What are EDC and IDC in Real Estate Investment

When investing in real estate, especially in residential or commercial projects, you may come across a range of charges in addition to the basic property price. Two of the most common charges that often raise questions are EDC and IDC. Understanding these terms is crucial because they directly affect your investment and the total cost of ownership. What are these, and why do they affect your property cost? Let’s have a discussion.

EDC (External Development Charges)

External Development charges are the charges that are charged by the builder, but they go to the government for the external development of infrastructure outside the premises of the project. These charges include the development of: 

• Roads and highways connecting the project

• Sewerage and drainage systems outside the society

• Water supply pipelines and treatment plants

• Street lighting and electrical substations

• Public transport infrastructure near the project

In simple terms, EDC ensures that the area around your property is livable and well-connected, not just the property itself.

IDC (Internal Development Charges)

Internal Development Charges (IDC) are the charges that are for the internal infrastructure development of the project. Builders collect this from buyers and transfer it to the development authority responsible for approvals. These charges cover: 

• Internal roads and streetlights inside the project

• Water pipelines, sewerage, and stormwater drains within the site

• Electrical lines and transformers inside the premises

• Community infrastructure within the complex

So, IDC directly enhances the livability inside your gated community or commercial hub.

Why are EDC and IDC Important for Investors?

For an investor, knowing about EDC and IDC is essential because:

• Transparency in Costs: They explain why the price per sq. ft. differs across projects.

• Location Advantage: Projects in areas with high EDC usually have upcoming large-scale infrastructure, which may boost future property value.

• Project Quality: IDC ensures internal facilities are top-notch, making properties more attractive to buyers and tenants.

• Long-Term Value: Properly developed external and internal infrastructure increases the chances of appreciation and rental demand.

Key Takeaway

While the base price of a property often looks attractive, the final investment amount includes additional charges like EDC and IDC, which play a huge role in shaping the property’s livability and growth potential. As an investor, always ask your developer for a breakup of these charges and check whether they are included in the quoted price or billed separately. A project with well-utilized EDC and IDC not only improves your living standards but also ensures better returns on investment in the long run.