BUY LAND! THEY DONT MAKE IT ANYMORE !!! —  reason & advantages

Mark Twain very fam­ously remarked once – “Buy land, they are not mak­ing it any­more.” Per­son­ally, I feel, never has any real estate invest­ments been bet­ter advised than above.

When I returned from the USA in 2004, and I huddled with my friend Ramesh Menon to identify the areas where we could invest our hard earned money. The brief was clearly to focus on three factors, on which to scale the invest­ment strategy.

RISK                           On a 5 year hori­zon, how much would each invest­ment avenue Grow /        Stag­nate / or depreciate

TERM & TERMS        Entry level pri­cing to be bench­marked against the stay-in period of invest­ment over a 3 – 5 year window

LIQUIDITY                  How easy would it be to PROFITABLY EXIT, in parts or in whole?

Our detailed study & exer­cise led us to the con­vic­tion that LAND IS LESS VOLATILE com­pared to mutual funds, stocks, equit­ies, Invest­ment trusts etc. Haven’t we all exper­i­enced and wit­nessed the massive erosion of wealth & valu­ation in the past few months, on most invest­ment instru­ments men­tioned above?

I am happy for my stra­tegic decision to choose land over the other medi­ums, as the pre­ferred invest­ment three years ago. As for valu­ations, my invest­ments have already appre­ci­ated over 300%, and still going strong.

It would be a good idea to share the seven reas­ons why we feel that invest­ing in land is the best option within real estate com­pared to the much more “touted & pub­li­cised options” of built up spaces in buildings.

Reason # 01 Land is an ever­green, ever-growing asset. Brick & mor­tar assets like build­ings (mall space / office blocks) deteri­or­ate with time, whereas LAND DOES APPRECIATE, with time. Remem­ber, some stud­ies con­firm that the value of any com­mer­cial build­ing becomes ‘Zero’ in 27 years. Even when the build­ing is use­less & demol­ished, what is left behind is LAND.

Reason # 02 Land is an asset from day one. It has very little lead time to mature from pur­chase to pro­gress. For e.g. If you are an early bird buyer for a res­id­en­tial or com­mer­cial prop­erty, it typ­ic­ally takes 3 – 5 years for your asset to be registered in your name, and to draw returns from them. One keeps invest­ing money & time for 3 – 5 years, without returns. Land can be registered imme­di­ately, and can start deliv­er­ing returns.

Reason # 03 Land is one asset which affords the most flex­ible options, within the real estate products.  You can choose to buy any size & dimen­sion, any value, any­time. Besides, land can be put to mul­tiple use dur­ing the period of own­er­ship. Let me elab­or­ate. Agri­cul­tural land if inves­ted into; can be used for farm­ing. Post zon­ing, land use can be changed and com­mer­cially used. Any­thing build on it can be redeveloped, for e.g. the same piece of land could end up being used as ware­house premise, com­mer­cial, res­id­en­tial, etc. etc.

Reason # 04      Land affords simple invest­ment man­age­ment. Once bought, it doesn’t incur high costs com­pared to built-up products. It is most likely that the land bought is self suf­fi­cient in deriv­ing the main­ten­ance cost, whereas, the other products attract a con­tinu­ally incre­mental maintenance.

Reason # 05      if we ana­lyze the sup­ply Vs demand for real estate products in our coun­try, land as a com­mod­ity would remain in demand for the next couple of dec­ades. There is an acute demand for fin­ished products, which would have to be con­struc­ted on LAND.  Hence, invest­ments in LAND are bound to grow, provided the buy­ing strategy is right. For e.g: Delhi as a city state is fore­cas­ted to grow from 136 lakhs to 240 lakhs of pop­u­la­tion in the next dec­ade. That neces­sit­ates almost another few thou­sands of hec­tares to be brought under devel­op­ment. Hence, invest in land today, rather than wait for appre­ci­ation at a much later date; at much lower returns.

Reason # 06      With the eco­nomy pro­jec­ted to grow at a fast rate, and with dis­pos­able incomes being higher, aspir­a­tion of green liv­ing, big­ger houses, bet­ter amen­it­ies, afford­able lux­ur­ies etc. would take over. Those can be achieved on big­ger land chunks being brought under devel­op­ment. Hence, invest in land today.

Reason # 07      Land affords the “right bal­ance in your real estate port­fo­lio”. While invest­ing in real estate, one needs to have a right product mix to hedge the risk, with one or two products which are low on risk and high on returns. That is what land prom­ises to be.

Hav­ing said the above, we also advise our cli­ents to exer­cise the right amount of cau­tion and source expert­ise while buy­ing land. Seek out experts rather than take the ‘gut-feel-approach’. Analyze-understand-replicate suc­cess stor­ies in land as a port­fo­lio rather than try to re-write a suc­cess story. Remem­ber, all lead­ing developers in our coun­try grew at this scorch­ing pace on valu­ations, using land as the growth engine.

HAPPY LAND-ing!!!!!!!!!!

The author is the Found­ing Part­ner  for a Gur­gaon based Real estate con­sult­ing organ­iz­a­tion Certes Realty Ltd. and can be con­tac­ted on ajay@certesrealty.com

15 Responses to “BUY LAND! THEY DONT MAKE IT ANYMORE !!! —  reason & advantages”

  1. sil­ver­fish extermination…

    BUY LAND! THEY DONT MAKE IT ANYMORE !!! – reason & advant­ages | About Lal Dora — Know & Share…

  2. Sanjay Rawat says:

    MCD recently said that all vil­lage lal dora plots also require man­dat­ory build­ing per­mis­sion. Then DDA said it may not be required. Even new min­is­ter kamal nath said vil­lages dont require build­ing per­mis­sions.
    Please cla­rify what is the cur­rent rule of govt.

  3. Rutha Norat says:

    Good art­icle on your site, too.

  4. Krishan kumar says:

    I am very impressed with your web­site and think you will give lot of beni­fit to vil­la­gers of delhi like me who want to sell land. I will go to your office in kan­jhawla after i spoken to mr ramesh manen today evening.thank you for all details you give.

  5. Brig. Ray says:

    Dear Menon & Ajay,
    Thanks for all the help given by you dur­ing the visit of the ex-army mem­bers to the Lal Dora sites in Kan­jhawla.
    We would like to cre­ate a group hous­ing pro­ject on Lal dora land. We look for­ward to all pos­sible assist­ance from your end.
    Thank you once again.
    Brig.Ray

  6. admin says:

    Dear Mr. Agar­wal,
    We have come across many such cases dur­ing our research and trans­ac­tions activ­ity.
    Since DDA was the sole agency in Delhi cre­at­ing the res­id­en­tial dwell­ing units, there was always a defi­cit between the demand and sup­ply. And a lot of home-seekers ended up buy­ing land / plots in unau­thor­ized colon­ies.
    Most of these unau­thor­ized colon­ies have come up on agri­cul­tural land par­cels, and are not author­ized for devel­op­ment of res­id­en­tial colon­ies. It is our obser­va­tion by trav­el­ling through your are that many a water con­nec­tions are either illeg­ally tapped, or, resort to inde­pend­ent bore-wells. Dur­ing 2008, there was an announce­ment by the Delhi gov­ern­ment to reg­u­lar­ize some colon­ies, provided cer­tain con­di­tions were met. As you would be aware, till date, there hasn’t been any con­crete action announced.
    There are a lot of myths sur­round­ing Lal Dora land. For the records, Lal Dora land means “Res­id­en­tial land”. It can be used for res­id­en­tial pur­poses. It is NOT AGRICULTURAL LAND. To our belief, Lal dora land, for self dwell­ing, is a much bet­ter, and safer option than buy­ing a plot in an unau­thor­ized colony, wherein the land usage is still Agri­cul­tural. Unless it is reg­u­lar­ized, and the land use changed to res­id­en­tial, the plot that you refer to remains illegal for con­struc­tion of a res­id­en­tial dwell­ing unit. You would also find dif­fi­culties in get­ting the build­ing sanc­tion approvals, as well as lever­age mort­gage to fin­ish the con­struc­tion.
    As for the exten­ded Lal Dora plots in Kan­jhawla, our research through peri­odic site vis­its, as well as the inform­a­tion gathered through the Right to inform­a­tion act, the Plots under Khasra num­ber 142 are announced res­id­en­tial plots. There are houses already built on the same. Of late, there has been increased quer­ies from developers seek­ing to build apartments/ mul­tiple DUs on the plot size meas­ur­ing 2100 sq. Yards. Our advice has been to seek prior build­ing sanc­tion plans, as well as fund­ing through fin­an­cial / bank­ing insti­tu­tions.
    Our obser­va­tion is that the cur­rent pri­cing in the area is attract­ive to acquire land, as well as look for­ward to the entire area devel­op­ing into res­id­en­tial hub.
    We do not recom­mend or advise invest­ment into land wherein the land usage hasn’t been defined yet. (or pro­posed under the MPD 2021).
    For a more object­ive advice, please con­nect with our legal con­sult­ants, who can advise you on the spe­cific status of your land, and accord spe­cific advise on the exten­ded Lal dora land.

  7. J B Agarwal says:

    I have a plot of 400 yards near sec­tor 21 of Rohini. I had pur­chased it in 2000 and I have come to know that it is not a reg­u­lar colony. It is private colony and not author­ised. Our colony has elec­tri­city con­nec­tion and water sup­plied by col­on­iser. Now I learn that some 1600 colonys being reg­u­lar­ised and our colony name is not there.
    2 – 3 kms ahead in vil­lage kan­jhawla on the same road there is lal dora land where all approvals are being issued. I want advice if I should sell my land and buy in Lal dora? I want to con­struct house and live there after retire­ment. What is dif­fer­ence between both approval and which is safer. Please guide me

  8. admin says:

    Dear Ajit,

    Thanks for appre­ci­at­ing and recom­mend­ing our ini­ti­at­ive for “assim­il­at­ing & dis­pens­ing” inform­a­tion about the Delhi Mas­ter plan 2021.

    Lal Dora land was always dis­tin­guished by a thin divid­ing line between the Urban & Rural areas, which have since blurred with the rapid expan­sion of the Delhi city. There abounds fair con­fu­sion about the status and approvals required under the Lal Dora lands. Let me re-produce here one excerpt from the Expert com­mit­tee report for Lal Dora.(report pub­lished in Jan’2007)

    “Build­ing con­trol reg­u­la­tions were neither pre­scribed nor made effect­ive in Urban vil­lages (lal dora OR exten­ded Lal Dora) under the erro­neous but con­veni­ent assump­tion that since such reg­u­la­tions were not applic­able in the vil­lage abadis, the same would also not apply to urb­an­ized vil­lages as well”.

    Even the sanc­tion­ing author­it­ies seem ‘not so clear’ whether one needs to get the plans approved.

    Our recom­mend­a­tions remain as below:

    a) It is always bet­ter to get the plans approved, archi­tec­tur­ally, struc­tur­ally and from the cor­rect author­it­ies. There is a scheme where a registered archi­tect can self-certify the plans, and sub­mit to author­it­ies later. This was intro­duced to make the sys­tem less cum­ber­some and respons­ive. You could take this route. Either ways, since you plan to build a house for yourselves, you would prefer the best struc­ture.
    b) A registered archi­tect would be able to secure all approvals pre-construction.
    c) If you are not being served with inform­a­tion through the reg­u­lar chan­nels, you could seek through the Right to Inform­a­tion Act. (RTI). File a RTI applic­a­tion and you would likely get the reply from the author­it­ies within 30 days.

    Hope this ful­fils your query.

  9. Ajit Thakur says:

    First, I would like to thank you for your inform­at­ive web­site that provide an insight on the lal dora oppor­tu­it­ies.
    Secondly, I would lik eto inform that I have a small plot (50 sq.yards) in exten­ded lal dora / abadi area in Bur­ari, Delhi – 84 and plan to con­struct a two floor house in near future. I would appre­ci­ate if you could provide me more insight on the fol­low­ing quer­ies:
    1. Is it man­dat­ory to get build­ing plan sanc­tioned from MCD?
     – Accord­ing to the Exec­ut­ive Engin­eer (B) – MCD as the plot is situ­ated in the rural area, it’s not man­dat­ory to get the build­ing plan sanc­tioned. At the same time, the office of EE (B) was unable to provide a writ­ten state­ment or sup­port­ive doc­u­ment and I was advised to con­tact the town plan­ning office of MCD for the same and sub­sequently they too were unable to help me out cit­ing that it’s not in their jur­is­dic­tion.
    2. From where can I get the details related to my query along with the sup­port­ive doc­u­ments and how?
    Your swift response in this con­text would of great assist­ance.
    Thanks & Best Regards,
    Ajit Thakur

  10. sarah hines says:

    Dear Ramesh Menon
    Certes Expert,
    I read your art­icle here: (what-is-lal-dora-land-delhi-master-plan) and wanted to inquire fur­ther regard­ing Lal Dora. I am con­sid­er­ing rent­ing office space in Lal Dora real estate for com­mer­cial pur­poses. The rent is dra­mat­ic­ally less than in a 100% com­mer­cial zone but I am con­cerned that they may be some hid­den restric­tions. I also do not want to risk poten­tial seal­ing by the gov­ern­ment. Could you provide more details (or ref­er­ence to a reli­able source of inform­a­tion) regard­ing oper­at­ing com­mer­cially in Lal Dora zones?
    Best regards,
    Sarah Hine

  11. Hindbir Dabas says:

    I thought I would share an artice which appeared in THE ECONOMIC TIMES NEWSPAPER. This might be use­ful for every­body.
    — —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  — -
    Lal Dora lit­er­ally means red thread, which was in use in the past for demark­ing the jur­is­dic­tion of a vil­lage. Presently it denotes the bound­ary of
    the ter­rit­ory of vil­lage within which norms and con­trols of muni­cip­al­ity or urban devel­op­ment author­ity is not applic­able.
    But as these area did not come under the Muni­cipal Cor­por­a­tion of Delhi (MCD), a haphaz­ard devel­op­ment took place. So much so that it became a prob­lem for the civic author­it­ies as it was used to viol­ate all the rules in Delhi. The land in these areas was sup­posed to be sold to a vil­la­ger only so that out­siders would not increase the dens­ity.
    But, as these vil­lages are inside the cent­ral part of Delhi, and many of them are in close vicin­ity to posh south Delhi, busi­ness­men and indus­tri­al­ist bought land through power of attor­ney here at sub­stan­tial premium to pre­vail­ing rates, but still at a huge dis­count to the MCD area in the close vicin­ity. In most of the cases land price in the Lal Dora is one fourth to one tenth of that in MCD area. This has cre­ated a mesh in these area which has attrac­ted severe cri­ti­cism from vari­ous courts.
    Vari­ous reg­u­la­tions
    In all, there are 362 vil­lages in Delhi out of which 135 are cur­rently clas­si­fied as urban vil­lages and 227 as rural vil­lages . When the rev­enue set­tle­ment was done for the first time in Delhi, the pop­u­la­tion of these vil­lages was included within a well-defined lal dora area. Out­side this lal dora area, the agri­cul­tural pro­duce was appraised for the pur­pose of land rev­enue. Since the vil­lage pop­u­la­tion saw nat­ural expan­sion between the set­tle­ment of 1908 and the begin­ning of con­sol­id­a­tion exer­cise for land hold­ings (around the year 1952), the exten­ded vil­lage popu­lace was enclosed within the new peri­pheral bound­ary known as Phirni and the area between the ori­ginal lal dora and the post con­sol­id­a­tion Phirni was treated as exten­ded lal dora.
    On August 24, 1963, a Delhi admin­is­tra­tion noti­fic­a­tion stated that within the vil­lage pop­u­la­tion com­prised in the lal dora or the Phirni, no build­ing per­mis­sion was required for con­struc­tion of a house if required by the owner resid­ing on that plot for his own needs.
    Prob­lems
    Cur­rently, lal dora areas are fraught with prob­lems of rampant illegal con­struc­tion , gross com­mer­cial­isa­tion, bad infra­struc­ture, over pop­u­la­tion and unem­ploy­ment . Though meant for only res­id­en­tial con­struc­tion, rampant con­struc­tion & devel­op­ment were part of the daily routine in these vil­lages. Some of the com­mon viol­a­tions are con­struc­tion bey­ond per­miss­ible limit and illegal addi­tion of a num­ber of floors.
    On the infra­struc­ture front, roads or sew­er­age, water or power, san­it­a­tion or hygiene everything has become a per­en­nial prob­lem. Due to its prox­im­ity to urban centres as well as cheap rent­als, export­ers, ware­houses , godowns and even cor­por­ates star­ted enter­ing the lal dora areas. Cheap rental has res­ul­ted from the illegal status of the area.
    Court’s obser­va­tion
    In the course of the ongo­ing court case, the bench also observed the unplanned , unres­tric­ted and unchecked growth of these com­mer­cial estab­lish­ments (on lal dora land) without adequate facil­it­ies for park­ing and roads has, affected life in the city. Whereas, in Septem­ber 2004 the Delhi High Court said there should be no dis­tinc­tion in the treat­ment of rural and urban areas within urban lim­its, which implies that the build­ing bylaws are applic­able in the lal dora areas as well.
    One of the terms of ref­er­ences of the Tejinder Khanna com­mit­tee (on unau­thor­ised con­struc­tion) was to recom­mend policy guidelines and devel­op­ment con­trol norms for reg­u­lat­ing con­struc­tion activ­it­ies in lal dora and exten­ded lal dora areas. The com­mit­tee opined that some of the devel­op­ments, which have taken place in the lal dora or exten­ded lal dora areas, need to be care­fully con­sidered . Some of these are:
    Con­struc­tion of addi­tional storey bey­ond two and a half storeys nor­mally per­miss­ible in the city under the MCD Build­ing Bye-laws . Some lal dora premises have been sold to com­mer­cial buy­ers who have estab­lished show rooms and eat­er­ies. Some guest houses/show rooms/factory out­lets have been estab­lished in the lal dora areas abut­ting on major high­ways Com­mer­cial activ­ity of non-village ori­gin , such as the fash­ion designer out­lets are being con­duc­ted within the lal dora areas even along smal­ler streets.
    Recom­mend­a­tions of Tejinder Khanna Com­mit­tee (TKC)
    Spe­cial build­ing bylaws will need to be framed for vil­lage pop­u­la­tion (lal dora and exten­ded lal dora). In order to accom­mod­ate the heavy pop­u­la­tion pres­sure and dearth of altern­ate res­id­en­tial sites, a height author­isa­tion of upto 4 storeys (15 meters) on plots abut­ting on the Phirni and upto 3 storeys (11.5 meters) on other interior plots may be per­mit­ted.
    Suf­fi­ciently wide access roads are required to enable fire tenders and ambu­lances to reach premises, which may require such assist­ance. Com­plete prop­erty own­er­ship records should be developed and main­tained on a digital data­base. All exist­ing prop­er­ties should be sur­veyed /evaluated from the stand­point of struc­tural safety. Any build­ing gen­er­at­ing safety con­cerns should be ear­marked for remedial action.
    Com­mer­cial activ­ity may be per­mit­ted on nar­row streets below 9 m or 6 m width provided such streets are des­ig­nated as ped­es­trian shop­ping streets * All exist­ing show rooms or guest houses abut­ting on major pub­lic roads may be reg­u­lar­ised, in view of the gen­eral policy recom­mend­a­tion to allow non-residential activ­ity along such roads, sub­ject to the avail­ab­il­ity of ser­vice road and some addi­tional park­ing facil­it­ies.
    All the above facil­it­ies meant for the lal dora areas should be equally exten­ded to area fall­ing in the exten­ded lal dora. Plots in the exten­ded lal dora area should also be allowed to be used for run­ning edu­ca­tional and health care insti­tu­tions , pro­fes­sional train­ing insti­tutes, sub­ject to avail­ab­il­ity of park­ing space and adequately wide access roads.
    Vil­lage devel­op­ment plans by way of Local Area Plans (LAPs) should be pre­pared in con­sulta­tion with the res­id­ents, for all lal dora and exten­ded lal dora areas , in each vil­lage.
    TKC is also of the view that as and when a policy per­mit­ting private col­on­izers /developers to develop housing/commercial/institutional facil­it­ies in areas ear­marked for fur­ther expan­sion of the urban area of Delhi is put into effect, farm­ers own­ing suf­fi­cient land, as per pre­scribed norms for this pur­pose may be per­mit­ted to par­ti­cip­ate in such a devel­op­ment pro­cess, on mer­its.
    With the above, it is hoped that if and when lal dora areas are reg­u­lar­ised, it would lead to safe and qual­ity devel­op­ment , improve­ment in phys­ical and social infra­struc­ture as well as a sig­ni­fic­ant escal­a­tion in real estate prices, a win-win situ­ation indeed.

  12. Parveen Dabas says:

    what is the pre­vail­ing price of the res­id­en­tial plots. I have 2 – 3 plots in the name of my father and I would like to know the fol­low­ing.
    a) Should we retain the plots or sell them out now?
    b) Are we allowed to enter into a JV with some part to con­struct hous­ing pro­jects.
    c) how soon can the approvals be received.
    How can you guys help us in this regard.
    PD

  13. Hindbir Dabas says:

    Insti­tutes on LAL DORA LAND allowed to add seats, courses
    Tribune News Ser­vice
    New Delhi, June 18
    The Delhi Cab­inet has allowed tech­nical insti­tu­tions loc­ated on Lal Dora or exten­ded Lal Dora lands, affil­i­ated with Guru Govind Singh Indraprastha Uni­ver­sity, to increase the seats avail­able in the exist­ing courses, as well as adding new courses sub­ject to ful­fil­ment of cer­tain con­di­tions.
    The con­di­tions spe­cified are enough built up space, no new con­struc­tion on account of adding new courses or increas­ing the intake of exist­ing courses and title of the land on which the insti­tu­tion is loc­ated should be in the name of the insti­tu­tion or soci­ety con­cerned.
    This decision is a follow-up of an earlier Delhi Cab­inet decision which gran­ted per­mis­sion to exist­ing tech­nical and higher edu­ca­tion col­leges or insti­tutes loc­ated in Lal Dora and exten­ded Lal Dora land, for a period of one year that is 2007 – 2008 or till the zonal plans are noti­fied.
    At present, seven insti­tutes hav­ing the title of land in the name of soci­ety and two insti­tutes on ren­ted premises, are func­tion­ing from Lal Dora and exten­ded Lal Dora lands whereas four dip­loma level insti­tu­tions are also func­tion­ing from Lal Dora and exten­ded Lal Dora lands. The decision to increase intake would help in solv­ing admis­sion prob­lem of the stu­dents.
    The Cab­inet has also decided to set up a bet­ter sys­tem of recov­er­ing elec­tri­city dues from the gov­ern­ment agen­cies through use of mod­ern tech­no­logy like pre-paid meters and auto­matic meter read­ing and use of let­ter of credit sys­tem as is done in the case of major con­sumers of power.
    It has become immin­ent since non-recovery of elec­tri­city dues has a dir­ect impact on fix­a­tion of tar­iff on year to year basis.
    It has also been decided to settle all mat­ters relat­ing to the unre­solved cases of old DVB dues per­tain­ing to private con­nec­tions through the mech­an­ism of Delhi Legal Ser­vices Author­ity through con­cili­ation and medi­ation and with assist­ance of Pub­lic Griev­ances Cell headed by a retired High Court Judge.

  14. admin says:

    You could con­nect with us on land@certesrealty.com

  15. Raj Kumar says:

    Hi. Please con­tact me with more details about the Kan­jhawla exten­ded Lal Dora land parcels.

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