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Make sure that the person you are buying the plot from is the rightful owner.
Land prices have risen 20 to 44 per cent on average between 2019 and 2022 across Tier-1 cities, according to ANAROCK Group, a real estate consultancy.
A recent report from Dolat Capital says the price increase has been particularly sharp in Gurugram and Hyderabad, with prices shooting up by more than 200 per cent in some areas since pre-Covid times.
Rising demand
Since the pandemic, many residents of metros want the greater seclusion that an independent house can provide.
This has led to an increase in demand for plots.
"Several plotted development projects have been launched across cities in the past two-three years," says Anuj Puri, chairman, ANAROCK Group.
Demand for farm houses and second homes has also gone up.
Demand within the residential sector has been on the upswing over the past two years.
"Demand and customer sentiment have remained strong despite economic headwinds and higher interest rates. This has encouraged developers to launch new projects for which land is the basic raw material," says Subhankar Mitra, managing director, advisory services, Colliers India.
Infrastructure development is another key driver.
"Demand has gone up in areas situated around upcoming projects. For example, ever since the construction of the Jewar international airport began, there has been a spurt in real estate activity in and around the airport, leading to an increase in land prices," says Puri.
Land prices in areas under the Yamuna Expressway Industrial Development Authority, adds Puri, have risen by 35-45 per cent or more over the past two years because of the airport and other developments.
According to Mitra, the coming up of metros and expressways has brought far-flung areas closer to the centre, leading to an increase in demand for plots in those areas.
Price escalation is also being caused by limited availability. "Noida has no land available in key markets," says Puri.
Higher returns
Land is usually the preferred option for investment purposes.
"In most cases, plots offer higher return on investment than apartments," says Puri.
Beware title risk
Make sure that the person you are buying the plot from is the rightful owner.
"The chain of titles must be clear," says Kirti Dua, partner, ANG Partners, Advocates & Solicitors.
Contact a property lawyer who will get the title check done from the registrar's office.
Don't allow yourself to get tripped up by regulations.
"Land is a state subject. Each state has its own rules regarding who can buy land and of what type. Moreover, multiple authorities regulate land usage," says Mitra. Plots are also subject to security issues. "Unused land can be encroached. Even if you are the legal owner, you may have to fight a court case, which could be tedious and time-consuming," says Puri.
A standalone plot purchased in a far corner of the city may also lack infrastructure support.
Both, for security and infrastructure-related reasons, buying a plot within a builder's project is safer.
While loans to buy a plot are available, a few conditions need to be fulfilled.
"The plot must be within municipal limits. The loan to value (LTV) ratio is lower in a plot loan, so be prepared to shell out 20-30 per cent of the price. And to enjoy tax deduction, you will have to convert the plot loan into a home loan once construction is over, by submitting the completion certificate and the occupancy certificate," says Adhil Shetty, CEO, BankBazaar.com.
Pay heed to location, connectivity
Location and connectivity must be kept in mind.
Also pay heed to the area's prospects: The development of a major infrastructure project can provide a boost to prices.
Says Dua: "The plot should not be in an unauthorised colony. And its land usage -- residential, commercial or mixed usage -- should match the purpose for which you are buying it."
If the plot is situated in a remote locality and you are likely to visit it infrequently, then build a boundary wall and place a watchman.
Micromarkets that have given highest appreciation
