Plotted developments present a compelling investment option: low initial expenditure and the potential for substantial future returns.
| Photo Credit: Getty Images/iStockphoto
In a recent trend, real estate developers in India have a new investment of choice: plotted developments. These residential projects, essentially curated individual plots of land, offer unique advantages that have captured the attention of developers and investors. The limited availability of land and a growing population drive the belief that now is an opportune time to invest in land parcels. Within the luxury segment, high- and ultra-high-net-worth individuals are increasingly investing in weekend homes or private villas, built in the peripheries of cities. And so, plotted developments are rapidly expanding in the residential real estate sector.
ALSO READ Behind the gates
According to a recent report, cities such as Bengaluru, Chennai, Hyderabad and Gurugram saw a spike in the value of residential plots by double digits since the last few years. In the past three years, plotted developments have generated impressive returns, ranging from 13% to 21% per annum.
The remarkable surge of interest in plotted developments is an outcome of the pandemic, where self-sustaining integrated townships, plotted developments, and low-density developments have seen an increased demand from homebuyers. Flexibility, community-oriented living, and spacious homes have contributed to their soaring popularity. Additionally, the expansion of roads and expressways into the suburbs has paved the way for real estate developers to capitalise on new land parcels. According to an industry report, the average plot prices along the Yamuna Expressway, the 165 km road connecting Noida and Agra, witnessed a remarkable 38% increase in plot prices, reaching ₹2,200 per sq.ft. in the first half of 2022 compared to ₹1,600 per sq.ft. in 2019.
Developers are transforming plots into gated communities.
| Photo Credit:
Getty Images
That said, several micro markets and tier two and three cities are also seeing a growing interest in plotted developments. For instance, Bengaluru has experienced significant land price growth in its top three micro markets: Devanahalli (18%), Attibele (24%), and Doddaballapur Road (18%). In Punjab, for instance, Sonepat, Karnal, and the Tricity area are being seen as future investment options by developers. Developers are transforming these plots into gated communities that offer myriad benefits to both the developer and the homebuyer.
Tailor-made homes
Plotted developments provide a level of customisation and flexibility that appeal to homebuyers. Unlike traditional apartment complexes, buyers have the freedom to design and construct their dream homes. With these varied aspirations and lifestyles, developers are tapping into a wider pool of buyers looking for tailor-made housing with diverse sizes and configurations.
Plotted developments present a compelling investment option: low initial expenditure and the potential for substantial future returns. These developments offer investors the opportunity to capitalise on the upward trajectory of land prices.
States step in
Several State governments in the country have begun initiatives around plotted homes. For instance, there have been changes in the by-laws in Delhi, which allow for a re-densification of colonies with traditional plotted homes.
Anuj Puri, Chairman of Anarock Property Consultants, says the Haryana government’s Deen Dayal Jan Awas Yojana offers policies to attract more investors to the region. “People can buy properties across various verticals as per the government’s norms. They can also get access to loans or financial support from registered sources to invest in plots. However, a drawback in the case of plots is that one is eligible for tax exemption only when the construction of the property (on land) is completed.”
Plotted developments are growing in popularity in North India and the middle belt, says Manit Rastogi, founding partner, Morphogenesis. “Newer versions of these plotted homes are developing, for instance, builder floors, which merge plotted living with the apartment concept, resulting in low-rise apartments where each floor is an independent unit. Builders and real-estate developers also see this form as an efficient use of land and are bringing this idea to smaller towns in India as well.”
Team Property Plus
Niche buyers
Plotted developments have gained traction among a niche segment of buyers, particularly those looking for exclusive living experiences. The allure of owning a standalone plot with ample space, privacy, and the potential for landscaping has attracted affluent homebuyers. Developers have recognised this demand and are designing plotted developments that offer premium amenities such as gated communities, landscaped parks, clubhouses, and sports facilities. By catering to the specific preferences of this segment, developers can enhance their profit margins.
The rise of plotted developments in India signifies a paradigm shift in the real estate landscape, with developers increasingly recognising the potential and advantages these projects offer. The demand for customisation, lower construction costs, land optimisation, and the ability to attract affluent buyers have all established plotted developments as an attractive investment avenue for developers. Plotted developments are poised to continue their upward trajectory, offering a unique blend of individuality, flexibility, and investment potential.
The writer is executive president, residential business — Embassy Group.
