Reasons Why Real Estate Developers Are Launching Plotted Development
Due to the upcoming expressway, a new land parcel along the stretch has also opened up for real estate development, especially in the plotted segment. The late several branded real estate developers have also launched plots as a part of gated societies to be built on and moved in. In fact, the trend has also caught on as, for the developers, plotted development is a smart strategy to liquidate land banks for raising working capital. These projects also require capital investment, limited project execution risks, and faster exit opportunities.
Anuj Puri, Chairman of Anarock Group said that the buyer prefers the asset as it is relatively affordable compared to built-up real estate. The returns are always better on a land invention as compared to the real estate industry. The infrastructure in the city peripheries offers a strong rationale for investing in the land now and reaping the benefits on their completion.
When it comes to developers, plotted development is a very smart strategy to liquidate land banks for raising working capital. In fact, the asset class has been characterized by minimal capital investment, limited project execution risks, and faster exit opportunities, he further added.
According to the report submitted by ANAROCK Property Consultants, the highest rise of 38 percent in average plot price was seen along with the Yamuna Expressway. The Yamuna Expressway, the 165 km along the eastern bank of the Yamuna River that connects Noida and Agra.
The average plot prices here rose to rs 2,200 per square foot (sq. ft) by the end of the first half of 2022 from rs 1,600 per sq ft in 2019. In fact, in West Greater Noida, the plot price climbed 36 percent to rs 4,500 per sq ft from rs 3,300 per sq. After the construction of Jewar International Airport has gathered pace, development activities in and around the area have risen leading to higher land prices.
Plotted development is a smart strategy to liquidate land banks for raising working capital. The assert class is also characterized by minimal capital investment, limited project execution risks, and faster exit opportunities, he further added.
M3M India has recently launched Phase-I of its first plotted development project. The upcoming project M3M City of Dream, sector 37, Panipat, Haryana. In Phase-I, the group has introduced 900 plots, ranging from 140 to 180 square yards, valued at Rs 600 crore, out of which 436 plots have already been sold, mopping up Rs 250 crore.
Vaishnavi Group, Bangalore-based plans to bring to the market 62-acre land in eastern Bengalure’s Sarjapur. The land is around 30 acres and will be for plotted development while the rest will be villas. The villa is sprawled over about 4,000 sq. ft.. it will also start from rs 11,000 per sq ft which is about 3.4 crore and upwards. The company has also witnessed another 30-acre land parcel about two km from the project for plotted development.
In fact, Purvaland by Puravankara Ltd. launched Purva Oakshire in Bengaluru on 35 acres of land. The plot sizes also vary from 1,00 sq ft and 4,500 sq. ft. The price starts from rs 81 lakh. The House of Abhinandan Lodha has also launched plotted development on 20 acres in Alibaug. The plot size of this project also ranges from 2,00 sq. ft all the way up to 5,000 sq.ft. The expected launch price for this product is going to be launched on June 13 is more than rs 2 crore.
Senior Director and Head, West and North, Residential Service and Developer Initiatives, JLL, Ritesh Mehta commented that the assert class is popular as it offers faster price growth to investors and quick exit to developers. This also comes with minimum project execution risks and fewer approval. It also offers a faster exit compared to much multi-story housing and 2X returns to the builder.
He further adds that the new policy has offered flexibility to buyers to buy land in any part of the country.
When it comes to the Real Estate expert point of view the post-COVID-19 launching plot was the strategy adopted by developers to get quick liquidity at the time. Now, the price in city centers has increased, so the developers preferred launching high rises within the cities as group housing is far more financially remunerative compared to the plot.
Mudassir Zaidi of Knight Frank, Executive Director – North, Knight Frank India also commented that after the pandemic the launching of the plot was also a risk-averse strategy when the market was reviewing. The opportunity is also now spreading to Tier 2 and Tier 3 towns. There are tons of listed players who have started scouting for land in Sonepat, Karnal, and the Tricity area in Punjab where they plan to launch the plot.