Valuation of Real Estate Development Along The Roads for Improving Property Tax, Case of Indore

Abstract

Infrastructure development meets the needs of human society effectively. Real estate development is a field of business activity dealing with land and buildings for providing value added services in developing residential, commercial, institutional and integrated projects and related infrastructure. Urban infrastructure projects not only have direct benefits such as reduces travel time, but also produce indirect benefits like land value increase. The problem lies in the accounting of these indirect benefits, and how it can be utilized for generation of funds for local authorities. Therefore, the main question of this study is how to measure this shift in values, and then the extent to which these land values increases can be captured for financing. Although urban local bodies have various methods of revenue generation such as water charges, Development tax, sanitary tax, education tax, Property tax, but land value development cannot be applied directly in any of this method. This research leads to develop relationships between physical infrastructure, real estate development and its application on property tax through again in land value. In Bangalore, Karnataka to overcome these issues they revised their taxation method, in which they captured factors which contribute to land value gain and start using it in property tax calculation. Other successful property tax models are like Porto Alegre, Brazil is directly using Market value as the base value for property tax Assessment. As most of the time, it is seen that whenever a transport corridor is introduced in the periphery of the city, spatial growth takes place along that corridor but the increasing land value is not being captured in any kind of property tax. In unplanned approach, development authority leads to face the unwillingness in paying property tax by users. Infrastructure development changes the land use and land value which can be measured by studying urban growth maps and temporal change in circle rates. Change in land value according to impact factor of various services nearby. To assess the land value determinants, a rapid baseline assessment held on AB Road, Indore.This research is an attempt to understand the relationship between the infrastructure development and incrementing property values, whereby factors would further help in generating more tax with the increasing property value. Regression coefficient again gives on different factors that have a direct implication on land value rise which can be incorporated to generate well-planned development and more funds by incorporating it in property tax escalation.