by THO
With Delhi-NCR grappling with worsening pollution levels, Zerodha co-founder Nithin Kamath has proposed that property prices should be linked with air and water quality to help keep the pollution levels down and that a ‘property price discount’ be offered in areas where levels are high. Real estate experts, however, said that property prices in an area are guided by factors such as scarcity of land, demand and supply, infrastructure, density and connectivity to places of work, which in turn dictate the guidance or circle rate of a particular area rather than environmental assets.
There are others who are of the opinion that the concept of charging a premium for properties overlooking the greens or water bodies is not new. Property prices prevailing in an area have historically been dictated by the qualitative aspects that a project or an area offers to the residents, they say, adding real estate developers have all along imposed preferential location charges for apartments overlooking a forest or a lake and a few local authorities have charged a premium for allotting plots located in proximity to parks and green belts.
According to Prashant Thakur, Regional Director – Research, ANAROCK Group, historically, there is no evidence of such a trend. Real estate decisions are guided by market drivers such as price and scarcity of land, demand and supply, and employment potential in and around locations. “We have not seen factors such as pollution influencing pricing.”
“Though the costliest city centres often have the highest incidence of pollution, we are yet to see their worth degrading because of such factors. Cities like Delhi, which witness extreme rates of seasonal pollution, continue to command premium pricing,” he said.
Builders charge preferential location charges for homes facing greens
According to a few experts, the concept of charging a premium for properties overlooking the greens or water bodies is not new. Property prices have historically been governed by the qualitative aspects that a project or an area offers to the residents.
“A case in point is Lutyens Delhi. The area has for decades been an ultra luxury address not only because of its low density but also the lush greenery around it. Interestingly, most of the nearly 18,000 parks are situated in South Delhi, which is why the property prices there have always been higher than other districts or parks of Delhi,” opines Akash Vashishtha, an environmental lawyer.
Real estate developers have for years taken preferential location charges (PLC) for projects that face water bodies, golf courses and forests. “Most of these properties are termed as luxury properties because they have been designed to provide a better quality of life at a higher price point. There have also been instances of authorities charging 5-10% additional amount for allotting properties facing a green belt or a park,” he explains.
Hence, the premium pricing element is not a new concept and has all along been factored in, though unconsciously, by authorities as well as real estate developers. “Nithin Kamath’s views on environment and property prices draws our attention to the fact that the public should pay for the services that environment assets provide so that they value them more. The impact of climate change should compel citizens to value environmental resources and learn to pay a premium for their upkeep,” he added.
Guideline rates determine property prices
There are a few experts, however, who do not subscribe to the view that property prices are linked to air and water quality.
“This is a consumer driven market where prices will always be dictated by the demand and supply of the land. The government sets a guideline value or circle rate for a particular area and charges stamp duty and registration fees. This value is based on the value at which land/property transactions have been taking place in an area over a period of time. The benchmark rate is set based on the location of the plot, connectivity to and from employment zones, basic infrastructure and the density in an area,” explains Sarang Kulkarni, managing director at Bengaluru-based Descon Ventures Real Estate Services Pvt Ltd, an integrated full service real estate and infrastructure planning consultancy firm.
It is, therefore, important for citizens to demand a certain standard of living from the government for which accountability is the key. “Cities need to provide infrastructure, including adequate green infrastructure. Also, once you follow urban planning guidelines you will have cities that look different to the ones in which we live in right now. The intent of a Master Plan is to provide a certain standard of living to citizens and they should demand it,” he said.
“Today if a mall comes up in an area and there are traffic issues, residents of an area do not usually make much noise about it because the retail asset indirectly benefits them as it leads to an increase in property values. It is up to the consumer to demand certain standards, link the environment to personal ethos,” he said.
What did Zerodha’s Nithin Kamath say on X?
Kamath has suggested that property prices should be discounted based on the quality of air and water as this would encourage homeowners to improve their surroundings. “Maybe a property price discount for the quality of air and water is the solution,” Kamath wrote on X.
“If economics accounted for this, maybe we would all figure this out. Essentially the air and water quality determines the rate for the property,” he suggested, adding that linking property to air quality will turn a property owner into the owner of the place.
For example, if I went from owning a property in JP Nagar and caring for it to caring for my layout in JP Nagar and then the whole of JP Nagar, it could have a better outcome,” he explained.
He also said that air and water pollution can have a serious economic impact, including reduced tax revenues, falling land values and degradation of civic infrastructure.
Essentially the air and water quality determines the rate for the property,” Nithin wrote.
“If I went from owning a property in JP Nagar and caring for it to caring for my layout in JP Nagar and then the whole of JP Nagar, it could have a better outcome,” he wrote.
Kamath argues linking property prices to environmental health could drive better urban planning and foster community efforts. “If economics accounted for this, maybe we would all figure this out,” he said, emphasising the need for a systemic approach rather than isolated solutions.
