Investing in land and monetizing it in rental format gives 10 times higher yield than ready apartments, according to a report by real estate consulting firm Colliers.
As a collateral impact of Covid-19, weekend homes or a place to escape the bustle of the city are expanding rapidly.
There has been a spike in demand for investing in land at a nature-friendly location and across key tourism destinations. The concept of investment in serene locations has gained significant traction during the lockdowns and travel restrictions during the pandemic and is now on an upward trajectory, noted the report.
“The micro-markets close to financial and industrial hubs in major cities of India are anticipated to gain more attraction in the upcoming years and holding real estate in these micro-markets is the key to securing and enhancing wealth for the smart investors. In fact, it is observed that the demand for Villas, farmhouses, plots, and land across key destinations close to nature and proximity to metro cities have increased 2X post Covid-19,” said Umakanth Y, Senior Director &a Head of Delivery, Advisory Services, Colliers India.
Destinations close to metropolitan cities on investor radar
Colliers has identified top 5 corridors based on the annual rental yield and expected capital appreciation. Financial indicators such as property capital yield, rental appreciation and significant physical infrastructure developments over a period are some of the primary factors for an investor to consider the property. "However, across the top 5 corridors, monetizing land will bring in a higher rental yield and price appreciation in the coming future through complementing infrastructure developments and increased tourism," said Umakanth.
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Maharashtra-Neral-Matheran: The Neral-Matheran micro-market is considered one of the key investment regions with an average annual rental yield of 15% for holiday homes and is expected to achieve 5X return on land investments in the next 10 years.
"Neral – the foothills of Matheran has been looked up as an opportunity for land investment to build holiday homes which also are income generators in the form of home-stays or short-term rentals," said the report.
The Neral-Matheran corridor has emerged as a major hotspot amongst investors due to the presence of branded developers with sizeable real estate projects, proximity to the city centre, and well-established social amenities like Bhimashankar Wildlife Sanctuary, ND Film Studio, Neral-Matheran toy train, Rambag point.
Other tourism spots in and in the vicinity of the Neral-Matheran area are Blue Bulb, Neral–Matheran Toy Train, Rambag Point, Panorama Point, Hart Point, etc
Other impacting influencers are: Panvel Bhimashankar Road connector; Proposed Jio University; Neral station & State highway connector.
Sanand Nal Sarovar in Ahmedabad
The tourism and industrial hub of Gujarat – Sanand Nal Sarovar corridor is strategically located in Ahmedabad. It is well-connected to major cities and transportation hubs, including the AhmedabadDholera Expressway and Ahmedabad’s proposed third-ring road, enhancing accessibility and convenience for residents and employment.
Due to the geographical setting, the huge natural lake, and spread vegetation, the region has been an attraction as a weekend property market for people from Ahmedabad. The location has been developed as golf clubs, resorts and weekend homes for people from Ahmedabad & Gandhinagar.
ECR in Chennai
ECR in Chennai
ECR in Chennai, located along the coastal lane presents an excellent example of a bustling road stretch studded with beautiful long beach views and serves as a perfect spot for unwinding and recreation.
ECR is home to numerous important heritage sites that attract visitors from all around the world with an advantage of sea along the corridor. Key Tourist destinations include Cholamandal Artist’s Village, Dakshinachithra, Muttukadu Boat house, Nettukuppam beach. With a unique location facing the sea, ECR offers a serene panoramic ocean view from the user adobe. Developers are capitalizing on this opportunity by developing various projects such as resorts, Villas, plotted development.
"Second homes in ECR are considered as best investment plans for income generators through short-term rentals," noted Colliers.
Kompally-Medchal-Shamirpet in Hyderabad
Kompallu-Medchal-Shamirpet are few key destinations for premium gated communities with guaranteed return on investments near Hyderabad. Kompally-Medchal-Shamirpet are now real estate hot spots due to various advantageous factors such as location, high potential growth of capital, and the availability of a wide range of housing options.
"The corridor includes unmatched living experience amid excellent social infrastructure, including renowned schools, hospitals and shopping complexes in the midst of nature. These corridors are considered as luxury weekend/holiday home destinations, led by the development of premium wellness and nature resorts and gated communities with wide amenities for the travellers, according to the report.
New Town Rajarhat in Kolkata
New- Town Rajarhat is a planned smart satellite city located at a distance of 11 kilometres east of Kolkata CBD area. The presence of important landmarks such as Eco Park, Biswa Bangla Convention Centre, and several IT parks has made the area an esteemed real estate destination, said Colliers.
These corridors with ample amount of land availability, increased traction in tourism and uptake in infrastructure are emerging as destination investments with an average annual rental yield between 2.5% - 4.0% and price appreciation for land between 6 - 8% annually.
“Better infrastructure, affordability, Higher rental yield, scope of capital appreciation, tourist attractions, proximity to city center are the key parameters while looking for any investments. These factors, together with the rising popularity of remote work and flexible work options, have contributed to make tourism destinations in India more attractive to investors. Overall, Neral-Matheran in Maharashtra and Sanand Nal Sarovar in Gujarat are attractive to real estate investors seeking higher returns due to their lower capital investment as well as the potential for price growth and higher rental yields. However, the investors should also do their due diligence and carefully evaluate the risks and opportunities before investing in any specific region.” said Swapnil Anil, executive director & head of advisory services, Colliers India.