Land on city's outskirts Vs plot (Growth over 27 years)
By Rishi Saraf 21-Oct-2016
It is interesting to see comparative growth in real estate over a longer period between two investments i.e. prime residential plot in a city Vs agricultural land near a city in India.
In the year 1989 prime residential land in Nagpur was quoting around INR 300/sq ft, which in the year 2016 quotes around INR 12,000/ sq ft, giving an appreciation of about 40 times in about 27 years.
In the year 1989, agricultural land near Nagpur city was quoting at around INR 40,000/acre (1 acre = 43560 sq ft), which in the year 2016 quotes around INR 4 million/ acre, an appreciation of about 100 times. If this agricultural land is further developed into plots, the plots can sell for INR 400- 500/sq ft and it could fetch a realization of INR 7-8 million/ acre (after deducting development expenses) i.e. an appreciation of about 175- 200 times over 27 years.
Such is the growth in agricultural lands. The key to good returns in real estate is to locate reasonably priced lands in the vicinity of your city which would eventually be part of the city itself.
There is a story of an astute investor who is said to have bought land near Butibori (about 26-28 kms from Nagpur) which looked like a jungle @Rs 500- 1000/acre many years back. Later he constructed a temple there, and people started visiting it. Subsequently as the areas nearby developed, prices went up to over INR 0.5 -1 million/ acre.
Applying the essence of Warren Buffet’s philosophy to real estate “You have to pay a very high price for a cheery consensus.” The best time to buy is when no one else is interested.