Powering Real Estate Value: Unveiling the Electrifying Link Between Land Value and Quality Infrastructure

When it comes to the valuation of real estate, factors such as location, amenities, and accessibility are typically considered. However, one crucial element that often goes overlooked is the quality of the area’s electricity supply and the availability of infrastructure. Sustainable, reliable and safe power supply that keeps pace with customers’ demand is directly correlated with both – a better quality of life and appreciation in land value. The converse is true as well – areas experiencing load-shed or frequent power outages also suffer from limited real-estate appreciation.

Advantages of a reliable power supply include:

• Enhanced Attractiveness for Investors: A reliable electricity supply and well-developed infrastructure act as catalysts for real estate growth. In India, cities like Mumbai and Bangalore, known for their uninterrupted power supply and advanced infrastructure, have witnessed significant appreciation in property values. This demonstrates how a conducive electrical environment can attract domestic and foreign investors, driving up land prices and boosting economic growth.

• Improved Quality of Life: Cities like Lahore and Karachi have experienced rapid urbanization and increased land values due to the availability of reliable electricity infrastructure. Areas with consistent power supply are correlated with lower crime rates due to availability of street-lights, higher income propensities due to improved commercial activities, improved educational participation and higher per capita energy consumption.

• Economic Growth and Commercial Development: Reliable electricity supply is vital for the growth of commercial real estate. Businesses require a stable power supply to operate effectively, making areas with consistent electricity availability prime locations for commercial activities. Karachi’s industrial hubs like Port Qasim, Korangi Industrial Zone and SITE receive uninterrupted power supplies in line with K-Electric’s load-shed exemption for industries. These areas thus are preferred locations for investors seeking to establish operations or expand and this demand drives property prices upwards.

For the astute real-estate investor, availability of road and utility infrastructure whether water, gas, sewerage or power in under-development colonies marks the appreciation potential. Karachi’s upscale neighborhoods like PECHS, DHA, Tipu Sultan and Nazimabad which are marked by consistent upgrades in power infrastructure and minimal power outages attract potential homeowners – resulting in increased demand and higher property prices. This is why developers often invest in projects equipped with backup power solutions i.e. generators or solar panels to make residential properties more attractive to buyers.

Areas with incidence of Power Theft experience Load-shedding:

In areas where load shedding is frequent and electricity supply is inconsistent, real estate development tends to be limited. Per National Power Policy 2013, across Pakistan, areas with incidences of power theft, kunda use and non-payment of electricity bills are subject to load-shed; with duration of load-shed increasing proportionate to the extent of power theft and non-payment. By considering the overall civic infrastructure, gas supply, safety measures, and electricity supply, stakeholders can make informed decisions about real estate development projects and maximize their potential for success.

Challenges persist in achieving uninterrupted power supply throughout major cities like Karachi, Peshawar and Lahore due to areas with high resistance pockets of power theft, overall lower income propensities which aggravate power default and a weak law enforcement structure. However, the potential growth of renewable power supplies is a solution that ensures affordability and can mitigate tendency to steal or default on power use.

Conclusion:

The impact of electricity infrastructure on real estate values cannot be underestimated. A robust and reliable power supply enhances the attractiveness of an area for investment, improves the quality of life, drives economic growth, and fuels commercial development. Examples from India, Pakistan, and cities like Karachi and Lahore demonstrate the profound correlation between land value and the availability of quality electricity infrastructure. By prioritizing and investing in a well-developed electrical network supported by an enabling regulatory and law-enforcement framework, governments and stakeholders can unlock the untapped potential of regions and create thriving real estate markets for the benefit of all.