Hidden value
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What hidden factors can indicate a property’s true value across the subcontinent? How superstition, water and proximity to a Big Mac can determine a property’s value.

The Challenge

  • Traditional property valuations often prove limited and imprecise when seeking to unlock and identify value in properties.
  • Loan books may provide limited data based on addresses and amenities and be less aware of hidden indicators of true value. 

The Purpose

  • In a vast and cluttered market, can we use data science, to obtain better signposts to property values and identify opportunities for debt investors? 
  • Create a tool that can pinpoint where cities have undervalued properties as well as which real estate markets are overpriced. 

The Method

  • A combination of web-scraping, natural language processing and data science helped create a learning model that provided valuations based on property features.
  • The model also unearthed insights and correlations that could prove invaluable for valuing assets in this complex and fluctuating market.

The Findings

Burger Index
  • Properties within 4km of a McDonalds enjoy a 43% premium in property prices.
  • In India, western fast-food franchises are usually located closer to urbanised city centres where property values are higher.
  • Unlike in the west, McDonalds in India is viewed as a premium meal, so it is more likely to open outlets closer to neighbourhoods with higher incomes.
  • McDonalds locations may indicate higher traffic districts and comparatively higher property values.
Vaastu Compliance
  • Vaastu, an Indian architectural philosophy founded on traditional practices and concepts, can greatly influence property values in Tier 2 and 3 cities.
  • While Vaastu-compliant houses attract a nationwide premium of 3%, its influence is largely clustered around Maharashtrhra and Madhya Pradesh, with premiums rising as high as 9%. 
  • Smaller houses (<500 sqft) will pay over 3 times more in premiums than larger homes. (>1300 sqft)
Water Storage
  • Water Storage facilities refer to having a water tank on premises to distribute water to residents, as opposed to being connected to an external water supply.
  • In some cities, water storage facilities bump up property prices by 34%, due to periodic shortages. 
  • Neither water nor water crises are distributed evenly within the region, and cities that suffer shortages will pay premiums to avoid them.
  • Underground tanks and rainwater harvesting have now become part of construction projects and enhance the value of these properties. 

The Outcome

  • Our data science model can integrate these insights to supplement property valuations based on traditional metrics. 
  • Using models and analysis, allow us to unearth a myriad of relevant insight in evaluating assets and crafting investment strategies.  
  • Including alternative data like distance to key amenities, weather information in the area, vaastu-compliance, as well as access to facilities like a gym or pool within or near to the address can serve to unlock the hidden value of a property.