Decoding Preferences: What Kind of Land Do Investors Want Today?
21 Jul 2025
The average plot of land for an Indian holds more potential than a building site. It can also function as an inflation hedge, as a source of rental income and as a legacy asset for future generations.
According to a FICCI-Anarock survey, 59% of respondents favoured real estate as the most preferred asset class. In contrast, securities market participation remains relatively limited in India, with a SEBI investor survey indicating that 5.3% of Indian households hold direct equities[2]. In fact, according to a survey, almost 33% Indians understand real estate as an investment option [3]. A large portion of real estate investments in India are made for returns, and the rest are for self-use.
Types of Land Investment Preferences:
3 options for real estate investment in land in India.
Residential Plots:
Typically considered real estate investments outside metro locations; increasing urbanisation is making such locations more relevant. This includes places like Ulwe, near Navi Mumbai, or Jewar, on the Yamuna Expressway, which would typically never have been mentioned in a conversation around real estate investment in and around Mumbai or Delhi, respectively.
Agricultural Land:
This type of investment is also considered by real estate buyers. The income that is generated from agricultural land is generally tax-free. Agrotourism and homestead farming are gaining significance lately. A person can earn from agricultural land as well as spend time on the agricultural land, especially if it is located near a city.
**Commercial Land: **
Commercial land is used for investment in land as it anticipates growth of infrastructure and development in the area. This can be developed into retail, office space, factories and warehouses.
Investing in large tracts of land generally involves setting up mixed-use projects that have commercial and residential spaces. According to a JLL India study reported by ET, developers acquired 2,335 acres across 23 cities, with potential development of around 194 million sq. ft. across residential, commercial and mixed-use projects [4].
Recent Trends in Land Usage:
The following trends are influencing demand for different types of land in India.
Impact of Remote Working on Land Prices: In January 2020, just 1% of active white-collar job listings in India offered remote roles. By January 2025, around 23% of active listings offered either full-time hybrid or remote work arrangements [5]. This may support the reverse migration trend from overcrowded metros to hometowns or affordable suburbs. Urbanisation is happening at a rapid pace, and there are many plotted developments happening in Tier-II and III cities as well as on the outskirts of metros.
Road to Progress:
A major infrastructure project that is currently under development may change the way Indians invest in real estate. The Bharatmala Project intends to create 34,800 km of roads across 550 districts in 31 states of India in Phase I of the project [6]. The development of these roads may trigger growth of many underserved towns and localities and also increase the commercial value of places and towns situated along dedicated freight corridors. The cost of land acquisition for the project has increased by five times the original estimate of Rs. 30,000 crore [7].
**Agro-Realty: **
The real estate sector is slowly moving to agro-realty. The sector is finding new ways to utilise agricultural land. A large tract of agricultural land is acquired by the real estate sector and is later divided into smaller plots to be sold off as real estate for residential as well as commercial use. Large tracts of cashew and teak plantations in Goa, rubber plantations in South India and even pockets in North East India are finding new uses for the land.
A Multipurpose Asset
Land is now being viewed by investors as an asset. Once considered to be for only one use, land can now fulfil several objectives. With the rapid urbanisation of many parts of India, opportunities for the use of suburban and even rural land are being uncovered. To understand this relationship better, read a guide on how urbanisation is the driver of land value. As major infrastructural projects are being developed, commercial real estate investment is being focused on locations near the project maps. In India, for example, agricultural land is being bought by investors and entrepreneurs to cultivate cash crops and for agro-tourism. Therefore, there are several reasons for investors to consider including land in their portfolio of assets.
https://www.drishtiias.com/daily-updates/daily-news-analysis/bharatmala-pariyojana-1
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