How To Invest In Land In India
The best investment in land is the land itself. Investing in land in India is one of the best investments you can make – it is a country in South Asia full of opportunity. The seventh-largest country by area and the second-most populous country in the world, the procedure of investing in land can be a double-edged sword for one if not guided properly.
Howbeit, our experts at IQI India have prepared you with everything you need to know to make your path easier when purchasing land in India!
Before investing, read this article to learn more about investing in India!
The common purpose of investing differs – from the entity to the buyer’s status in India.
- Individual buyers primarily buy land to build homes. Some buyers would utilize the other floors by renting them to tenants, making it one of their income sources.
- Developers usually buy land for development purposes; it can be residential, commercial, or warehousing projects. They do not sell it off; instead, they rent it to generate some consistent income.
You must first determine your basic need for buying the land before purchasing it — whether it be to build flats, malls, entertainment zones, warehouses, cinema halls, hospitals or schools. Once you define your purpose, it will be easier to determine the type of land to buy.
Like any other country, there are freehold lands in India, and most of the land is freehold. Whoever plans to buy land must get approval to construct the type of property they wish to build. If they plan to develop an independent home or a multi-story apartment, they will have to get the land approved for residential use; in contrast, if the land is approved for commercial use, the investor must use or develop it for commercial use.
India also has leasehold land which is government-owned, whether it be the state government, central government or other different authorities. These authorities include corporations and industries that own a vast area of land. In turn, they will lease it out for a long tenure or to prospective buyers who can take it for an extended period – 40 years, 50 years, 99 years or more – and use it as approved for the specific land type.
Apart from that, there are zones like hospitality, IT and more. The dedicated hospitality zone can have hotels and resorts, while the dedicated land for hospitals and healthcare is also available, and in high demand in India.
Besides that, there is also agricultural land. India is rich in produce, so billions of hectares of land are used for farming. India’s GDP is mainly acquired through agricultural activities, so agriculture holds a significant position in Indian land.
The process of purchasing land in India is defined by the type of purchase you want. Different requirements come with every kind of usage.
Firstly, you must point out your purpose of buying the land so that you are aware of the procedure that entails. For example, the requirement for purchasing industrial land is different from residential land; once you know this, you can also understand the process that comes with it.
These are some questions you can ask yourself to determine what you want from your land investment:
- What returns am I expecting from my investment?
- How long can I hold on to the land? / What is my holding period capacity?
- What type of development do I prefer (commercial, residential etc.)?
Once you’ve identified your needs, property companies will do a needs analysis based on your budget, asset preference, and location. Everything is identified alongside the holding period – whether they will stay as an end user, live on the land themselves, run a business, an industry, or a warehouse: all these processes are then suggested accordingly. In India, the procedures differ from state to state.
However, the Indian government has created the Single Window Clearing system in almost all the major holdings and places where these processes are required. Nowadays, everything is online across India. The buying process is straightforward, even if the documents vary from state to state. Once you purchase and register with the local authorities, you are immediately in the records. Anybody can view the rightful owners of the land or property online.
How the funds flow from one country to another and how these processes are managed will depend on the type of land you buy.
Land ownership requires a number of documents, but some of the important documents are:
- The registered sale deed or registered lease deed in your name
- Mutation certificate
These two documents are compulsory to have yourself registered under government law.
You must register the sale deed or lease deed with the government, and you can do this by paying the stamp duty when you purchase your land.
The second document is the mutation certificate. The mutation certificate is the document that states the details of the land ownership.
Again, these documents vary from state to state. Nevertheless, the end user will hold the original documents. Aside from these two essential documents, there are several other supporting documents that will come with the land purchase.
In India, different states have different types of registries. There are also other types of parameters to measure the land: for instance, a bigha of land in Himachal Pradesh is different from a bigha of land in Uttarakhand.
The price range is difficult to determine since many factors need to be considered.
Rates vary according to usage, development type and more.
However, you can define your budget range, how you want to profit from it, and the asset you want to buy to get an estimate of the price of land in India.
- Connaught Place, New Delhi
- Amrita Shergill Marg, New Delhi
- Hazratganj, Lucknow
- Nariman Point, Mumbai
The best locations in India are determined depending on the kind of property you want to own. Some hubs such as the Connaught Place in New Delhi, the Nariman Point in Mumbai and Amrita Shergill Marg are hotspots for high returns on investment.
Then again, India is full of opportunities around all its states or places. Whatever location in India you plan to invest in can be profitable as long as you put in the work to make it happen.
There are various kinds of loans available depending on what kind of buyer you are.
- If you are an individual residential property buyer, you can get home loans or mortgages according to your buying capacity.
- If you are an investor and want to get interest rent from a commercial property, there are commercial property loans that come with housing loans.
- A loan against property is also an option. If you own an existing property; you can raise your loan and buy a new property. There can be different overdraft limits which you can utilize partially or fully to buy a property.
- If you are a developer, you can get a project or construction loan.
- If you are not a developer and want to sell a partial or a full stake/portion of that project organization, some private equities and banks can fund you to exit your project.
As evident, there are various kinds of loans available in India. Most institutions across the globe are currently eyeing the Indian market, so they fund very easily because the asset class is growing very fast.
Yes, a foreigner can buy land in India, but there are certain limitations that come with it.
Whether you are a non-resident Indian or a foreigner, you must fulfill some requirements regarding your presence in the country. If you want to buy commercial land, you would need an association related to it; the same goes for residential land.
Despite these limitations, you are allowed to buy land in India as a foreigner if you can meet all the requirements. India is a friendly country for foreign investments, which is great news for international investors!
It is very easy to reach out to a landowner in India. Usually, you can figure it out by asking the locals, but there are also different methods you can use. For instance, you can look out for signages outside properties. You can contact property owners through the details provided on the signage. You can also find them through online advertisements listed by property owners online.
Another way is to connect with brokers, agents and real estate experts. You can get in touch with an IQI consultant who can connect you to landowners within India and even other countries around the world!
If you are a prospective buyer and you want to buy land, here are some tips:
- Be aware of the legal prospects – You should be aware of the legalities that come with investing in land and familiarizing yourself with all the essential paperwork involved with your purchase.
- Do background checks – Before purchasing land, do some background checks. If possible, try to find the previous owner’s history and know the legalities involved in the purchase.
- See the location yourself – Before buying the land you want, be sure to check the location before buying land. It is best that you visit the land for yourself before purchasing. You can also have a property agent give you a physical tour of the property – and you can now use technology to see the land through virtual tours. IQI can provide this technology if you cannot visit the property yourself.
- Clearance on documentation – You should ask these questions before purchasing land: do those properties require legal clearance? Is there any conflict or loan against the property that the original owner has taken? If taken, how would they clear out these loans? These factors need to be taken into account before deciding to buy land.
Before selling land, you must fix a price on the property you want to sell. Setting an exact price is important to know how much you expect to receive when you exit the property.
Besides that, the buyer’s profile also matters – can they take care of the property when you lease it out to them? You should also take this into consideration.
IQI professionals in India can help you decide how to price your land and how you can receive your returns, and also maximize them as much as possible. If you need help in getting a bang for your buck, our agents in IQI are within reach, anytime you need it!
Planning to invest in India? Reach out to an IQI professional today to get expert advice on which land or locations are most profitable!