“Buy land, they’re not making it anymore,” these golden words by Mark Twain still holds true with property prices inching a new high every year.
Since time immemorial, a piece of land or a plot has been a lucrative investment option for several Indians. Be it the price factor or the appreciation potential or even the flexibility that comes with it, it is one investment that often yield decent returns if invested cautiously.
In the North, this trend is often seen in Tier II and III cities, while in southern part of the country, metropolitan cities like Bangalore, Chennai, and Hyderabad have always been in the forefront. Often considered as traditional and conservative markets, these cities always had a decent supply of plotted developments. Not just that, in terms of prices as well, these markets were growing at a consistent pace.
However, in Q1 2017, plots and layouts took a backseat in the new launched unit supply. As per PropUrban’s latest quarterly report on top three south cities titled ‘ResIndex Q1 2017’, apartments dominated the property spectrum in all major cities.
Here are the highlights.
• In Bangalore, apartments had a clear majority in Bangalore in Q1 2017 as against the same period in 2016 when plots and layouts had 25 per cent supply and villas had about 3 per cent supply.
• In Chennai too, as against conventional trends, residential apartments gained significant prominence. Over the past few years, the city has seen substantial increase in the demand for apartments majorly from the IT/ITeS professionals who migrate to the city for better career opportunities.
• Hyderabad painted the similar story with no supply of plots and layouts. As expected, apartments have gained significant prominence in Hyderabad too as the city has seen substantial increase in the demand for apartments majorly from the IT/ITeS professionals who migrate to the city for better career opportunities.
So, what has led to this?
Well, the surgical strike against black money in late 2016 coupled with end-users taking over the baton from investors has resulted in drastic decline in the supply of plots. As land transactions involve larger cash component, builders also shied away from launching plotted developments in this quarter. Clearly, considering the prevailing market scenario, developers have taken a cue and possibly are being cautious in launching plots and layouts.
Interestingly, even buyers showed inclination towards apartments. In our recent consumer outlook survey, a mere 11 per cent respondents showed inclination towards buying plots while nearly 66 per cent wanted to invest in an apartment unit. This also indicates that end-users are returning to the market while investors are seen to be hibernating.