Should you invest your hard earned money in land back home?
In search for investment options, investors usually encounter a number of risks. The popular maxim of investing is that the risk you take is directly proportional to the returns on your investment. At the starting point, most investors look into low risk options like fixed deposits. Those with a greater risk appetite may gamble on the high risk-high return stock options. However, if you’re an investor looking for medium risk and to yield high returns, you should consider buying land in the outskirts of the city.
Land in urban areas is typically scarce, expensively priced and it generally means lack of options for the mid-income buyers. Outskirts have a relatively better outlook where there are a fair number of choices; options in the nature of land you want to purchase and a diverse pool of developers from which to choose. Most importantly, as an investor, land away from the city has great potential. Purchasing land in the outskirts is the right choice if you want to reap high returns on low volume of investment. If you’re looking at a low entry investment with high benefits over the long term then, areas in the outskirts of cities is the place to be.
In terms of residential land, you should take into account that already established residential areas may be hard to penetrate owing to few available spaces and high capital that is involved. Nonetheless, if you do your research you could find spaces that are either in the process of developing or aren’t discovered yet but have the potential to grow. These spaces provide the best opportunities in land investment. For Expat Indians, it is important to note that Reserve Bank Of India (RBI) allows NRI investment only in non-agricultural land.
There are some key indicators you should base your research on including connectivity and access to basic amenities. If the plan is to save for your retirement in keeping with the lifestyle you desire, a long-term investment in areas that show promise of development would provide ideal returns over approximately a 10-year horizon. It is largely a myth that good land investments are only found in urban areas. The areas outside of cities have shown huge profit margins in the past 10 to 14 years.
From 2000 to 2011, the value of land in suburban areas around major cities such as Kolkata, Bengaluru, Mumbai, Chennai and Delhi has grown by over 1000 percent and more in some cases. The diminishing nature of the land puts it in a prime position to gather returns of this nature over a long period.
It’s a good idea to avoid ignorance in any aspect of the transaction to ensure that it remains transparent and legal. If you’re unsure of any decisions while deciding to buy land, it is wise to approach an expert. Find a real estate developer or land investment expert you can trust and through them you could get a better idea of where the best scope of investment in land may lie.The complex nature of investing in land has often been a primary deterrent for investors to shy away from the sector. However, with the benefits of investing in suburban land, doing your due diligence can put you in a great position to reap the dividends. Investing in outskirts areas could make for a more robust and diversified portfolio.
Mutual funds, equities, commodities, residential property and other options all make sense in certain scenarios and so does land. It is a long-term option that will diversify and add volume to any investment portfolio. It’s important not to jump the gun on land investment, only venture into it if you’re willing to consider it as a serious option and treat it as a business endeavor.
Few land investment hot spots are:
Sindhudurg district, Maharashtra/North Goa coastline
The Maharashtra government has declared Sindhudurg as tourism development zone (TDZ), this has led to the development of the area into a tourist hot spot. Mopa International Airport has been proposed to set up at North Goa. This will make the location more accessible.
Pali is the ideal location of weekend home because of its close proximity to major tourist destinations such as Lonavala and Khandala. The area is gifted with beautiful scenic attraction and is great location for adventure sports.
Bagepalli is 100 km away from Bengaluru and has great connectivity. KIADB (Karnataka Industrial Areas Development Board) has already acquired approximately 1000 acres for a major industrial plan in the vicinity which will lead to the rise of a prominent industrial hub in the future.
Trichy, Tamil Nadu
The location is easily accessible and have made notable developments in the infrastructure. The area is well connected with national highway 120, airport and railway station. Indian Institute of Management (IIM) is setting up their new campus in Trichy.
Thally, Tamil Nadu
Thally is a few hours away from metropolitan Bengaluru and Hosur town. The proposed Satellite Town Ring Road (STRR), will develop the connectivity even further. Jigni Industrial area, Bommasandra industrial area along with Hosur town, which have several reputed companies, are in close proximity. Thally will be an appropriate option for the investors looking to reside or invest at the outskirts.
(Lansel D`souza is a Senior Vice President at Expat Projects and Development Pvt. Ltd)