Is Investing in Land a Good Idea?

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Investing in land is one of the best forms of investment when looked from several angles.  If you invest in shares, it is highly volatile, subject to the sentiments and vagaries of the market and most of the times it is as good as gambling. If you invest in any other safer forms like fixed deposits, mutual funds, debentures etc, the return on investment is at the best nominal.

Investment in gold is traditionally considered quite secure and the appreciation of gold has always been nominal, but reasonable. But investment in gold cannot bring spectacular returns.

However, investing in land, if done judiciously at the right place and right time, the return on investment is bound to be fantastic in the long run.

Investing in agricultural land

Investment in land can be done with several motives. An agriculturist investing in arable land has scope for regular returns off the agricultural produce from the land and also as a long term investment on an appreciable asset.  For rural people traditionally involved in agriculture, possession of owned land is a matter of social status and prestige. Even if the villagers are not getting adequate agricultural returns from their lands over a period of time owing to reasons like, floods, large scale pest attack, draught, low produce, excess produce (that outstrips demand) etc., still buying and owning land continues to be a matter of pride and prestige amidst rural peer group.

Owning a house in your own land

Amidst urbanites, owning a home of one’s own is always a dream to be fulfilled in life.  However, owning a piece of land that’s your own and building an exclusive house on your own at that land may not be a dream that can be fulfilled for many people. For people with limited investible funds and repayment capacity, owning a flat in a multistoried residential building is an affordable compromise.

But ownership of a flat is no where comparable with the ownership of land. The flat owner has little piece of land that he can claim his own.  A person investing in a piece of sub-urban land, that is perhaps half of the area of a big, owned flat in the urban locality is still a better investor in the long run. Even if the person cannot realize the dream of building his own home in that piece of land, the land is very much available, perhaps to his grandson, to build a house of his own after two generations from now. At that point of time, the piece of land would be prohibitively costly for the grandson, if he were to buy something similar on his own!

Thus a grandpa of hand-to-mouth existence of today could gift an unimaginably luxurious piece of land to his grandson! This scenario is possible only if one invests in land and not in a flat.

Owning a plot of land as a secure investment

Just a personal experience to share. Twenty five years ago, some of my relatives forced me to buy a plot of land in a far off suburban locality of Chennai city in India (where I live). It cost Rs 15,000.- those days, which was rather a huge chunk of money for me at that time.  Now, after the passage of 25 years, that locality has grown to be a part of “greater Chennai” with lots of potential growth in its surroundings. That piece of land today can be sold at about Rs. 2,000,000.- The appreciation works out to 133 times!

No other avenue of investment could ever fetch such a huge appreciation on investment. It makes lots of sense to invest on land, indeed.


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