Investing in Land….

As its said about Land … ‘They don’t make it anymore!’. Land is scarce and it only depleting with time. As the Human Race progresses with science and technology and life expectancy increasing the pressure in land from man increases. In the times to come, it will only make land a very precious commodity. Precious beyond belief. Keeping the future in mind, Land will dominate investment portfolios the world over and it does not take too much education to understand why.

Having said this, identifying land parcels, assessing its valuation and potential for growth as an investment is an Art if not Science. The basic principles which guide this assessment and the investment decision are:

  • The location should be such that it will develop in the near future. Development driven by the logical movement of population. Development driven by future plans for economic development of the area by industrialization, commercialization, development of SEZ’s etc. The area may be covered by development plans of the Government for residential areas in future.
  • The land should bear a clear legal title with all approvals and permissions in place which facilitate development of the land immediately or in future. The title of the land should permit free transferability and free of all encumbrances. A proper title search of the property which shows a 30 year past history of the property with all links is essential. The zoning of the land by use as specified in the Government Records should be examined and certified.
  • In case of a investment in a project, there should be good quality development of the project
  • The logical result of the above should be assured appreciation in the future.

History is witness to the fact that the biggest of investors over time have made it big by investing in land. Many large corporations have been valued for the real estate they own more than their core business and this cements the fact that well located land is true tangible investment.

India has a housing requirement of more than 3 million units immediately and this will only increase. This factor is going to put pressure on land availability and consequently the prices will certainly increase. Hence spotting the right opportunity for location of land keeping in mind the future becomes very crucial. The one who manages to get this right will be the winner in this game.

With the Indian economy being buoyant and showing consistent growth driven by economic inclusion and consequent domestic consumption, the disposable income of its citizens and the standards of living are bound to rise. This disposable income, will lead to demand again deepening the market for real estate as an asset class. Investment in land is prudent, has logical reasoning for growth and return on investment and secures the future.