The uptick in demand for plots across premier cities in India is a win-win situation for developers and consumers. While developers get easy sales with quick returns, buyers are betting on affordable locations with future potential. However, with land titles and zoning violations still rampant, it is a difficult path to navigate. E Jayashree Kurup explores the dilemma with a range of experts

Historically there were two types of plot buyers in India - investors and end users who bought for building and living on it. Sunil Mishra, Chief Business Officer, Anarock says almost 70% of the buyers in the last two years bought a plot for a home. In Bangalore, for instance, people bought plots in a 50-km radius of the city. The shift to work from home (WFH) helped. Going forward, when normal behaviour returns, he believes consumers may shift again to buy plots for investment. But for now, he has seen end users coming in. 

The Anarock average is currently 45 days from opening a lead to closure. The closures can be in 15 to 80 days. “The 15-day closures are for the 1-1.5 meeting wonders. Consumer behavior has not been too different for different price brackets either. For a Rs 50 lakh buyer the amount is more important than for the Rs 5 crore per unit guys. It is the fear vs greed spectrum. The Rs 50 lakh guy buys in 35 days. The Rs 5 crore guy buys in about 50 days.”

The first wave saw buyers considering Tier 2 markets for purchase as big city employees went home during the WFH period. But Wave 2 showed that it was better to be in big cities where hospital facilities existed. Cities like Bangalore and Pune which have a majority migrant population, started the buying cycle again in the city of work.

Century Real Estate, one of the largest landowners in South India, announced sales of 75% of inventory in one quarter in 2021 in Century Seasons, a plotted development project. Its second plotted project, Century Greens, sold out within two quarters. 

Demand for plots for investment has picked up in Bengaluru despite the second wave and the May and June lockdown. Developers are not complaining. Maninder Chhabra, Chief Strategy Officer - Sales, Marketing and CRM, Century Real Estate, says brisk plotted sales for developers means “Quick monetisation of land, faster sales, better cash flow generation, and quick exits.”

As large and small builders get cracking on developing plotted layouts, differentiation is the key. As a large land banker, Century has the scale to develop plotted projects based on themes like Century Seasons, themed on the four seasons. Another differentiator is the CenturyMark, carrying the promise of turnkey solutions from plot purchase to home interiors. “This is what consumers are looking for,” says promoter Ravindra Pai. “We are seeing a demand for plots in gated communities. Consumers expect basic amenities such as tap-off points for water, electricity and even cabling for internet connectivity and a well-equipped club-house. The community has to be secure within a compound. They are not really expecting the houses to be built now. People want to be able to time their construction according to their convenience. Smaller plots of 30x40 sq ft or 60x40 sq ft at a price bracket of Rs 30-55 lakh is the sweet spot.”

In Bangalore prices are between Rs 2,500-3,000 per sq ft, going up to maybe Rs 5,000 per sq ft. As a newly developing corridor driven by proximity to the airport, North Bangalore accounts for about 30% of the entire market. People want to be sure it is a safe investment. Says Pai, “Plot buying is a little bit futuristic because they want to see appreciation by the time they sell. So, they are willing to take a bit of a punt. Many buy, not in fully developed areas but where there is visibility that in three to four years this area will see demand.”

In Pune in Maharashtra, where there is a large volume of techies, with 70% North Indian migrants, plot corridors are spread across many markets. The Hinjewadi corridor scores on proximity to the Mumbai-Pune Expressway and sees investments from the IT workforce which saw scaled up salaries but few opportunities to spend as the state has battled prolonged lockdowns to beat a persistent Covid count. But here the problems are clear titles and many small developers who are selling land outside of municipal areas. Gram Panchayat lands can be tricky when enforcement becomes a norm. 

Lawyer Rashmi Deshpande has a few words of advice to those buying outside municipal boundaries. “One needs to be very sure whether it is revenue land or converted land,” she says. “Land conversion is a revenue process, but the buyers need to be sure of zoning laws as well.” Aju Thomas, Director, Ciril, from Hyderabad says open land without boundaries is extremely risky. Manish Moudgil from the survey settlement team in Bangalore recommends using online Apps such as Dishank that allows consumers to check the titles and ask for surveys if there is any discrepancy.

Pai of Century believes consumers need to start with the fundamentals. “Look for clear titles, check that the zoning is residential, check that approvals are in place. As cities digitise land records, some of these are easily available online; so buyers just need to do their primary research.”

The next big step for both developers of plotted projects as well as buyers is, “Existing social infrastructure and the upcoming ones, including roads which make a difference to the appreciation in values,” says Pai. If you buy from a reputed developer, some of these basic things are taken care of. Century even assists them with registration and later construction of the houses. They take care of the project for a year and then hand it over to the association. “Even later, we work for consumers - sometimes to change a khata or to assess the tax to be paid. In older projects too we held workshops, attended to plumbing and electrical issues. This is also good for strengthening relationships. After all, 30% of new sales were out of references from previous customers,” explains Pai.

The biggest drivers of these plot sales are millennials in the age group of 22-35, who form a large percentage of younger buying populations. Landed developers like Century have lined up five plotted developments for sale amounting to about 40 acres or so. Again, this makes good business sense to enter the market with a product that is in demand, reach out to existing consumers and their friends and family, create a value proposition and then exit quickly after selling out in a couple of quarters. The long-term relationship gets strengthened as the value proposition and convenience of the location grows.

In Bangalore and Pune, the RERA is in place, the IT workers are earning more than ever before and the pandemic has ensured that there are fewer options of spending that money. This has channeled it into purchase of plots as investment options.

In Hyderabad, another key IT hub in South India, the demand for plots has also seen a huge uptick. The drivers are the same, but the risks are higher. RERA is nascent in the city, a lot of sales of non-registered plotted projects are taking place across micro markets. Consultant Thomas of Ciril, says the city has planned the ring roads to consistently open up newer areas to development. This ensures development in all directions. However, the IT and financial corridors that account for bulk of the jobs are concentrated in the central and western parts of the city. “The development of the ORR puts a plug on the price,” says Thomas. But even as pharma, airport and entertainment corridors are proposed, there is sluggish development on those corridors. Therefore, large developers are not moving in there. Smaller local developers are being reined in by a government initiative to restrict sales in revenue plots.

Finally, as cities digitise land records, it is easier to check on the legality of the plots. Branded developers offer that assurance in gated communities. However, there are a large number of unbranded developers who have been cutting plots across cities. And the IT sector employees, flush with cash are easy prey. Ultimately whether it is for end use or investment, plot purchases need due diligence, and many city authorities are trying to enforce them too. But the plot euphoria is palpable and can be a win-win for ethical selling and buying.

E Jayashree Kurup is Director Wormeister Real Estate & Cities. You can reach her on jkurup@Asappmedia.com