“Buy land, they are not making it anymore” – Mark Twain had famously remarked once.  The romantic dalliance of the Indian investor community in the last two years has been a roller coaster ride. Everyone has seen extreme troughs n crests, primarily owing to impractical valuations in all the categories, be it Gold, stock markets or Real estate. The investment opportunities in land weren’t explored factually since there were many a myths about land. In the words of Ruchika Bhardwaj, an analyst with Certes Realty Ltd – “In the last one year, Land has had a soft fall compared to the loud thud in the other product categories”. The essence of this article is to critically dispel the myths surrounding land and evaluate the opportunities of investment.

Myth 1 – Land is a scarce commodity  

Most hoarding or reckless buying of land happens on the presumption that land is a scarce commodity and that it should be bought yesterday. In the Indian context, it is pertinent for the buyer to understand on “why” a certain land is attractive. Our recommendation always hinges on two factors – “demand for finished products on a 5 year horizon” and “Intent & ability for infrastructure development”.

Myth 2 – You need to have Deep pockets

Many an investors misunderstand that land investments entail a whole lot of capital, whereas fact remain that one can invest at varying ticket sizes. The same amount of capital can buy more land, if one can get expert assistance and identify opportunities for growing the money in well researched places.

Myth 3 – land is Land. What’s so specialized?

Anything, and everything related to real estate has a land connect. People generalize land as one asset class. However, there are @ least 20 kinds of land, which can be put to varying uses, and varying yield/ returns. For example, anything from race course, amusement parks, warehouses, commercial, residential, gold courses, resorts, exotic farming etc. can be created on land, but the price of each one of them would be different.

Myth 4 – Price of Land increases gradually.

Limited short terms returns In our opinion, since there aren’t many organized advisory firms specializing in the land business, the one eyed end up criticizing the product, rather than expose their limited abilities. Hence, the myth that land doesn’t yield desired returns in the short term. If invested into the right land, at the right time, at the right price, Land yields are the highest within the Real estate products.

Myth 5 – Instinct and hearsay is enough expertise for land

It is indeed the most misunderstood concept where investors, builders etc. use their common sense approach to identify land assets, rather than engage experts at the ground level to assist them in the endeavour. In the process, there are not enough success stories, especially for the small investor. Land should be bought through someone who understands the local level nuances like area, topography, social and physical infrastructure etc.

Myth 6 – Land is always sold, not bought

 The common practice is to have a “reactive”, rather than “Proactive” approach towards buying land. Most investors look at land assets when someone proposes, rather than make it an ongoing exercise to continually identify assets which would yield the highest returns. Our advice remain not to be restrictive, and choose from 3 options, but to widen the search from macro to micro analysis of opportunities.

We compare land and the other realty assets on three key parameters of Risk exposure, Liquidity terms and ROI terms.

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 put to interim use to deliver 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 uses 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 of CERTES REALTY LIMITED, a Delhi NCR based Real estate advisory and land consolidation organization and can be contacted on menon@certesrealty.com

This was a news report which was featured on www.delhi-masterplan.com. I found it interesting to share with visitors of my personal blog too, as the news is exciting for investors into Delhi, and not so good for some of the peripheral cities of Delhi NCR, which would likely to be adversely affected by this.

Finally, someone has decided to “crack the whip, on oneself, for a cause”. However delayed it might be though.

The Municipal Corporation of Delhi (MCD) has announced the formation of a 11 member committee which would monitor and accelerate the smooth implementation of all the recommendations under the Delhi master plan MPD 2021.

Thankfully, the committee is well represented administratively and politically, which raises a glimmer of hope for the “timely” implementation. The committee would be headed by Mr. Ved Prakash Arya, the deputy leader of the MCD house. The other members of the committee would include Subhash Arya ( leader of house ), R.K.Singhal)standing committee chairperson), Vijender Gupta ( former standing committee chairman), J.K. Sharma (leader of opposition) and some other councillors.

You would recall that the vision of the Delhi master plan, which was notified vide S.O 141 in 2007 is to create Delhi into a “global metropolis and world class city”. Readers would also agree that millions of dollars are being invested towards the same. The human capital required for such a gargantuan task is now being deployed. Or should I say, the ‘political will & capital’ is finally backing up the millions waiting to be invested.

Ajay Dabas, an expert on the Delhi master plan 2021 avers -”Delhi would be the fastest growing real estate opportunity for the 4 levels of investment already under deployment. Delhi would roll out infrastructure first, and then create real estate, a FIRST for city development in our country”.

Ved Prakash Gupta categorically mentions that committee has been set up to facilitate the effective implementation of the master plan’s recommendations.

You could contact the writer of this news, Nancy Singh on help@delhi-masterplan.com

“The committee can be contacted for any kind of problem in implementation. We will work to redress the problem by taking up the issue with officials concerned and will also bring it to the notice of Master Plan-2021 Committee,” he said.

Dilliwallahs, in all their robust expressiveness, uses the roads as the venue.

Ever since I have been a teenager, growing up in Saddi Dilli, I have been wondering on our limitless access to the roads for all activities, as we deem fit, to be conducted on the roads.

My friends were organizing a Jagrata (Jaagran)… an all night pyjama party invoking the gods to shower choicest blessings onto the geographically limited territory of “K” block. Precisely, limited to 44 houses.  Wow!!! Even the Bhakti geet was suitably altered with “Maa” being provided with the exact coordinates. Even the donations were mentioned specifically for ‘Ma’s’ attention – “Sharmaji, K-112 wale,  ne 500 rupaye di ardaas kitti hai maaaaaaaaa”

The point is not the Bhakti, but the venue of expression. My organizer friends when queried, replied to me that all that we need to arrange is the tent, snacks, some bottles for us organizers and tools to woo Mrs. Primlani’s daughter. Venue for pitching the tent and throwing garbage was pre-decided -”the main road leading from the roundabout to K block”.  How convenient, I thought. How considerate of the administration to have sent a Police PCR van to oversee ‘road grabbing”.
I graduated out of college with all the Bhakti on the roads. Having being oriented to the ‘English whisky’ at organizing Jagratas, I became an avid participant at all such organizing committees, since it was also remunerative. Psssstttt.. Let me share a secret. “I used to make more money in college than my first & second jobs”.

Then I graduated from the University and got a job with a publishing house. That was my exposure to the “Shakti”. The then prime minister, Mr. V P Singh managed the unthinkable. He created a storm in the ‘mandal-cup’. Half of Dilli was on the roads uprooting trees, tree guards, foot paths etc. without really imbibing the import of “what-the-hell-am-I-protesting”? Yet again, the Delhi roads were the venue for all expressions.

We dilli-wallahs gain the most pleasure on dancing on the highways. Our Baraats assemble on the roadsides, where free booze, steaming hot kaafi and pakoras are served. Once the alcohol fulfils its intended purpose, out come the dancing jootis. Make up dripping ladies and pot-bellied ill fitting suits convert the road into a mobile  dance floor, and the happening event is captured for posterity. May out children also see “mamu’s wedding” and keep alive this tradition. Amen !!!!!

Jhaankis !!!!! Another activity custom intended for the road. We dilliwallahs believe in collective expression of our beliefs on the road, procession et all. Sometimes pre-dawn and sometimes post dinner. However, the biggest draw is during the peak traffic hours’ where the general public too is included in invoking gods, Dilli Ishtyle. Everyone curses the organizers, and invokes gods to take them homely, safe n timely. Thank Shakti & Bhakti together.

A few years back, the Kerala high court tried to rule against declaring the ‘bandhs” as illegal. The entire political class ganged up together and ensured that such ‘constitutional rights’ are not snatched away of the aam-aadmi. tch.tch.
Quite unfortunately, the aam-aadmi has no interest to ‘abhivyakti (express) his Bhakti n shakti on the roads, while putting to inconvenience his fellow aam-aadmis. It is the so called elite of organizers and fund raisers, who can put a million to trouble for their moolah, which can be collected legitimately, in the name of God. As for dancing on the road, the most danced roads lead to a marriage hall belonging to someone influential.

Voila. Now we know how and why Dilli keeps expressing themselves on the main roads.. the more motorists, the better it gets… Tu jaanta nahin hai main kaun hoon… It is my birthright to use the road for every purpose other than what it is intended for !!!!!

This article was written for the Realty PLUS magazine by a colleague of mine.

In the last few months that I have started attending seminars and conferences on real estate,  I am further more amazed at the consistency of Ignorance about one of the largest investment opportunities ever – The Delhi Master Plan MPD 2021.

 Being considered as someone with expertise on land & projects under the MPD 2021, I am inevitably posed the following three questions

 a)    WHY & WHERE Delhi?

b)    Why and when should I invest in Delhi?

c)    Size of the opportunity and how to go about?

 Inadvertent or deliberate, it is our firm conviction that the Delhi opportunity is not well publicised amongst the masses. Besides, there are a lot of myths concerning Delhi opportunity which I intend to dispel through this article.

 Without getting into detailing, here are some quick reasons why the serious investor should not & cannot ignore the Delhi MPD 2021 opportunity.

 è Political – Strong “Intent & Ability” to develop Delhi into a modern megapolis

è Demographic – Population expected to increase by 80 lakhs in 10 years

è Demand – 2 million dwelling units is the forecasted demand for housing

è Economic – Growth driver for the investments into India. Hub for business activity in Northern India, with multi billion dollars investments in the next 5 years.

 è Policy – New favourable policies on investment climate – Proposed enhancement of ground coverage and FSI norms

 è Events – Delhi is already investing more than a few billion dollars for the commonwealth games 2010, and might be a bidder for the Olympics in 2020 or 2024

 Let me try and address some myths on the Delhi Master plan 2021 along with the answers to the above questions. A pictorial representation produced here below would be helpful to the readers too.

 Myth 1 – Land is scarce in Delhi.

 “Delhi has more land than the entire Gurgaon City – ready to be developed, and infrastructure in place, and available to be brought under development over the next 10 years”. I use this sentence to shock people who are under the myth.

 Delhi city state is a total of 1483 sq. Kms out of which the current urbanized area is approx. 702 sq. Kms. There is a WHOPPING 700 sq. Kms yet to be developed. Look at both the illustrations below for your own understanding.

 Illustration A – Map of Delhi with New urbanizable areas marked with surrounding cities

 Illustration B – Total area in the Opportunity zones which to be developed through PPP, private and DDA initiatives.

The above two illustrations surely would have helped dispel the first Myth.

 Myth 2 – Delhi is costly

 I would not be misplaced in saying this with reasonable authority that “Land is still cheaper in Delhi than in surrounding cities”. Lack of knowledge and vested interests has compelled investors to be fed the information that land is scarce, and out of reach in Delhi, CONTRARY TO THE PREVAILING TRUTH. Even today, the landed cost of FSI within Delhi can be managed below Rs. 300 per sq. Ft if well transacted.

 Myth 3 – Private sector can’t participate in Delhi

Yes, historically, the major developments in Delhi were undertaken by the DDA, which would find itself severely constrained with the scale of development that Delhi envisages over the next 10-15 years. Hence, the townships, residential and commercial segments would either be developed on the PPP model, or by the private developers. Relevant directions have already been set in motion towards the same, till now.

 Myth 4 – Surrounding markets are more attractive today

 I would rather express my own investment rationale & sentiment to this myth. “I would rather invest in the capital of the country, with a pent up demand for 2 million homes with the prices being lower than the surrounding cities, where whatever I may decide to develop would sell faster than anyplace else.” What else reasoning do I give to the queries?

 Myth 5 – Delhi would have limited development potential

 My good friend Ashok Jain always counters my queries with his favourite quip –“Where in India do you find a city which requires everything from low cost housing units to the top end farm houses, office space to malls, race courses to golf courses, amusement parks to Industrial parks, guest houses to warehouses, all willing to be developed yesterday”. To top it all, the Delhi master plan MPD 2021 has identified most of these needs and encourages the private participation in all these segments. Do I close my eyes to this piece of the pie?

 As for opportunity zones, one can seek participation both in the New 05 cities being developed under Delhi or for the redevelopment of the existing habitation areas. The five new cities that Delhi would create like Dwarka & Rohini, spread over more than 10,000 hectares each, would be self sustaining economic cells which would offer everything for “walk to work” to “quantum increment in the QUALITY of life”. These are essentially spread over the three primary zones of P-II, N and L zone of Delhi MPD (see chart above)

 My mother always says this – “If you have and well intentioned and capable friend, you won’t need a mirror”. The same logic applies to the business environs where we work, sometimes as the MIRROR, and sometimes as the impression.

 Our solemn advice is for the investors to seek out a consultant who has deep rooted insight into the opportunity zones, someone who understand both ends of the spectrum, bird’s eye view of policy & future resonance as well as the Ground reality of MPD 2021.

 This article is to express our conviction drawn over years of research, diligence and investments which have yielded more than expectations. I would only be willing to paint every critic and cynic with our optimism. I am just one phone call away.

The author, AJAY DABAS, is part of the Founding team of  www.delhi-masterplan.com  and can be contactedon help@delhi-masterplan.com

Something from the chain mails which I thought must be shared with as many as possible.

WHO PACKS YOUR PARACHUTE?    

Charles Plumb was a US Navy jet pilot in Vietnam After 75 combat missions, his plane was destroyed by a surface-to-air missile. Plumb ejected and parachuted into enemy hands. He was captured and spent 6 years in a communist Vietnamese prison. He survived the ordeal and now lectures on lessons learned from that experience!

One day, when Plumb and his wife were sitting in a restaurant, a man at another table came up and said, ‘You’re Plumb! You flew jet fighters in Vietnam from the aircraft carrier Kitty Hawk ….You were shot down!’
‘How in the world did you know that?’ asked Plumb..
‘I packed your parachute,’ the man replied. Plumb gasped in surprise and gratitude. The man pumped his hand and said, ‘I guess it worked!’

Plumb assured him, ‘It sure did. If your chute hadn’t worked, I wouldn’t be here today.’

Plumb couldn’t sleep that night, thinking about that man. Plumb says, ‘I kept wondering what he had looked like in a Navy uniform: a white hat; a bib in the back; and bell-bottom trousers. I wonder how many times I might have seen him and not even said ‘Good morning, how are you?’ or anything because, you see, I was a fighter pilot and he was just a sailor.’ Plumb thought of the many hours the sailor had spent at a long wooden table in the bowels of the ship, carefully weaving the shrouds and folding the silks of each chute, holding in his hands each time the fate of someone he didn’t know.

Now, Plumb asks his audience, ‘Who’s packing your parachute?’ Everyone has someone who provides what they need to make it through the day. He also points out that he needed many kinds of parachutes when his plane was shot down over enemy territory — he needed his physical parachute, his mental parachute, his emotional parachute, and his spiritual parachute. He called on all these supports before reaching safety.

Sometimes in the daily challenges that life gives us, we miss what is really important. We may fail to say hello, please, or thank you, congratulate someone on something wonderful that has happened to them, give a compliment, or just do something nice for no reason. As you go through this week, this month, this year, recognize people who pack your parachutes.

I am sending you this as my way of thanking YOU for your part in packing MY parachute.

DONT SCREW AROUND !!    

Once upon a time, a young lad was born without a belly button. In its place, was a silver screw. All the doctors told his mother that there was nothing they could do. Like it or not, he was stuck with it….. he was screwed.

All the years of growing up was real tough on him, as all who saw the screw made fun of him. He avoided ever leaving his house…. and thus, never made any friends.

One day, a mysterious stranger saw his belly and told him of a swami in Tibet who could get rid of the screw for him. He was thrilled. The next day, he took all of his life’s savings and bought a ticket to Nepal.

After several days of climbing up steep cliffs, he came upon a giant monastery. The swami knew exactly why he had come. The screwy guy was told to sleep in the highest tower of the monastery…. and the following day when he awoke, the screw would have been removed.
The man immediately went to the room and fell asleep. During the night while he slept, a purple fog floated in an open window, bearing in its mist, a solid silver screwdriver. In just moments, the screwdriver removed the screw and disappeared out the window.

The next morning when the man awoke, he saw the silver screw laying on the pillow next to him. Reaching down, he felt his navel, and there was no screw there!

Jubilant, he leaped out of bed…… and his butt fell off.

The moral to this story is: ‘Don’t screw around with things you don’t understand…….. you could lose your behind.’