What is the better investment option: Apartments or plots


When it comes to investing in a property, most buyers think of putting their money in an apartment. We look at whether it may be financially more prudent to invest in a plot, rather than an apartment

Purchasing a house is an important financial decision, particularly for first-time buyers. Home buyers have to be careful as they invest their hard-earned money for a secure future. Nevertheless, a good investment can earn handsome returns. However, one has to bear in mind that any erroneous or hasty decision while making a big-ticket purchase, for example, during the course of purchasing a property, might yield results that one could regret. Moreover, investors may also be faced with the dilemma of having to decide whether one wants to invest in a plot of land or opt for an apartment, to reap better returns on investment.

Pros and cons of investing in plots and flats

Buying an apartment is not the same as purchasing a plot of land. Although both the asset classes are highly lucrative in nature, there are several pros and cons dividing the two types of purchase. Here are some key merits of investing in a plot of land, which could help a buyer to arrive at a final decision.

Customisation

Purchasing a plot of land gives one the freedom to mould, shape and build a structure according to one’s own preference and unique requirements. An apartment, on the other hand, is a pre-designed construction, to suit a particular set of people’s needs. There is limited scope for customisation as per each buyer’s needs.

Appreciation in value

In the long run, land appreciates better than apartments. The primary cause for this, is that the availability of land is limited and its supply cannot be increased as per the needs and requirements of the market. As the plot of land ages, it does not depreciate in value, instead the value of plots increase with time. Whereas, in the case of apartments, it is quite the opposite. As apartments become old, they require heavy maintenance and constant repairing, which, in turn, depreciates their value over time. Appreciation, to an extent, also depends on the locality, availability of amenities, security, infrastructure, connectivity and other extraneous factors.

Delivery and transfer of possession

Transfer of ownership of an apartment may take months or even years to go through. In case of plots, they are usually always ready for possession. Therefore, a buyer who is looking to invest in a plot of land will get its possession considerably earlier than that of a flat.

Compromise in quality

There may also be delays in the construction of apartments, due to various reasons. This delay, in turn, may force the builder to complete their projects in a hurry. Often, in this haste, the quality of the product is significantly compromised by the builders, who are trying to cut down the cost while keeping up with timelines. Their inability to meet deadlines, due to time-crunch and cost-cutting, negatively affects the quality of the structures.

Standard of living

Owning a plot of land is a symbol of luxury. A piece of land has no spatial constraints and any construction on it can be built to accommodate a large number of people, depending on the size of the family and its requirements. Hence, having an independent house, can also be said to improve one’s standard of living.

Apartment vs plot: Major differences

ApartmentPlot
Limited scope for customisationFreedom to build anything, as per choice
As apartments become old, they require maintenance and the building’s value depreciates over timeLand values appreciate better and faster than flats
Transfer of ownership of an apartment may take months or even yearsPlots are always ready for possession and transfer of ownership is not too difficult
Construction quality may be compromisedConstruction quality can be top-notch and as per one’s budget
Apartments have size constraints and cannot be constructed to accommodate too many peopleAny construction can be built, to accommodate a large number of people

FAQs

Is it good to invest in land or flat?

Land is expensive to buy but flats can be bought on EMIs.

Is flat worth buying?

If you have limited funds but want to enter the real estate market to reap returns, flats offer the best opportunities for investors.

(The writer is chairman, Reliaable Developers)

 

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