Investing in a Plotted Development Project near Mumbai? Here's What You Need to Know

Several real estate developers have launched plotted development and villa projects in areas such as Lonavala, Khandala, Dapoli, Alibag, and Karjat near Mumbai.

Plotted DevelopmentVilla ProjectsReal EstateMumbaiMaharashtraReal Estate MaharashtraSep 06, 2024

Investing in a Plotted Development Project near Mumbai? Here's What You Need to Know

Real Estate Maharashtra:Several real estate developers across Maharashtra have launched plotted development and villa projects across the state, especially in areas such as Lonavala, Khandala near Pune, Dapoli in Konkan region of Maharashtra, Alibag in Raigad district near Mumbai, Manor in Palghar district near Mumbai, Igatpuri, Kasara Ghat near Nashik and Karjat near Mumbai.

These include Rustomjee Group, Mahindra Lifespaces, Godrej Properties, Wadhwa, House of Abhinandan Lodha (HoABL), Arihant Superstructures among others.

Godrej Properties has launched a project named Godrej Woodside Estate on Karjat Khopoli Road near Panvel where it is selling plots sized between 1,200 sq ft to over 3,000 sq ft in the price range of ₹54 lakh to over ₹1.35 crore. Rustomjee Group recently announced its first plotted project in Kasara Ghat- a three hours drive from Mumbai with the launch of 462 villa plots starting at ₹59 lakh.

Wadhwa Magnolia by Wadhwa Group has also launched a plotted project in Panvel, Navi Mumbai having last transaction price of per sq ft price of ₹6,500, as of June 2024. Mahindra Meridian by Mahindra Lifespaces Group has launched 26 plotted units at a price of ₹2,060 per sq ft (last transaction price as of June 2024) in Alibag near Mumbai.

Mumbai-based Kalpataru Limited has launched 240 units at a price of ₹1,817 per sq ft (last transaction price as of June 2024) in Karjat- a second home destination near Mumbai. HoABL has launched 1,086 units at a price of ₹1,596 per sq ft (last transaction price as of June 2024) in Neral- foothills of Matheran near Karjat, according to the data of CRE Matrix.

Raigad district that covers areas such as Panvel, Karjat, Khalapur, Khopoli, has witnessed launches of 66 plotted development projects comprising 7,024 units and 36 villa projects with 981 units since 2019, according to the data of provided by CRE Matrix, a real estate data analysis platform.

Majority of buyers who have invested in plotted development and villa projects are in the age of 25 to 45 years. These are primarily from Mumbai, Thane, Pune, Hyderabad, Palghar, Nashik, Nagpur, Jaipur and Jodhpur, data shared by CRE Matrix showed.

Prices of these plotted developments coming up in and around Mumbai start at ₹50 lakh and can go up to as high as ₹2 crore if not more, said local brokers.

There has been a surge in plotted development projects post Covid-19 Infrastructure development across cities has also led to the growth of this segment. The roll-on-roll-off (RoRo) services connecting Mandwa near Alibaug with South Mumbai and the Atal Setu - a 22 km long sea bridge connecting Mumbai and Navi Mumbai - have led to several plotted development projects getting launched in areas such as Alibag and Dapoli.

The Mumbai-Pune Expressway Augmentation project has encouraged investors to put their money into second homes in Lonavala and Khandala, said experts.

What should investors keep in mind before investing in plotted development or villa projects?

People interested in investing in plotted developments or villas should check the ownership title of the land. They should also check if the land is agricultural or non-agricultural.

While investing in land, one should understand the difference between agricultural land or non-agricultural land. We need to be doubly sure about the ownership title of the project. In fact, investors should get the legal due diligence of the project done before investing their money. Documents such as property card, 7/12 extract, property tax bills, water connection bills should be vetted before signing on the dotted line, said Aditya Zantye, a Mumbai-based chartered accountant who practices in MahaRERA, a real estate regulatory body.

Along with due diligence of the property title, one also needs to keep in mind the tax liability that may accrue to an investor putting in money in a plotted development. Currently, non-resident Indians (NRI)s cannot invest in agricultural land due to restrictions under the Foreign Exchange Management Act (FEMA). Otherwise, one should check the amount due as stamp duty, registration charge, property tax and water tax. Short term and long term capital gain tax (LTCG) liability may also arise if the investor decides to sell the property, said Zantye.

When it comes to LTCG, one needs to keep in mind that tax liability is the same as that of selling a house or office space. For example, if you purchased a land parcel for ₹50 lakh and sold it later for ₹1 crore, the capital gain here is of ₹50 lakh, said Zantye.

Budget 2024-25 had proposed to lower the long-term capital gains tax on real estate to 12.5% from 20% but without the indexation benefit. However, this was later amended. The government's revised budget announcement allows taxpayers to pick between a 12.5% Long-Term Capital Gains (LTCG) tax rate without indexation and a 20% rate with indexation, for properties purchased before July 23, 2024

How much appreciation can investors expect from a plot?

According to experts, investors can expect reasonable returns from a plotted development asset. Prices of plotted development projects have appreciated 4X in the last six years. We foresee this trend to continue over the next few years. Infrastructure developments in MMR have led to increased interest among investors, especially for areas such as Manor-Palghar, and Kasara-Igatpuri, said Abhishek Kiran Gupta, CEO and Founder CRE Matrix.

Cities like Pune, Bengaluru, Hyderabad and even NCR have seen considerable interest in plotted development projects, he said.

Land has appreciated on average in India by 18-20% on a per annum basis whereas appreciation for residential properties hovers around 10-12% on an average across India. The thrust on infrastructure development - where metro cities are being connected to tier-2 and tier 3 cities and towns - has ensured this growth, said Ritesh Mehta, Senior Director, and Head (North and West), residential services and developer initiative, JLL India, a real estate consultancy firm.

Frequently Asked Questions

What is the price range of plotted development projects in Mumbai?

The price range of plotted development projects in Mumbai starts at ₹50 lakh and can go up to as high as ₹2 crore if not more.

What should investors keep in mind before investing in plotted development or villa projects?

Investors should check the ownership title of the land, whether the land is agricultural or non-agricultural, and get the legal due diligence of the project done before investing their money.

Can non-resident Indians (NRIs) invest in agricultural land?

No, NRIs cannot invest in agricultural land due to restrictions under the Foreign Exchange Management Act (FEMA).

What is the tax liability for investors in plotted development projects?

Investors may be liable for stamp duty, registration charge, property tax, water tax, and short term and long term capital gain tax (LTCG) liability if they decide to sell the property.