Investing in Plots and Land in Lucknow: Prospects and Risks
- 02 May 2023
Investing in Plots and Land in Lucknow: Prospects and Risks
Lucknow, the Golden City of the East is literally a gold mine as far as real estate is concerned. The development and infrastructural progress have led the city’s real estate market to a never-experienced-before surge in demand. Lucknow’s market has taken this sector by storm. This can be credited to the expansion of new townships and the arrival of multinational companies, making purchases of land, plots, commercial properties and residential properties high on demand.
The purchase of any property is an important step in achieving life goals. Plots and land may be profitable, high-return investments, but only if certain precautions and protocols are followed. If you’re looking to invest in land, it is certainly the best decision, but not before weighing the pros and cons of land investing in Lucknow thoroughly.
Pros and Cons of Land Investing in Lucknow
Buying land can be a daunting task for many who are first-time buyers. Whether you are new in Lucknow and looking to buy a plot to achieve personal goals or seeking an expansion in your profile or an investment for the future, these pros of investing in land in Lucknow will boost your confidence.
1. Appreciation in Value: The demand for land and plots in Lucknow is seeing a consistent rise. This can be attributed to the fast-track urbanisaton, growth in population and an influx of employment opportunities, leading to a reliable and consistent appreciation of land value, and hence, a potentially lucrative investment.
2. Zero maintenance cost: Land does not require any maintenance cost or overheads such as electricity, gas and water. Hence, investing in plots in Lucknow is an easy, stress-free investment.
3. Low price: This is a no-brainer. The cost of a piece of land or plot is definitely comparatively low compared to residential and commercial properties. The reason for the low cost of land is that most of the land available is located in regions that are still under development or are slated to be developed in the future, so the demand is less.
4. Low tax: If you ever wondered why land acquisition is the most rampant investment, it is because land that is sold or transferred to another is not taxed. So, if you purchase a plot for a business, you will not need to pay any taxes, saving your money for further expansion.
5. High Rental Income: The more the demand, the higher the return. Land and plot acquisition in Lucknow has reaped high profits, and in turn high rental income, because of the increasingly high demand for commercial and residential properties. Development of IT hubs and many industrial zones, the demand for commercial properties and quality housing, which can pay back as considerable returns on investment.
6. Diversification: Of course, buying a property- be it a plot, a house, an apartment or a commercial space, is always a good and effective way to enhance and diversify your portfolio. It is a safe and sure-shot route to play against inflation or an economic plunge. They safeguard by providing stable income means and long-term capital appreciation.
Despite these advantages, land investment in Lucknow is not bereft of challenges and risks.
1. Regulatory processes- No pain, no gain. True words, but not when your hard-earned money and endless efforts are at stake. The process of land purchase can be tedious with time-consuming regulatory procedures, clearances and approvals, leading to delays, which can leave you troubled.
2. Land encroachment- Land encroachment has been one of the biggest banes of the real estate market in Lucknow. Purchasing land without prior research can throw you to unnecessary legal battles. Always check the background and credibility of real estate agents, and verify the authenticity and ownership of the land before investing, lest you end up buying a plot that is encroached upon.
3. Market fluctuations- Real estate markets are extremely volatile. There are various factors that can lead to fluctuations in the sectors- economic aspects, unforeseen circumstances and changes in government policies can lead to the market value of land being appreciated or depriciating.
Investing in Plots in Lucknow: Opportunities and Challenges
They say -Less is More. The statement holds true for investments in plots in Lucknow. With a surge in the demand for properties in Lucknow, the demand for plots has also seen a sharp rise. Investing in a plot or land is one of the smartest ways to grow monetarily. Here’s why-
1. Low cost Investment: Do you know a plot or piece of land costs a fraction of the price of a built residential or commercoial property? That is the reason the old age belief that -Land is better than a home- came about. Investing in plots in Lucknow will give you a low cost investment and rest assured, very high returns.
2. Flexibility: Plot investment is the best option also in terms of the freedom it gives you to develop it as you wish and align it with the market trends and demands. Whether you develop it for residential or commercial purpose, the land will set the base for you, and bring high returns.
3. Potential for High Appreciation: It is a known fact that investment in plots are liable to garner higher appreciation as compared to ready properties. This is because scarcity of plots is bound to increase, which will create urgency in demand and hence, the surge in its value.
Where buying land is the most reliable form of investment, it comes with its fair share of challenges. Investing in plots may seem easy, but the process is prone to complexities.
1. Development Costs: While investing in raw land is a cost effective investment, developing it can incur heavy expenses. Investors must consider the purpose of investing in land in Lucknow - whether it is for residential, commercial or agricultural purpose- when making the decision, as that can completely change the cost and value of the land.
2. Transactional Challenges- Usually, plot investments involve heavy cash component; this is because the actual rates don’t always align with the market rates of the area.
3. No Tax Benefits- There are no tax benefits offered in purchase of land and plots, so much so that even the banks offer loans which account for only 70% of the total value of the plot, unless the loan is taken against residential construction, repair or purchase. The reason for this is that banks don’t see raw land as an income generating investment. It is more of a monetary liability for a non-revenue generating investment.
4. Litigation Risk- Many family-owned properties in India are under litigation. Investors must ensure that the land titles are clarified prior to the acquisition. Many a times, real estate agents pursue buyers into purchasing a plot which does not have the land title cleared. Here, heavy research and investigation is pertinent. At times, the land may be own by several individuals. In this cae, the consent must be aquired from all parties.
Is Land Investing in Lucknow Worth the Risk?
As mentioned before, land investment is one of the best investment practices anywhere in the world. Lucknow, touted as one of the fastest growing markets in India, is turning into a profitable real estate market. The speed of development, the quality of infrastructure and the lifestyle the city now offers, are certainly upping Lucknow as a lucrative land investing hub.
Like any other purchase- apartment or house, land investment does involve certain challenges and risks, but if your back end research, information on the market trends, land value, and documentation on on point, plot investment can be the safest bet in terms of economic factors and returns. Considering the fast paced progress Lucknow is witnessing and the number of world-class constructions taking place, the value of plots will definitely see a steepand sudden rise, taking the plot value to unfathomable heights.
Moreover, factors such as- affordable prices, safety, availability in prime areas, and Lucknow itself a city bringing a medley of heritage and modernisation, there couldn’t be a better time and place to indulge in plot investment in Lucknow.
The Realities of Investing in Lucknow Land
With so much being said and written about Lucknow as the new city of dreams, the emerging realty hub, the next big hotbed of real estate investment, and the like, the most fascinating insight into this involves understanding how the city prepared itself to be counted amongst the leading markets today.
Of course, it cannot be denied that exemplary governance, intelligent and neat infrastructure and affordability led investors to the city, but one factor has propelled this progress and that is- manufacturing. In the recent years, the city has focussed diligently on other fields such as electronics, banking, health care and food processing. This has played a very crucial role in the influx of people from surrounding areas moving to Lucknow for employment, and in turn, leading to multinationals entering the city.
Connectivity has also been a major contributor to this surge in the realty and investment sectors. Till now, Noida and greater Noida had been the successful hubs of real estate investment, but the immaculate infratsructural planning in Lucknow has made the city the new rising star.