Fields to fortunes: How India's land prices have evolved since independence

Land prices since independence: Land prices have surged between 90-110 per cent over the past decade, with Gachibowli in Hyderabad and Hinjewadi in Pune seeing increases of 133 per cent and 123 per cent, respectively. In Bangalore's Whitefield, prices have nearly doubled. Despite this growth, the pace of appreciation has moderated compared to the 250-350 per cent increases observed in previous decades.

"Developments like metro rail networks and expressways have significantly increased land values. The Smart Cities Mission and the relaxation of FDI norms have also pushed up prices. Additionally, the introduction of REITs in 2019 has set new benchmarks for commercial real estate valuation," said Manoj Goyal, Director, Forteasia Realty Pvt Ltd.

As current developments drive up the prices of residential land, here's how the landscape has evolved since India gained independence in 1947, reflecting the country’s economic growth, urbanisation, and policy shifts.

Early Post-independence (1947-1960s)

In the immediate aftermath of independence, land prices were relatively low. The focus of the government was on rebuilding the nation and developing essential infrastructure. With an agrarian-based economy and limited urbanisation, land was primarily used for agricultural purposes. Urban development was minimal, leading to stable and low land prices.

Economic liberalisation (1970s-1980s)

The 1970s and 1980s marked the beginning of India's economic liberalization. As industries started to develop and small to medium-sized cities began expanding, land prices began to rise slowly. Increased demand for land due to industrial growth and urban expansion contributed to a gradual increase in land values.

Economic reforms (1990s)

The early 1990s heralded a notable turning point with the introduction of economic reforms. Policies aimed at industrialisation, urbanisation, and attracting foreign investment led to a surge in land prices, especially in metropolitan areas. The real estate sector became a popular investment option, further driving up land values in major cities.

Booming real estate market (2000s-2010s)

The 2000s witnessed a real estate boom characterised by rapid urbanisation and a burgeoning middle class. High demand for both residential and commercial properties caused substantial increases in land prices, particularly in cities like Mumbai, Delhi, and Bangalore. This period saw unprecedented growth in property values as urban areas expanded and economic prosperity increased.

"In the timeline from 2003 to 2013, land prices saw a dramatic five-fold increase, a pace of growth that the past decade has struggled to match. For instance, Cuffe Parade in Mumbai saw its price more than double from Rs 85,000 to Rs 1,70,000 per square foot, falling short of the explosive growth rates of the earlier period," Goyal added.

Recent trends (2010s-Present)

In the past decade, land prices have continued to rise, albeit at a slower pace. Market corrections, regulatory changes like the Real Estate (Regulation and Development) Act, and economic fluctuations have moderated the growth of land prices. High property costs remain a significant concern, impacting housing affordability and development expenses in urban centers.

"Urbanisation, with a growing urban population from 31 per cent in 2011 to 35 per cent in 2021, has significantly influenced land prices. Policies like RERA and GST introduced efficiency in the real estate sector, while infrastructure developments and a surge in FDI from $1.2 billion in 2013 to $5.7 billion in 2023 have further driven up prices," said Aman Gupta, Director, RPS Group.

Area specific price surge

In Bangalore, as an exception premium localities such as Vajarahalli and Bagalur have seen increases of 690 per cent to  Rs 7,900 per square foot and 600 per cent to Rs 3,500 per square foot, respectively, according to data from 99acres.

Affordable areas like Medahalli and Doddaballapur have also experienced considerable growth, with rates climbing by 387.1 per cent to Rs 7,550 and 300 per cent to Rs 3,600 per square foot. Premium areas like Old Madras Road and Jakkur now command rates of Rs 5,500 and Rs 10,500 per square foot, reflecting growths of 266.7 per cent and 255.9 per cent.

In contrast, Jangamakote's rates have increased by 244.4 per cent to Rs 1,550 per square foot, while high-end localities such as RK Hegde Nagar and Thanisandra Main Road now have rates of Rs 12,700 and Rs 10,100 per square foot, marking growths of 243.2 per cent and 210.8 per cent.

Affordable zones like Anekal and Chandapura have rates of Rs 3,300 and Rs 4,300 per square foot, with growths of 230 per cent and 196.6 per cent. Mid-segment areas such as Begur and Kengeri Satellite Town have rates of Rs 6,700 and Rs 10,050 per square foot, showing growths of 204.5 per cent and 187.1 per cent. Premium locality Konanakunte commands a high rate of Rs 12,400 per square foot, with a growth of 175.6 per cent.

Properties in Delhi

In Delhi, property rates have varied widely. North Delhi's Sector 29 Rohini has reached Rs 21,900 per square foot, reflecting a 159.2 per cent increase, while Sector 35 Rohini stands at Rs 13,400 per square foot, up by 145.9 per cent. Sector 34 Rohini offers more affordable rates at Rs 15,700 per square foot, with a growth of 143.4 per cent. In South West Delhi, Sector 23 Dwarka and Sector 17 Dwarka are premium areas with rates of Rs 48,900 and Rs 55,150 per square foot, showing increases of 140.3 per cent and 119.7 per cent, respectively.

Sector 8 Dwarka is mid-segment with a rate of Rs 26,650 per square foot and an 84.4 per cent increase, while Sector 19 Dwarka remains premium with a rental yield of 2 per cent. In West Delhi, Paschim Vihar and Punjabi Bagh are premium areas with rates of Rs 56,950 and Rs 61,950 per square foot, reflecting growths of 70.8 per cent and 53.7 per cent.

Janakpuri, another mid-segment locality, has rates of Rs 61,450 per square foot, up by 50.2 per cent. Affordable options include Dera Mandi in South Delhi at Rs 3,350 per square foot, showing a 55.8 per cent increase, and Najafgarh in West Delhi with a rate of Rs 5,800 per square foot and a 38.1 per cent growth. Mid-segment and affordable choices like Rohini and Pitampura have rates of Rs 16,300 and Rs 46,600 per square foot, respectively, with Pitampura offering an 8 per cent rental yield.

Properties in Pune

In Pune, property rates have also shown substantial growth. Premium area Nanded in South Pune has seen its rates reach Rs 6,250 per square foot, with a 17.9 per cent increase. Mohammed Wadi, also in South Pune, offers a rate of Rs 4,650 per square foot, reflecting a 50 per cent growth.

Affordable areas such as Khed Shivapur and Charholi in North Pune provide lower entry points, with rates at Rs 1,350 and Rs 3,000 per square foot, showing significant increases of 440 per cent and 300 per cent. Other affordable localities like Alandi Road and Pirangut have rates of Rs 2,650 and Rs 2,850 per square foot, reflecting growths of 253.3 per cent and 216.7 per cent. Uruli Kanchan and Loni Kalbhor also offer affordable options with rates of Rs 1,700 per square foot and growths of 209.1 per cent and 161.5 per cent.

Mid-segment areas such as Paud Road and Bavdhan in West Pune present rates of Rs 4,700 per square foot, showing 141 per cent and 95.8 per cent growth, respectively. Charholi in North Pune also falls into this category with a rate of Rs 3,000 per square foot and a 300 per cent increase. Additionally, the East Pune locality of Manjari Budruk has rates of Rs 2,200 per square foot with a 37.5 per cent growth, while Kharadi Annex offers rates of Rs 1,800 per square foot, showing a 20 per cent increase.

Affordable options like Shikrapur and Kesnand in East Pune have significantly lower rates at Rs 700 and Rs 1,200 per square foot, with increases of 100 per cent and 84.6 per cent. Marunji and Kasarsai also fall into the affordable category, with rates of Rs 1,700 and Rs 1,200 per square foot, respectively.

Chandkhed, with a rate of Rs 800 per square foot, has seen a more modest 14.3 per cent growth. Lastly, Hinjewadi Rajiv Gandhi Infotech Park in West Pune, a mid-segment area, has rates of Rs 2,450 per square foot with a 6.5 per cent increase.

The rise in land prices is driven by infrastructure development, government policies, and economic conditions. Areas with significant infrastructure projects or high development potential often experience sharper increases in land values.

Source: Republicbiz