How to profit from land investmentNew Delhi: Many property investors do not consider investment options beyond apartments or office spaces. Flats and other forms of built-up real estate are attractive to short-term investors because they can readily be sold when
New Delhi: Many property investors do not consider investment options beyond apartments or office spaces. Flats and other forms of built-up real estate are attractive to short-term investors because they can readily be sold when prices have risen sufficiently. However, investment in land is the more profitable option over the longer term because it offers higher gains for prudent investors.
Apartments are an inflexible form of property, and this means that there is a ceiling on how much they can appreciate. They are bought at fixed prices which are indicated by the market rates prevailing in locations. On the other hand, investing in a plot in a promising new location can yield much higher returns on investment because land is the basic resource on which all and any kind of real estate is built.
With the fast expansion of the municipal boundaries in cities like Pune, land is a resource that has assured future demand for all kinds of development. It is a resource which sees the highest consumption by developers. Once land availability decreases in an area, its prices appreciate at a very rapid rate. When this happens, those who have invested in land at an early stage are the clear winners.
Built-up property is an end product, and those who have invested in such property are the consumers. This means that, like end users to whom they seek to sell or rent out the property, they pay for all the expenses and overheads that the developer has incurred while building the property. These include construction materials, the cost of clearances and permits and electrical wiring and plumbing. Anyone who buys a flat is also to some extent paying off the developer's profit margin.
This means that land purchase is the only opportunity for investors to obtain an asset onto which no extra costs have been loaded. It is the purest form of real estate investment, which gives maximum profit to investors. Interestingly, in a city like Pune, areas like Koregaon Park, Kalyani Nagar and Baner were once rural areas. The elite bungalows that are in such short supply in these locations today were built on plots acquired by early mover investors. Today, these plots command the maximum value on the Pune property market.
To enable Pune's real estate investors to purchase land at low cost in locations with future promise, Maple Shelters has launched its Aapli Zameen initiative. Under this scheme, investors can purchase plots of 2 gunthas to 10 gunthas in:
* Khumboshi: 30 km from Pune, with a magnificent view of the grand Purandar Fort and with a Balaji Temple within five minutes distance
* Devdi: 30 kilometers from Pune, Aapli Zameen's Devdi Lakeside is close to the Balaji Temple and offers 1, 2, 3, 4 BHK Bungalow Plots
* Jejuri: A famous pilgrimage destination just an hour's drive away from Pune and with the famous Shree Khandoba Temple just five minutes away
* Tamhini Ghat - Saje: Just past the popular tourist destination of Mulshi Dam, where Aapli Zameen offers bungalow plots.
For successful land investment, it is important to buy plots which are large enough to support developments of sufficient size in the future. In other words, the land area must be useful for developers who wish to acquire it for development of an apartment or office project. In a city like Pune, there are countless instances where people had bought land in emerging locations while land prices were still low, built standalone houses there for self-occupation, and then sold the plots to developers at very high profits.
The ideal modus operandi for land investment is to purchase a plot with marketable title in a location towards which real estate development will eventually be pushed, and which is currently in demand by second home buyers.
Such areas will see the arrival a multitude of market drivers in the future. The creation of road connectivity and the arrival of schools and colleges, hospitals and shopping complexes will drive up the prices of land in such an area. For the highest returns on investment, one must invest at an early stage while prices are still low.
(Sachin Agarwal is CMD of Maple Shelters)