Invest in peripheral towns and upcoming industrial belts
Subhash Lakhotia
The first step toward a profitable investment in land is to exclude areas in metropolitan cities where prices of land are unlikely to rise much higher. The reason is that high prices in such areas are not likely to double in five years. Ask yourself whether Rs 15,000 per sq. yd. can double to Rs 30,000 per sq. yd. in five years and Rs 60,000 per sq. yd. after 10 years? This small question should give you an instant answer.This ready yardstick is based on the simple fact that if a person were to invest his surplus money in a scheme like Indira Vikas Patra the money would double in just five years, in certain mutual funds the sum can quadruple in 10 years. Such appreciation may not be possible in areas where the prie of land is already very high. Therefore, to make money in land investment, avoid purchasing land in such areas. It is not uncommon that in areas where land prices are already sky-high, the appreciation may not even match the yearly bank fixed deposit interest. Thus the first golden rule is not
to purchase land in those localities, especially in big metropolitan cities, where the area is developed and the price of land already very high. One may go in of course, for land in such costly areas, for a house of one's own, to stay in. In your list of areas for investment in land, include first of all the land available in upcoming new colonies in and around large cities. The value of such land is likely to increase substantially in the near future, and at a much faster pace, as land becomes increasingly scarce in the cities. A classic example of this is the DLF area near New Delhi. People began investing in land in the DLF Qutab Enclave, just a few years back, and the appreciation in the last five years has been much faster than in Delhi itself. The future lies in new approved residential colonies near New Delhi. For example, the Ashok Enclave, Phase III in Faridabad is a good investment at an affordable price. Similarly, Indraprastha Colony, Faridabad which again is an approved freehold colony
should be a very good investment decision for persons who would like to buy a place to live which is near Delhi. Similar is the case of Neelpadam apartments in Ghaziabad (opposite the Dabur Factory) as also Kaushambi, Vaishali, Indirapuram etc. All these places are comparatively cheaper with facilities for bus transport. However, while making an investment in new colonies or upcoming areas on the outskirts of big cities, please ensure that the title to the land is clear. If a builder or promoter has converted certain agricultural land into a housing colony you must ensure that proper approval of the scheme has been sanctioned by the competent authority. If you invest in land which doesn't have a clear title it might be because the land-use has not been approved. The value of this type of land is unlikely to increase. Moreover, problems relating to transfer and sale may also arise. Therefore, not only must you ascertain that the land is in the approved colony, but also personally examine the approval
certificate and the No-objection Certificate (NOC) and sanctioned plans. The registration or the conveyance deed in respect of the land should be done as soon as the full payment has been made. Many builders offer land on installment basis. If you are going in for such a transaction make sure from the promoter or builder that the transfer charges on the land for subsequent re-transfer by you to another person are either nil or small. If you are a a really big investor in land it may be worthwhile purchasing some agricultural land on highway near a big town and thereafter convert the land status to residential land after complying with the necessary government formalities and paying the property conversion charges. Thereafter, the land could be developed in the form of a colony and sold in small lots. This scheme may be worthwhile only for investors who have substantial funds at their disposal and can afford to wait for returns on their investment. Avoid purchasing land in an unauthorised colony or
area. Finally, another area, though a little speculative where substantial profits on land transaction may be made, could be investing in a small town or village around upcoming industrial belts. For this, you have to be in constant touch with newspaper reports and government policy to keep yourself abreast with the changes likely to come up in a particular town or in a village. The return on your investment from such land could be very high if you can judge the likely progress and investment possibilities in such areas. For example, if you come to know that a new university is to come up in a particular village or town it is worthwhile making an investment slightly away from where the government is going to purchase the land for its univ site. The appreciation in such areas will definitely be high. An example of this is visible in Ajmer, Rajasthan, where a new university is coming up on the outskirts of Ajmer in villages Ghungare and Kahed. The rate of agricultural land in these villages rose from Rs
5,000 per bigha to the going rate of Rs. 30,000-Rs. 35,000 per bigha in 15 months. The fantastic increase was possible only because of the government's intention of opening a university in the area. A new trend is that of acquiring land near religious towns in the country. The land prices near Mathura and Vrindaban have multiplied many fold in the last 2/3 years. Likewise, if one invests in Ayodhya, after the situation improves there, the price rise is going to be much higher. In Haridwar, the price of certain pieces of land ten years ago was just Rs 6,000 per bigha and today it is Rs 3,50,000 per bigha. This shows that the current trend is gaining momentum in more religious and spiritual townships. Similarly, investment in land in the counter magnet towns to Delhi in the National Capital Region is bound to reap rich dividends. For example, five towns of different States near Delhi have been selected as counter magnet towns. Investment in the counter magnet towns - Patiala (Punjab), Bareilly (UP), Hissar
(Haryana), Kota (Rajasthan) and Gwalior (MP), will be a gold mine after the year 2000, especially when the government is envisaging an expenditure of nearly Rs 3,000 crore for the speedy development of these towns in the Eighth Plan. Likewise, when you get the feedback that a big factory or big companies of the Government are coming up in a particular area, the neighbouring areas are very good for investment because price rise of such land will definitely when compared to land in other areas. These industries will also need a housing complex to accommodate their executives. Also some motels would come up in close vicinity. These are some of the points which require consideration before making investment in land so that your investment multiplies rapidly. My forecast is that real estate prices will rise from January, 1998. The reason being that a lot of money that will be coming through the VDIS, 1997 and a substantial portion of that will go into the real estate market. So put a hold on your sales of
real estate and buy real estate right now for a good bargain.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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