Investment Decision land or flat
When planning to invest in property, buyers are often torn between the option of purchasing a land or buying an apartment. ‘The Realty+ Show’ second episode deliberated on the issue.
Investments in both flats and plots come with their own set of merits and shortcomings. A plot of land affords the buyer the choice of building the house to his own liking whereas buying an apartment does away with the hassle of constructing and scores higher in terms of security and safety.
Amit B Wadhwani, Founder, Sai Estate Consultants Chembur Pvt Ltd (SECCPL questioned the panellists, “Are flats a more attractive option than plots if they are bought keeping in mind the investment perspective?” Dr Anurag Batra, Editor in Chief, BW Businessworld stated that firstly buyers should be clear of the intent to buy and where he wants to invest. “If you are buying for self-use, then buy it now because this is the right time to buy real estate. In Delhi people still have the mentality of buying a plot for self-construction, but in Gurgaon and Noida young generation is shifting towards buying flats in projects with added lifestyle amenities.”
Pradeep Agarwal, Chairman, Signature Global was of the opinion that buyers should invest wisely and in the right place. While there is an option of buying affordable flats under PMAY scheme, the Haryana government newly launched Deen Dayal Awas Yojna also gives a buyer an option of buying affordable plots of 80-150sqm. He said, “Developers are now allowed to develop townships in 5 acres of land.”
Sanjay Gupta, Founder Sadguna Realty made an observation, “In Mumbai land costs are really high, so buying a piece of plot is something which is a matter of luxury there.” Batra also agreed that availability of land in city centres is scarce. Yash Miglani, Director, Migsun
added, “It is important to get the correct information about the project and how much yield it will bring for you. If the finer details are studied well than it is absolutely a great idea to invest in real estate either plot or flat. The prices will increase in next 2-3 years”
Alishaan Naqvee, Founding Partner of Lexcounsel Law Offices giving a legal point mentioned, “Homebuyers should do their due diligence before investing in the property, RERA and Insolvency laws have streamlined the segment but still a thorough check on developers track record is necessary.” He also feels that the land is prone to litigations but a flat comes with necessary permissions as taken beforehand by the developer before constructing the project. Miglani
expressed that while land gives the flexibility of construction and quality, it requires close monitoring by the buyer that can be quite taxing. Buying an apartment on the other hand is hassle-free.
affordable housing or Vertical slums
Giving an interesting turn to the conversation, Wadhwani said, “What I have witnessed from my
experience is that the projects not doing well are tweaked and termed as affordable housing by developers. In the name of affordable housing, the carpet areas are reduced and construction quality is below standard more like - vertical slums.”
Agarwal putting the onus on homebuyers commented, “Customers should first gather all the relevant information like, what is an affordable housing project, under which section they fall to avail the loans, run a background check on the developer and find out if the project comes under PMAY policy. Naqvee also agreed that while the responsibility of following the guidelines is on the developer, homebuyer too is equally responsible. “Affordable housing is not an investment oriented project. Also financing options for land are very limited.”
Panellists concurred that land has more appreciation but flat can give instant returns. The two options are like chalk and cheese and offer two different kinds of living. The buyer is not technically and financially as experienced as a developer to construct a home. Instead he can ask a developer to customize the flat during the construction. Availability of amenities and security are other big advantages of buying a flat in a project. Location and budget segment shoud be the two important considerations for any buyer. While flats bring the rental yield, investing in plot also makes a great sense if you have the holding capacity.”
The final thoughts that emerged from the discussion were that it is imperative for buyers to consider their own set of requirements and budgets and accordingly decide to invest. If the investor wants to use the property for his personal use, then land could offer an advantage of flexibility and value appreciation in long term. But, if the motive is to resale the property in a short time, then it is more profitable to buy a flat.
In Batra opinion, the real estate prices will go down by 5% in few months and investors should wait for investing in the right property option that brings good yield for in future. As Wadhwani cited, “Flats and Land are two different kinds of living mindsets. In cities like Mumbai, the land cost is so high that flats are the only viable option for majority of the homebuyers, whereas in places like Delhi NCR one can still weigh between selecting a plot of land or flat.”
(L-R) sanjay Gupta; pradeep agarwal; amit wadhwani; DR. annurag Batra; yash miglani; alishaan naqvee