Investing in land near national highways can be a highly profitable venture, with huge potential for substantial returns. A recent report by JLL sheds light on the promising investment opportunities in micro markets near national highways in India. According to the report, land prices in these areas are projected to appreciate by 60-80% in the short term, and 20-25% in the long run, after the facilities become operational. This presents a compelling investment proposition for those seeking to capitalize on the growth of India’s infrastructure and transportation sector.
The National Highway Authority of India (NHAI) has identified more than 650 properties across 22 states, with a combined area of over 3,000 hectares, to be developed with private sector participation in the next five years. These properties include 94 sites on the Delhi Mumbai Expressway, 376 sites in under-construction new Highways/Expressways, and close to 180 sites along the existing network of highways in India. The NHAI’s focus on modernizing the Indian highway network is expected to drive infrastructure development and connectivity in these areas, leading to potential appreciation in land prices.
The short-term price appreciation in micro markets near national highways is expected to be driven by the infrastructure development and connectivity created by the NHAI’s initiatives. As highways and expressways are completed and become operational, they are likely to attract wayside amenities and facilities, such as petrol stations, restaurants, motels, and other commercial establishments. This is expected to further boost the demand for land in these areas, resulting in potential price appreciation.
A Shankar, head of strategic consulting and valuation advisory at JLL, commented on the expected impact of NHAI’s modernization efforts, stating, “We envisage that NHAI will give an impetus to the modernization of the Indian highway network in the coming years, ultimately culminating in various advantageous effects for highway users, market players, developers, investors, and facility operators. Further, we estimate land price appreciation in said micro-market sites by 60% to 80% in the short term and 20% to 25% as the facilities become operational.”
In terms of investment opportunities, the report highlights that capex investment per site for land near national highways ranges from ₹1 to ₹10 crores on average, or ₹2 crore per hectare of site area. This translates into a private investment of approximately ₹4,800 crores in the next five years for the development of these identified properties. The lessee returns for a typical site and project are estimated to be in the range of 15% to 30%, making it an attractive investment option.
In addition to the potential for high returns, investing in land near national highways offers other favorable factors for investors. These include clear land title, and encumbrance-free and pre-approved sites, with no change in land use required. Moreover, attractive lease tenure options of up to 30 years with flexible project development options are available, which can further enhance the growth prospects for developers and potential investors.
However, it’s important for investors to carefully consider certain factors before investing in land near national highways. Noise pollution and air pollution can be concerns, as a thin layer of fine dust may be deposited on properties located near highways. Access to the road and the outside world may also be challenging, with potential safety risks associated with crossing highways. Additionally, there may be risks of land acquisition in the future if the highway undergoes expansion. Therefore, it is advisable to thoroughly evaluate the location and potential risks associated with the specific land parcel before making an investment decision.
In conclusion, investing in land near national highways can offer significant potential for high returns in the long term.
