Which is better investment option, land or flat?
Real estate is a preferred investment option for a few investors. Investment in this sector can also help diversify the investment portfolios of investors looking for an additional source of income.
According to a joint report by NAREDCO and EY, India’s real estate sector is expected to reach a US$ 1 trillion market size by 2030.
So, are you looking at real estate as a form of investment? If yes, you might be confused between buying a flat or a plot.
In this article, we will look at the different aspects of buying a plot and buying a flat so that you can make the best decision.
Buying a plot involves a lot of work. If you have bought the plot to build a house, you have to hire resources such as architects, masons, plumbers and electricians. You have to be actively involved with the work and every step of the process. If you are unaware of the various construction processes, you must also learn about them. So, buying a plot and building a house involves a lot of time and energy.
Moreover, when you buy an apartment, the only work involved will be the interior furnishings and buying electronic items if you want to rent it out as a fully furnished house.
Appreciation rate
Although plots and apartments form a part of your real estate portfolio, the appreciation rate of these categories will vary. Typically, we see that the appreciation rate or the return on the investment on plots is generally higher than apartments as the plots’ supply is limited compared to apartments.
Moreover, the value of apartments tends to depreciate over time due to normal wear and tear. However, there is no normal wear and tear in the case of plots. Moreover, if the plot is situated in an upcoming place, the appreciation rate will be greater than other plots in already-developed areas.
“Plots usually gain value faster than flats. For flats, while the underlying land on which the flat is situated might go up in value, the building itself gets old and depreciates in value. That’s why brand-new flats cost more than older ones, even if they’re side by side. However, flats are usually a safer bet than land for other reasons, though the payoff might be a bit less
