Do you know India's real estate sector is expected to touch US$ 1 trillion in market size by 2030 and contribute 13% to the country's GDP by 2025? In fact, the market closed over 1,700 acres of land deals in top cities in the first nine months of FY22.
Even though residential and commercial projects have led real estate lately, plotted investments continue to hold their own. It became pronounced post-pandemic when real estate emerged as a secure asset class, driving a surge in demand.
Prominent residential and commercial developers acquired large land parcels to cater to this increased demand. This significantly impacted plotted land prices, which increased by 19% to 60 % in major markets like Delhi NCR, Mumbai, Hyderabad, Bengaluru, and Pune.
In line with the trend, NCR micro-markets registered the highest land appreciation since 2019, with plots on Yamuna Expressway registering the highest peak of 38% in average prices – from INR 1,600/sq. ft in 2019 to INR 2,200/sq. ft by 2022-end.
Led by aggressive infrastructure development, which includes the Noida International Airport, plots for sale on Yamuna Expressway are in hot demand. That is further making investors and end-users lean towards plotted investments.
Let us decode plot investments in detail, including the elements that make them excellent real estate investments.
Why Invest in a Plot?
With India's real estate witnessing big-ticket growth, it will become a multi-fold entity by 2047, with plotted investments a shining star. Plot investments are often connected with higher future returns than ready-to-move or under-construction properties, making them a viable investment alternative for a secured future.
Investing in a plot is an excellent idea if you are looking for:
High Capital Appreciation - Land investments in the last two decades surpassed even equity instruments & mutual funds in terms of capital appreciation. Many young professionals now look up to plots for a second investment. This is especially true for plots for sale in Noida, Lucknow, Pune, and other expanding micro-markets and emerging urban centres.
Higher resale value - Plots command a higher appreciation rate than constructed properties as the condition of land remains the same, barring natural impact due to weather or erosion. Additionally, limited land supply makes it a competitive market, ushering in higher appreciation. All of these add to higher resale value.
Flexibility of Usage - A residential or commercial plot facilitates customised usage. You could build, sell, or lease it out. Such flexibility cannot be attached to any other investment instrument. Agricultural & farming land, however, do not offer customisation to a great degree owing to their inherent usage.
Low maintenance- There are little to no maintenance costs for plots- no worries about recurrent repair or revamp-- just installing fencing, hiring a surveillance guard, or mowing the area would be the upfront cost. By contrast, apartments and residences are high-maintenance investments that increase exponentially for premium-class inventories.
Transparency - Real estate norms in India have evolved drastically with increased transparency and accountability brought about by the Real Estate Regulation and Development Act (RERA). Investing in plots for sale from a developer, builder, or registered society is much more transparent with RERA safeguards.
However, only builders and developers fall under its purview. If an individual seller is holding out a residential plot for sale, due diligence by the buyer is non-negotiable.
Low entry barriers: Buying an apartment typically means putting it to the test for construction quality, facilities, amenities, physical attributes, and whatnot. On the other hand, buying a residential plot for sale is much more straightforward; it is just a parcel of land with hardly anything subject to quality checks. All that needs scrutiny is documentation, beyond which there is little to affect your plot.
Affordability: A piece of land comes with no strings attached. You pay for what you get - just a flat, plain parcel of land and nothing else. Flats and apartments bring many frills to the table - you pay for more than you get, like shared spaces, maintenance costs, parking, etc. All other things being equal, a plot offers higher affordability than a flat.
While investing in plots is a winning move on many counts, there are some nuances to be aware of as a buyer-
Loans: You can get a loan to buy a plot, but it's less fluid than home loans. Plot loans or land loans can be availed on residential and commercial plots. You cannot get a loan for agriculture or farming land. A home loan on a residential plot is possible after the plot has been purchased to build a home. The plot should, however, be within the municipal limits of the loaning bank in question. Plots from govt. agencies are typically favoured by banks.
Taxation: Unlike built-up developments, plots do not provide immediate tax benefits. A plot of land with no construction on it will not be any help from a taxation standpoint. However, if you buy a plot with the idea of building something on it, say a house, villa, or apartment, exemptions under section 80C and section 24 apply.
Zoning: A residential plot entails different laws about commercial plots governed by local authorities. These zoning laws are specific to a jurisdiction and the nature of development. For example, a commercial plot on Yamuna Expressway may be cleared for towers higher than a plot near Noida International Airport, where air traffic considerations come into play.
Rapid urbanisation driving up the need for office and residential spaces is rapidly scaling India's appetite for land and plots. The exceptional real estate growth of Gurgaon, Noida, Bangalore, Pune, Mumbai, Delhi, and other hotspots signifies that land assets will stay in hot demand.
For more on discovering hot opportunities like plots on Yamuna Expressway, Jewar, Lucknow, Agra, and other emerging hotspots, get in touch with us.
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