What is Master Plan?
A Master Plan is an evolving long term perspective plan document which acts as a guide to the sustainable and planned development of a city. It includes planning guidelines, policies, space requirements and development plans for various socio-economic activities such as housing, transportation, community facilities etc. that support the city population.
Why a Master Plan is important in Real Estate Investing?
If you are a Real Estate investor, you might have overlooked the Master Plan of the city where you invest or are planning to invest. What do you think instigates a builder to buy land in some areas and not others? Got some hints? Here are few reasons that may compel you to take Master Plans more seriously than before:
1. Land Use Maps
A Master Plan provides proposed land-use maps of all areas within the city. Using this land-use map, you can invest in land from a future perspective for eg. you can purchase an agricultural land parcel that is in residential zone as per master plan. In future, you can either sell the land at a much higher valuation or develop the land yourself.
2. Planned Economic Activities
The Master Plan details the planned economic activities in various areas. It is a vision document for a city. From the master plan, you can identify industrial belts and where the economic activities will take place in future.
3. Planned Infrastructure
Everybody knows that improved transportation and social infrastructure is a key factor in uptrend of real estate prices. How about knowing few things in advance which are out of sight of general public right now? A Master Plan can tell you about the proposed metro or the six-lane expressway much before when others would start talking about it.
4. Planned Population
Every Master Plan is made for a future population estimate for the plan period. More population in a city means more demand for housing which leads to increase in real estate prices.
5. Avoiding Frauds and Traps
Frauds and traps are not unfamiliar terms when we talk about Real Estate in India. You would have heard stories about builders duping innocent investors by selling dreams of homes or offering multifold returns in a short time. Often, they would purchase a small portion of agricultural land and sell residential plots without any approvals. In reality, the builder may not receive any approvals at all because that land may not come under residential zone as per Master Plan.
These are some of the reasons that makes a Master Plan an important tool while analyzing a Real Estate investment. An understanding of the Master Plan of a city will not only give you an edge over other investors but also provide you with a future perspective of the city.
Though it may seem common sense that everyone must be looking at a Master Plan before investing, the truth is far from that. Perhaps, because extracting the right information itself is a tedious task. First, you have to spend some time on internet before you can get hold of the land-use plans and the detailed master plan report. Then, once you get hold of the Master Plan, you may not read beyond second or third page of the 250 page document. For this reason, we have compiled Master Plans of all major cities of India at one place. We have also provided key features for each and every Master Plan so that you do not have to spend hours retrieving the useful information. Check them out here:
Hope you enjoyed this article on “What is Master Plan and why is it important“.
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