Abhinandan Lodha, Chairman, House of Abhinandan Lodha shares his opinion on leveraging the steady gains and steadfast transparency and ease of investing in land in an exclusive authored article.
In today's volatile financial landscape, traditional investment options are increasingly seen as unpredictable and risky. Against this backdrop, land investment emerges as a stable and promising alternative. Unlike buying homes, which involves significant upkeep and can be subject to market fluctuations, land investment offers a more straightforward and often more lucrative proposition. Industry statistics show that land values have consistently appreciated over time, often outpacing other forms of real estate investment.
Investing in land is akin to discovering a gold mine for the future. Learning to monetize land for better yields and returns can significantly enhance your investment portfolio. Experts often recommend that around 10 percent of an investment portfolio be allocated to real estate, specifically land ownership, which is a solid investment option. Unlike other assets, land generally does not depreciate and is less volatile, providing peace of mind and consistent returns.
Government Initiatives and Infrastructure Development
The Indian government’s focus on promoting tourism—whether religious, cultural, or otherwise—has led to targeted infrastructure developments. For instance, Ayodhya, the fabled birthplace of Lord Rama, is experiencing a remarkable transformation driven by the construction of the Ram Mandir, resulting in substantial socio-economic and cultural progress, including a 130% rise in exports from 2021-22 to 2022-23, an 8,342.7% surge in spiritual tourism in 2022, flourishing local businesses, significant medical advancements, a revival of cultural and spiritual heritage, a shift to digital transactions, increasing global investment interest, and enhanced connectivity through upgraded air, rail, and road infrastructure.
Likewise, major metropolitan cities and commercial centres are also promising geographies where investors eye locations where city limits are likely to extend, have revised FSI norms, and there is an unmitigated focus on infrastructure and commerce. The entire NCR territory surrounding Delhi is a well-known example. As an upcoming development, the Mumbai-Goa expressway, set to be completed by December 2024, will reduce travel time by road by 50%, from around 11-12 hours to just 6 hours. Similarly, travel time between Anjarle and Dapoli will be cut from 6 hours to 3-3.5 hours. Such developments significantly enhance the potential for land value appreciation.
Other promising investment corridors include Mumbai Neral-Matheran with an expected 5x returns over the next 10 years in land investments, along with Ahmedabad Sanand-Nalsarovar (3.5x), Chennai ECR-Injambakkam-Kovalam (3.5x), Hyderabad Kompally-Medchal-Shamirpet (3x), and New Town-Rajarhat in Kolkata (2.5x). These areas offer excellent returns due to factors like infrastructure development and proximity to major cities.
The research involves identifying areas with ongoing or upcoming infrastructure projects, proximity to city limits, and potential for tourism.
Strategic Growth in Land Projects
Strategically leveraging these trends, our organization has shown consistent growth in its land projects, making them compelling choices for investors seeking stability and considerable returns over long periods. Our dedicated research teams identify prime locations poised for infrastructure improvements and tourism development, ensuring that investments yield substantial returns. Through our meticulous research, we have zeroed in on 48 locations across the country, with a key parameter being the alignment of state and central governments to infrastructure development. For instance, properties in Anjarle and Dapoli have seen significant appreciation due to these strategic choices.
Part of the research includes understanding the buyer personas—such as NRIs seeking a connection to their roots—drive the success of these investments. A typical land investor is someone with a stable salary, often not requiring loans, and looking for secure, long-term investments. Properties range from ₹25 lakh to ₹10 crore, attracting a diverse clientele.
The new trend of Virtual Selling Platforms for Customer Convenience
Within the realm of land investments, our model of virtual selling has started gaining a lot of traction. It offers unparalleled access to projects and allows potential buyers to explore every detail remotely. This convenience is crucial for customers who may find it impractical to physically visit large plots of land. Virtually, we have given customers the option to select a plot within a 100-acre project from the comfort of their home, saving time, effort, and travel costs. The entire process of purchasing land, from selection to transaction, can be completed within 20-25 minutes, with clear titles and all necessary approvals provided.
Steps in a Virtual Selling Process:
1. Initial Decision: The willing customer is ready to purchase a plot. This is followed by a call with the customer to discuss and showcase the availability and amenities and the exact location of the plot in relation to some facilities like the clubhouse, community centre, open parcels of land, the exit etc.
2. Selection:The customer chooses the plot if they like it and agree to the pricing and payment schedule.
3. Payment: An upfront payment of 10-15% is required, with the balance over the development period, which is typically less than 18 months.
4. Loan Facilitation: While many buyers don’t take loan options, plot loans are facilitated through premium partner institutions.
Online business models such as ours go a long way in ensuring transparency and efficiency. Many customers from across the globe have made their purchases entirely online, without meeting the team or visiting the sites. Investors who wish to opt out of land investments can do so through platforms designed to facilitate the sale of properties. Reliable developers ensure smooth transactions, often through a marketplace app where you can list your property and find buyers without distress sales. The entire process is managed for a small facilitation fee. Considering customer trends, we typically find that within a plot, one-third of our customers want to construct villas, one-third are undecided, and the balance will figure it out once the plot is handed over. Most will buy resale of plots.
This trust has led us to successfully acquire 700 acres encompassing 10,000 plots, serving 6,000 satisfied customers from 20 countries. It is essential for sellers to experience transparency, convenience, and a steadfast commitment to promises, ensuring trust and integrity with no room for dishonesty. Strong management and sound fundamentals are critical to our success.
One of our strengths lies in the strategic partnerships that enhance property value and investor confidence. For instance, a 90-acre project in Ayodhya features a collaboration with The Leela for luxury amenities, and partnerships with Indigo Hospitality introduce premium restaurants in other locations.
Long-term Prospects for Land Investment in India
The long-term prospects for land investment in India are promising due to continuous urban expansion, infrastructure development, and increasing demand for real estate. It is a win-win situation as developers too create the ecosystem for further sustainable growth by providing necessary amenities and infrastructure.
Large tracts of land are developed wherein a portion of it is leveraged for facilities, creating essential infrastructure, and ensuring seamless transactions. For example, in Ayodhya, our organization was able to purchase an additional 20-25 acres of land to the original 51 from the same community of farmers.
When selecting a platform for land investments, consider factors like encroachment risks, legal titles, ease of exit, and appreciation potential. Choose platforms that offer transparency, convenience, and reliability.
Land investment remains a robust option with numerous benefits, including predictable cash flow, excellent returns, tax advantages, and diversification. With well-chosen assets, investors can leverage real estate to build significant wealth over time. A strategic approach to land investment, underpinned by thorough research, innovative virtual selling, and strategic partnerships, positions organizations as pioneers and leaders in the industry. By understanding and addressing the needs of diverse clientele, stable, high-return investment opportunities continue to be provided amidst a volatile financial landscape.