Why invest in land?

Many people misunderstand land investment, but it’s a smart move for diversifying portfolios. Surprisingly, land is often overlooked as an investment.
 Is buying land a good idea in 2024? Yes! Though it might not suit everyone, those looking to diversify and earn good profits should consider it. It’s a common saying that -NEVER PUT ALL YOUR EGGS IN ONE BASKET

That brings us to our topic –

Why is LAND the best asset class in Real Estate?

Opportunity that the land presents:

• Land is Versatile – It can be put to any use wherever the highest returns and the best opportunity is available whether residential, commercial, or industrial depending on market dynamics
• The cost of land always appreciates while building depreciates. Some lands appreciate more when compared to other lands when purchased in the right location. Buildings depreciate with age.
• Land gives the highest appreciation – land shows exponential long-term IRRs and returns when compared to any other asset class in Real Estate
• Land brings in huge cash flow when sold and enables a comfortable lifestyle for the future of the family. Investing in land is a secure way to build wealth and achieve financial stability. Even beginners can start with small plots, and the process is now more efficient and affordable. Land ownership provides various income opportunities, such as building rental properties, farming, or leasing the land.

Now, we should try to understand what factors help in  choosing the right land:

Land can be broadly classified into lands in Urban areas and lands in Non-urban areas, Further on, Urban areas may comprise Residential or commercial, and Non-Urban areas can be Agricultural or Industrial.

Urban vs. Non-Urban – it is commonly accepted that semi-urban lands with development potential appreciate faster than urban lands or city-centric lands. While residential and commercial lands are in city centers & agricultural lands are far out, the in-between areas are the locations that house industries and warehouses which give the best potential to appreciate They do so as they turn into being used for either residential or commercial as the city limit grows. Also such industrial land has the potential for rental (sometimes without a shed as well) yielding cash flows while they appreciate that classifies as ROI every year.

Why non-urban Industrial land?

• Industrial land can be used today, and the owners can get cash flows for the next 25-35 years instead of an idle land investment.
• The potential for the same to convert to residential or commercial is high in the medium and long term – Madhavaram is a classic example in Chennai where metro rail has made this a residential destination and investors are benefiting from huge appreciation after enjoying rentals over the last several years. So the pursuit is to identify the next Madhavaram!