By Satish Vadaga, City Lead – Hyderabad, ANAROCK Property Consultants
Buying a plot of land can be a very attractive investment option, considering the potentially high resale value of sufficiently large plots as compared to apartments. That said, investing in land is a very different ballgame than investing in built-up properties.
For one, the required investment horizon is much longer than for apartments – land investors must ideally hold plots for anything between 7-12 years. Secondly, buying land with the purpose of selling it a housing developer sometime in the future is much more cost-intensive than buying a flat, as plots need to be big enough to accommodate a full-fledged housing project. Thirdly, as plots need to be held for several years, there can be the danger of encroachment.
Nevertheless, since land is the basis of all real estate development, it can be a very profitable investment if one approaches it with the right temperament and capital - and, equally importantly, knows where to buy it.
What’s pushing plotted development: Hyderabad lends itself particularly well to land investment. The city’s housing sector has been growing consistently - with returning political stability, Hyderabad is witnessing increased demand for residential property. More importantly from a land investment perspective, its real estate market is quickly expanding to the fringes of the city where land is still not hyper-expensive.
In fact, compared to other metros, land in Hyderabad is still relatively affordable and thus within the reach of many buyers and investors. Plotted developments in the peripheral areas have taken off in a big way.
Several proactive steps taken by the state government have improved the prospects of many micro-markets, making investment in land an attractive proposition. Some of the recent government decisions that can positively impact Hyderabad's land market are:
- Formation of new municipal corporations
To put a check on illegal land layouts and to promote planned development, seven municipal corporations will be formed adjoining Greater Hyderabad. Corporations will be formed for Badangpet, Bandlaguda, Peerzadiguda, Jawaharnagar, Meerpet, Boduppaland Nizampet. Most of these areas are within Hyderabad's Outer Ring Road (ORR) and have good interoperability with Greater Hyderabad Municipal Corporation.
- Announcement of Pharma City and Yadadri Temple City
Plotted development in Hyderabad is likely to benefit greatly from mega initiatives such as Pharma City and Yadadri Development Plan. The Pharma City coming up on 19,000 acres in Mucherla is expected to attract many global and domestic pharma companies and provide employment to lakhs of professionals in the city. At the same time, the development of Yadadri Temple City coming up in Yadagiri Gutta will entail construction of new roads, buildings and other facilities for visiting devotees.
- Improvement of ORR
The government plans to add 280 km of roads to the ORR to plug the missing links on this buzzing growth corridor. The Hyderabad Road Development Corporation Limited (HRDCL) has been entrusted with the responsibility of constructing this new network of roads.
- Building permission on plots streamlined
The government recently announced that building permissions for plots sized between 75 sq. m. and 500 sq. m. will be processed through an online self-certification system. For plots larger than 500 sq. m., there will be a single-window system of applications comprising of only one application form which can be submitted online.
Upcoming Investment Destinations
In light of the above developments, several localities - mostly in the affordable and peripheral areas of Hyderabad - are emerging as land investment hubs whose land values start as low as even INR 400 per sq. ft. and go as high as INR 3,600 per sq. ft.
- Mokila - Due to its proximity to the Gachibowli and the commercial hubs of West Hyderabad, real estate inMokila is on the upswing. The Outer Ring Road connects Mokila to the rest of the city and apart from plots, the demand for villas and apartments is also high in this affordable destination. Land values hover betweenINR 1,600 to INR 2,000 per sq. ft.
- Shankarpally - Located in the vicinity of Cyberabad, this location is a big draw for IT professionals. Fresh green environs, solid infrastructure and limited traffic have drawn buyers to purchase land in this suburb of Hyderabad whose prices start from INR 1,650 per sq. ft. and go up to INR 2,200 per sq. ft. The proposed 4-lane highway and 100 feet road will bring Cyberabad 'closer' to Shankarpally.
- Shad Nagar - Shad Nagar has a high supply of residential plots and attracts buyers due to its proximity to the International Airport and upcoming Special Economic Zone (SEZ). Land values are significantly lower – between INR 500 to INR 800 per sq. ft. It also has good schools, a hospital and a police station nearby. Apart from the ORR, Shad Nagar is also connected to the rest of Hyderabad via the Shad Nagar Railway Station.
- Maheshwaram - Well-connected to the Srisailam and Bengaluru Highway, Maheshwaram is finding favour with many professionals - and prospective property buyers - due to its affordable land prices. Located in theRangareddy district of South Hyderabad, the area is still affordable compared to other central localities near IT Hubs. The government has shown interest in Maheshwaram due to the availability of land parcels and its connectivity to two major highways. As the area is still in its developmental stage, it provides myriad land options at reasonable rates to buyers - between INR 850 to INR 1,400 per sq. ft.
- Srisailam Highway - Srisailam Highway, located in the southern part of Hyderabad, scores high due to its proximity to the Rajiv Gandhi International Airport. The stretch includes many upcoming centres such asBarkas, Venkatapuram and Tukkuguda. It is also located close to the TCS special economic zone (SEZ) atAdibatla. Moreover, with many SEZs planned along Srisailam Highway, the locality’s prospects are bright. Land values here are anywhere between INR 500 to INR 1,000 per sq. ft.
- Medchal - Connected to Hyderabad via the Outer Ring Road, Medchal has witnessed increasing real estate activity over the last few years. The new district of Medchal – Malkajgiri houses a range of industries as well as educational institutions and has ample natural resources. It is a well-connected district with three national highways and two state highways apart from many roadways running across the district. The district is often regarded as the link between Hyderabad and North Telangana. Land values are slightly higher here in comparison and range between INR 1,750 to INR 3,000 per sq. ft.
- Kompally - Kompally is an emerging residential hub located in the north of Hyderabad. From a small township on the fringes of the city to a promising educational, industrial and residential centre, Kompally is now on the radar of many property buyers. It is well-connected to HITEC City and Mahindra Tech Park and offers affordable homes that cater to young professionals. The presence of vast expanses of developable land is attracting developers and investors alike. However, land prices range between INR 2,000 to INR 3,600 per sq. ft. – still affordable in comparison to many other areas in the city.
- Adibatla - Located between Nagarjuna Sagar Highway and Srisailam Highway along the ORR, Adibatla in South Hyderabad has a high supply of plotted developments ranging anywhere between INR 1,300 to INR 2,200 per sq. ft. The Shamshabad-Adibatla stretch has picked up due to IT, the aviation industry and its affordable prices. Emerging as a new IT hub, Adibatla is part of the Information Technology Investment Region (ITIR) project and has garnered interest from companies like TCS, Cognizant, Google, etc.
- Shameerpet - The area has also seen burgeoning real estate activity after the establishment of Genome Valley, which houses some of the biggest names in biomedical research, technology and manufacturing.Shameerpet is back in the reckoning since the inauguration of the Outer Ring Road (ORR) betweenShameerpet to Ghatkesar. This operationalized the entire 158-kilometre ORR and has helped improve the prospects of the locality. Land values start from INR 1,100 per sq. ft. and go all the way upto INR 1,900 per sq. ft.
- Isnapur - Located only an hour away from Secunderabad and Hyderabad, the area is popular due to its prime location and affordable rates. Moreover, National Highway 65 directly connects Isnapur to the city and ORR, making it a hot favourite among property buyers. A wide range of plots are available in Isnapur priced between INR 1,200 to INR 2,300 per sq. ft. and many are located within gated communities providing a safe environment and several amenities.
- Patancheru - Patancheru falls in an industrial zone located about 32 kilometres from the city centre on the Hyderabad-Solapur highway. The area is about 18 kilometres from HITEC city and is favoured by property buyers looking for affordable land opportunities which are priced between INR 1,300 to INR 2,400 per sq. ft.The locality is likely to benefit from the upcoming Regional Ring road from Sangareddy, which is just 25 KM from Patancheru.
- Yadadri, Ghatkesar (Warangal Highway) - Situated along the Warangal-Hyderabad Highway, YadagirIgutta is popular with real estate buyers and investors. The area has been allocated a separate Rs 100 crore budget even as the Yadagiri Gutta Development Authority (YDA) is working continuously on its development. The state government has proposed a Land Pooling Scheme (LPS) along the Warangal and Vijayawada highways to accelerate real estate growth. As and when the proposal gets approved, these areas will witness high appreciation in land values. As of now, the prices are quite affordable and range between INR 400 to INR 700 per sq. ft.
The viability of these areas also makes investment in built-up housing projects there very attractive, since it primarily housing demand which drives the growth of land rates. These are major new growth corridors that will see increasing interest for both rental and ownership housing. For investors who prefer plotted developments, these areas are clear stand-outs on Hyderabad's rapidly growing real estate landscape.