Written by Kamal Manchanda, Founder, Brand Realty Investors Group (BRIG)
Land has been the cornerstone of wealth generation for centuries and will continue to do so. With the increasing population, increasing needs of each family member, and the need for land for public and private initiatives, land will always continue to be in demand and will continue to grow in value over time.
According to a study, plot prices have grown by almost 25 times in the last 25 years in Delhi NCR areas, whereas built-up residential and commercial properties have grown only by 4 times during this period.
When one invests in a built-up property, one is investing in land and also investing sizeable capital in the constructed part of the building. With the passage of a long time, say 50 to 100 years, the value of an investment which went into the building is moving towards zero because one day the building will become old and will have to be rebuilt and it is only the value of land which is steadily rising during all these years.
Land remains the same for generations and generations but the buildings part become old and depreciate over some time. One can easily relate to this by looking at the prices of the old apartments in comparison with the prices of the new apartments, which are always higher. These new apartments will also become old over 20 to 25 years with newer ones commanding better prices, due to their remaining time value and due to new features and facilities built into newer apartment complexes.
There are numerous examples within the last 100 years or so, where large corporates and industrial houses have been revived only because they were sitting on large parcels of land in areas which have become prime over all this period. Areas which were once hubs of industrial activity have now become hubs of commercial and residential activity, thereby delivering huge value to the landowners in these areas.
Infrastructure growth is unstoppable. With better infrastructure coming up all across, in terms of roads, airports, and connectivity – one can see better and better utilization of land for various purposes.
In a hugely populated country like India, where infrastructure and demand for housing are growing at a phenomenal rate, holding on to land investment and making new land investments is going to be much more profitable for a very long time.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of RealtynInfra. Reproducing this content without permission is prohibited.
