Land
among all real estate property prices increases at a faster rate than even
apartments as well is the opinion of the expert realtors and market watchers. The
reasons are many. One of the main reasons for this is that the floor space ratio
of land compared to apartments is very high. This makes the demand of land higher but on
the contrary the supply is limited. Thus the land value escalations in most of
the cities are higher than the value increments of the built up apartments
opines the expert realtors. But what is the range of the escalation of values
in the last year? We have a city wise analysis below.
In
Mumbai the mean price increment as noted in the table in the four directions of
the city was in the range of 26.875 percent which is quite high.
In
Bengaluru, the IT capital of India, the price escalations in the North, East,
South and West of the city has a mean increment of 19 percent which is also
quite high.
If we
look at the situation of Pune the table below shows the price increment of land
in different areas of the city
.
According
to the table above the price increment of land values in Pune also shows an
increment of an average of 30 percent in the last year which is quite high.
Notwithstanding
all the data shown above the expert realtors and trend watchers note that there
are cycles of real estate and the economy which also has an impact on the
increment of land prices. But considering all these factors one concludes that the
increment in prices of land is of the order of at least 12 to 14 percent
annually with the price doubling in five years.
Increase in Guidance Value owing to increase of Prices in Bengaluru
There
is a guidance value of land and property in every region that is determined by
the local authority which determines the stamp duty that has to be paid to the
state. No matter what the value of the property the seller attributes, the
guidance value is the minimum that the stamp duty and other charges are to be
paid on during registration.
During
the last year Bengaluru has noted a huge and a sudden jump in the guidance
value of properties in different places of Bengaluru where the myth goes that
the return is always above 20 percent on real estate year on year. Let’s look at the table below which points out
that the guidance value is very high in Sadashivnagar. It touches the mark of
Rs. 20, 000 per sq. ft. Cunningham Road is also one of the areas where the
guidance value is of that range of prices.
UB
City is one of the most posh areas of Bengaluru where the revised rate is Rs.
21, 350. Commercial street,Kanakapura Road,MG Road and Brigade Road are few of the areas where
the guidance value has also been increased considerably. We see that this
increment in guidance value of land has been increased after 15 months owing to
increase the amount in the exchequer as there has been a slump in the revenue
of the government by 10 to 15 percent this year.
Outlook
The realtors
say that this is perhaps the best time to invest in land especially in cities
like Bengaluru, Hyderabad, Pune and Tier II cities also like Ahmedabad as the
infrastructure development is at an all-time thigh. There are many suburbs that
are being developed in the cities like Bengaluru and Pune with the
possibilities of higher rate of return on investment. If you think of the
economic cycles also the market watchers and economists opine that this is the
ideal time to invest as the market will go to a peak again in the late or
middle of 2020’s. Thus the investor will get a quite few years of time to reap
the benefit of the period when the prices would be at its peak.
