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Gaurav Srivastava | 28 Dec 2022

What is a Greenfield Project in Real Estate?

What is a Greenfield Project in Real Estate?

In the cities like Delhi and Mumbai, Greenfield lands are a crucial facet of infrastructure and development. Before we go into detail, it is better to start by stating that a Greenfield Project is a fresh and new project. Unlike the Brownfield Project, where an existing project is improved, everything starts from scratch under a Greenfield Project.

So, let's begin with the article and learn everything about a Greenfield Project along with its advantages and disadvantages. Also, we will let you know how a Greenfield Project is different from the Brownfield Project.

The basic meaning of the Greenfield Project

Greenfield Project is one where the construction is initiated from scratch. It is a piece of land where no construction has taken place previously. Additionally, there has been no activity of reconstruction or demolishing on such land.

In other words, we can say that a Greenfield Project is a project where the land on which the project is built has not been used before, and no existing structure must be demolished or rebuilt. It is a project created from the ground up without any limitations of previous work on the land, like an existing building or infrastructure. Some of the common examples of Greenfield Projects are power plants, new factories, airports developed from the ground up on Greenfield land.

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Advantages of Greenfield Project

The top advantages of a Greenfield Project are as follows

1. Versatility

The foremost advantage of a Greenfield project is that it allows the developers or the builders to start from scratch and create a housing or commercial project that perfectly matches the present as well as future demands. In addition, these projects have total architectural freedom when it comes to the project because there is no need to demolish or alter anything on the property. Moreover, they are not restricted to a few options, and when it comes to site development, it is a clean slate that enables architects to be more forward-thinking and creative.

 2. Growth

Another significant benefit of a Greenfield project is growth. Within crowded cities like Delhi and Mumbai, greenfield projects are scarce. As a result, most greenfield developments are located on the fringes of such cities. However, because of the enhanced commercial activity in the region, there's a great potential for economic and infrastructural growth. This makes sure that these underdeveloped areas get utmost exposure to development and can compete with the metropolitan cities like Mumbai, Delhi etc.

Also Read: Green Home Benefit

3. Sustainable

When you don't have to spend effort, time or money decontaminating the area where you want to build a house, it becomes extremely easy to create an ecologically conscious environment. In this way, Greenfield Projects are proven to be more ecologically sustainable.

4. High quality of living for homeowners

Most home buyers nowadays prefer high quality of living, and a Greenfield Project fulfills this requirement of the homebuyers. Residential Greenfield Projects are generally built as self-contained townships with smart houses equipped with upgraded in-house automation and community living with new residents. This living concept is completely different from redevelopment projects where the premises are shared with existing tenants. In this way, Greenfield Projects offers a luxurious standard of living to the homeowners.

5. Highly beneficial to the community

Another benefit that Greenfield Projects adds to the list of advantages is that it is highly beneficial to the community. Greenfield Project creates more opportunities to create initiatives that prove advantageous to the community. A Greenfield Project is mostly found in the suburban region or residential areas. These areas are ideal and perfect sites for the creation of healthcare centres, civic centres and schools that are conveniently accessible to community members.

Also Read: Why Green Buildings Are A Need And Not An Option Anymore

Disadvantages of Greenfield Project

The disadvantages of a Greenfield Project are as follows

1. Takes more time to complete a project

The first and the most noticeable drawback of a Greenfield Project is that it generally takes longer than usual to complete a new development project on a greenfield site. From the initial approval stage to the final building stage, it takes major time to complete construction on a greenfield site. Although the lack of pre-existing infrastructure on the new facility may be considered a creative opportunity and advantage, it also means that the developer will be required to secure a slew of government approvals and permissions for the new site. If these approvals are not obtained in a timely manner, a real estate project might be put on hold for several years.

2. Cost of capital

The development of a new real estate project on a Greenfield site must start from the foundation, involving the application for multiple licenses and permits that are crucial to initiating construction on a fresh piece of land. When this is combined with the construction of basic infrastructure in that region, the cost of development increases rapidly to a much higher level than before.

3. Ecological consequences

Another drawback of a Greenfield Project that requires immediate attention is an ecological consequence. The expansion of green areas and the destruction of natural green cover, seen in places where untouched land is generally accessible, is one of the primary disadvantages of a Greenfield Project. These projects are not ecologically suitable because they destroy virgin land areas for commercial or industrial purposes.

Brownfield Project vs Greenfield Project- What's the difference? 

Most people often confuse a Greenfield Project with the Brownfield Project, but there's a huge difference between the two. So, if you wish to know the difference between Greenfield and Brownfield Project, then have a look at the pointers below

1. Possibility of future expansion 

Due to lack of room, future growth and expansion under the Brownfield Project is challenging. But, on the other hand, if we talk about a Greenfield Project, there is a lot of room here, and therefore future expansion is easily possible.

2. Demolition requirements

Under the Brownfield Project, demolition might be required if there's any pre-existing property on the site, which can also increase the cost of the project. Whereas, under a Greenfield Project, no demolition will be required as it is brand new.

3. Limitation of space

In a Brownfield Project, space is limited; therefore, every element, like pipes, equipment etc., must be put meticulously. Moreover, due to limited space, pipe routing becomes essential. In contrast, there is no limitation of space in a Greenfield Project because the complete area is vacant. This even makes the pipe routing an easy process.

4. Cost of project

As the Brownfield Projects are usually modest in scale, the money invested is typically lower. Conversely, Greenfield Projects are large-scale projects that start from scratch; therefore, the cost involved is higher.

5. Necessity of investment

Brownfield Projects are basically expansions or improvements to the existing real estate projects; therefore, the basic infrastructure is already in place. On the other hand, because Greenfield Projects are new and often take place in underdeveloped areas, the necessary infrastructure must be built exclusively during the real estate project execution. This will, in turn, have an enormous impact on the timeline and delivery of the project.

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With this, we conclude that a Greenfield Project is anything that will be built from the ground up in a forested, barren or agricultural area. Usually, there aren't any difficulties faced in a Greenfield Project, but if the project creates any environmental damages, then the Government may interfere in between.


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