Return on investment
The value of a plot of land in any particular location depends on what the government will permit to be done there, and on the success dynamics of the society in which the land is situated. You cannot add to the value of land as you can to a structure - value derives from the dynamic community that makes the land desirable. Therefore, a plot’s value will appreciate if there are developments in the vicinity to make this happen. Sometimes, investors purchase land based on anticipated value – something like a mall, multiplex or office block is scheduled to come up nearby If the anticipated development fails to materialise, or if the location does not receive water or electricity supply, the plot will fail to appreciate.
Land will also fail to appreciate if it is in danger of being taken over by the government for its own purposes.
No matter how good a plot looks, or how reasonable the price, one must check everything. The price may be low because certain legal sanctions or complications incurred during a previous ownership have rendered it a non-selling proposition.
Other factors to investigate.
Ø Availability of ground water
Ø Soundness of electrical supply in the area
Ø In case of residential land – avail ability of schools, colleges, medical facilities, domestic markets, public transport, etc.
Ø In case of commercial land – avail ability of retail outlets, post offices/couriers, telephone connectivity, other reputable commercial establishments in the vicinity.
Ø Availability or non-availability of the above will substantially influence the property’s overall appreciation potential. Investment in commercial or residential land in an established growth sector with all of the above factors in place definitely makes a lot of sense.
Where are the best land deals today?
The most sought-after land for sale in
India is in the metros. However, due to the extreme supply crunch, the rates are invariably completely out of reach for any but corporate or institutional investors. As a rule, the only ‘good deals’ in central Mumbai, Bangalore, Delhi and Kolkata comprise of purchasing available plots at exorbitant prices and then cashing in on their immense appreciation potential.
For smaller investors, buying a plot in an upcoming suburb or a potential-rich Tier II or Tier III town is a far more feasible option – especially in context with larger plots, which are out of question in metros.
Courtesy: HT, 12th Nov. 2007