rises are stalled too. “Higher returns are directly related to the developmental progress of the airport,” says Rajan Bandelkar, president of NAREDCO Maharashtra. Think of the Navi Mumbai International Airport’s slow pace. Land prices shot up in 2008. But they’ve settled down to previous levels in the decade since.


Many of the new airports are planned in regions that show potential for tourism development. Chipi airport, in Maharashtra’s coastal Sindhudurg district, is being developed to get recreational visitors to the otherwise agricultural area. “Getting an airport will attract more tourists and will increase income from tourism, which will also help in further development of infrastructure,” Bandelkar says. Will this mean the areas around the airstrip will become more valuable? Sure, but tourist hubs and coastal areas might be a surer investment.

If you’re considering a home as an investment, look more at rail and road connectivity than proximity to an airport, say experts. “Buying property near future airport projects works only if you’re looking for long term gains,” says Puri. Study the pace and expected scale of the airport project before you invest. Remember, sometimes hard-earned money can fly away faster than a commercial jet.