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Views from an apartment add to the value of the property
Source: TNN Jun 23, 2012
What a house overlooks significantly beefs up its profile. Whether your apartment overlooks the sea, or the mountain, the golf course or just plain green patches like a park in the apartment complex, the 'view' cost is factored into the total cost of the property.

The value of the view of an apartment is based on market demand. Often, buyers are ready to pay a premium to own that coveted view.
It is not uncommon to come across people who have a fascination for the vast panoramic view of a sea or ocean and if they come across villas or flats affording just such a spectacle from their balconies, you are likely to hear these people say, "Wow! This is a million-dollar view and I'm willing to pay that for it." And, they do.

In Mumbai, landing a sea-facing apartment is akin to getting a trophy. Logic is defied in computing the cost of sea-facing apartments; if the market price is Rs 5 crore for a 2BHK apartment facing the sea, the owner can quote exactly double and still find many takers for it.

Demand is high and the price is for the asking! "There is such a craze for a sea view that there is no debate on super area and built-up area and the average prevalent real estate values," says Gopal Singh, a Mumbai-based consultant.

"An owner can ask for any price. But 90% of the owners prefer to let out their flats rather than go for outright sale, as such properties not only yield excellent rental returns, their capital appreciation is phenomenal, too," Gopal Singh says.

Having a sea facing apartment at Bandstand, Worli and Malabar Hill is a sign that you have arrived! In Delhi, golf views hold sway over a large number of buyers. Realty major, DLF, has built many apartments with golf courses like Aralias, Magnolias. The developer says that since the lungs of the city, the ridge area, cannot be tapped, golf view remains the next best option. Sure enough, the golf view has many takers.

Rajeev Talwar, the managing director of DLF Universal Ltd, says: "People like to own their island of peace. There is so much stress in urban life and people are willing to pay a premium for green and serene view. Golf-facing apartments easily command a premium of 10-15 % over others."

As a valuation parameter, how important is the parameter of the view. "What a house faces or overlooks is definitely an important factor, as it enables the developer or seller to charge a premium," Anshul Jain, the chief executive officer of DTZ India, says.

"From developer's end, the premium is significantly more if the entire project is marketed on a select theme instead of only a few apartments. For example, if the project theme is 'golf course facing apartments', the entire project may command a premium as high as 20-30 %, compared to other projects in the vicinity. In case, the project has some apartments with a view, the premium commanded is not as high and usually varies between 1-5 %.

While deciding the value of an apartment, parameters like location of the tower, floor number, quality of construction, amenities like furnished, modular kitchen, central air-conditioning, etc, are also considered. In case everything is same and the only differentiator is the view, then 'view' becomes the single most important parameter," Jain says.

Another concept gaining ground in the city is the 'mountain view'. Recently, 'Araville' project was launched by Supertech and the Aravali view was touted as the project's USP.

R K Arora, the chairman and managing director of Supertech Ltd, says: "We have created only 500 apartments on 10 acres, which means lower density and like in any premium project, we have focussed on the view.

Each unit is three-side-open with semi-circular balconies that give a panoramic 360 degree view of the Aravali hills. Araville project is in Sector 29, at the foothills of the lush green Aravali hills, and will make for a relaxed living with an idyllic view."

So, which view is prized most: a sea view or mountain view? "Properties with spectacular views are worth more, for sure; but there is really no set formula for trying to work out any additional value that may, or may not, be attributable to a view," says Sachin Sandhir, the managing director of RICS, South Asia.

"However, in developed countries, a few studies have been conducted to ascertain the 'value of a view' where full or partial ocean view, Mountain View, lake view, etc, have been taken into account. Though such research has found the view having a substantial impact on the value of a property, the results have varied considerably. Unobstructed Ocean or lake view seems to have the most impact on a property value which has varied from 30-90 % - closer the view, higher the impact.

Studies in Hong Kong have shown that a harbor view could increase the value of an apartment by 2-3 % only, while a broad mountain view would depress apartment price by 7%. A study in South Carolina suggested 9-12 % premium for a property atop the hill with an unobstructed view of a city or open space," Sandhir says.

Water view is the most coveted of all the view. In a study of owner-occupied residential property market in Auckland, results suggest that a wide water view closest to the coast has the highest positive impact and can increase the mean sale price by approximately 44%.
In another research, premiums were much lower. Comparing harbour and mountain view in Hong Kong, Jim and Chen (2009) found that harbor view was preferred and reflected in housing value. A broad harbor view could increase the value of an apartment by 2.97%, while a confined harbor view could lift price by 2.18%.
It's all about identifying the market's sweet spot, that is the least a seller will accept and the most a buyer will pay. Value of the view is eventually about putting a value on the human need for privacy, status, besides the sheer love for a view.

Tag: Indian real estate, property in india
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