Demand soars for residential plots amidst COVID-19- The key reasons behind this phenomenon

Demand soars for residential plots amidst COVID-19- The key reasons behind this phenomenon

Residential plots in the country are witnessing considerable buyer traction and prospective owners are now considering individual homes amidst the coronavirus pandemic. Square Yards’ research has revealed a steady increase in demand for plots throughout 2020. Demand for plots either went up a little or remained same in the first 3 quarters though there was a massive rise of almost 50% in the quarter between October and December last year as compared to the period between July and September. 

The year on year change for demand is also indicative of a similar trajectory in industry growth. The phenomenon has been commonly observed throughout India without being restricted to only particular regions or cities. More than 65% of inventory or more than 100 plots in Phase II of Century Greens, the premier plotted project by Century Real Estate in Bengaluru, got sold out in only the first 10 days of pre-launch in February, 2021. The Phase I of this project was unveiled in September, 2018 and this was sold out 3 months post the launch. Out of 381 plots that were developed by Shriram Earth, a project in Mysore, the company has stated that only some remain. 

With interest increasing for plots, particularly after the coronavirus pandemic, big and organized developers have forayed into plotted projects. Leading players like Puravankara Developers, Godrej Properties, Mahindra Lifespaces, Shriram Properties, Century and Sobha Developers have all ventured into this segment. 

Reasons behind higher demand for plots

Plot demand is only being propelled by coronavirus. They are becoming coveted options for realty investors and buyers owing to the nature of land as an appreciating asset class and higher demand for low-density projects and open spaces alike. Experts feel that plots have always been the first preference for Indian buyers and now after COVID-19, demand has gone up and should stay high in the near future. Plotted developments offer greater flexibility and versatility along with immediate appreciation. Value of land never comes down and developers are now catering to increased design by offering plotted projects with better lifestyles. Reputed developers are offering gated communities with top-notch amenities, particularly in rapidly growing areas with swift infrastructural development. 

The COO and Founder at Square Yards, Kanika Gupta Shori, has stated that plots are better choices for buyers as compared to apartments or houses if one is looking to invest in real estate. Plotted developments do not have any elements that depreciate, giving buyers the complete land value appreciation benefits. Age may negatively impact values of floors and apartments over a prolonged duration if they get a little worn out or dilapidated. She has added that plotted developments promise potentially larger returns on investments than floors or apartments owing to the lower entry-size by way of capital investments and swifter appreciation rate of plots alike. 

Things to note while purchasing plots

Due diligence is required even more while purchasing plots as per Shori. She adds that paperwork is vital and buyers should check for the release certificate, title deed, property tax papers, local approvals and permissions and also the encumbrance certificate. There are several instances of fraudulent transactions in the plotted development space as per experts and buyers should go through all documents minutely. A valid land title is a must along with a clear deed. A release certificate is a must while buying any resale plot. The encumbrance certificate ensures that there is no legal debt outstanding on the plot. Earlier tax receipts should be carefully scrutinized as well. 

There are also risks pertaining to illegal encroachment and other legal issues along with risks pertaining to Government acquisition as per Shori. Buyers should check the land status with care prior to purchasing any plot. Risks are comparatively lower while buying plots from reputed real estate developers with gated communities. They also provide several amenities including convenience stores, swimming pools, parks, playing zones and club houses among others. Yet, buying a plot from a smaller developer or individual seller necessitates a lot of care and caution.

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Published Date: APR 26, 2021