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Apartment or Plot – Which Is the Better Investment in 2025?
2025
Apartment or Plot – Which Is the Better Investment in 2025?
Surprisingly, the ratio is 50:50 when it comes to a plot or an apartment. This means that people are equally interested in a plot or an apartment! But, there are merits and demerits to both paths, but the real essence is: which of the two will provide better long-term yields and financial returns?
Nowadays, it's crucial to understand the return on investment (ROI) in the real estate industry. We need to assess the returns value and appreciation, as well as the development of rental income, liquidity, and flexibility. Whether you have plans to build your dream home in the future or earn straight rental income from day one, this blog will help you decide what is most beneficial and what returns are for your financial objectives.
Plot Investments in India
What is a Plot Investment?
A plot investment is buying a piece of land, usually for future development or resale. Unlike an apartment or built-up property, a plot is raw land, making it the most flexible real estate asset in India.
Types of Plots in India
Residential Plots
Zoned for individual homes, villas, or gated community developments. Located in suburban or emerging urban areas with growing demand.
Commercial Plots
For business purposes, such as offices, shops, or commercial complexes. Plots in prime locations may be priced high.
Agricultural Plots
Local authorities have to undergo a formal land-use conversion process for farming or horticulture to convert into residential or commercial use.
Pros of Plot Investment
Lower Maintenance Costs
To make the Plots cost-effective in the long term, minimal maintenance is required.
High Appreciation Potential
In the outskirts, the land is appreciated more, like the places of Chennai, Pune, or Bengaluru.
Flexibility to Build
We have complete freedom in plots where we can design and build as per personal or project-specific requirements, with no restrictions from builders.
Fewer Legal Issues
Once verified, plots have fewer disputes related to construction quality or possession delays compared to built-up properties.
Cons of Plot Investment
No Immediate Rental Income
Plots don’t generate regular income unless developed; hence, they are not suitable for short-term income-focused investors.
Difficult to Finance
It'll be harder to get a loan for a plot of land than for the apartment. Lenders offer a lower loan-to-value ratio, and only approved plots are eligible.
Longer Wait Time for Returns
Plots need a longer holding period before delivering significant returns, as appreciation is gradual and infrastructure-dependent.
Infrastructure Dependent
The Plot’s value depends on its surrounding infrastructure. If there is a Lack of roads, water supply, or public connectivity, it can limit appreciation and usability.
For more helpful tips and insights on real estate, check out our blogs. Our experts share everything you need to know.
Understanding Apartment Investments in India
Real estate investments are evergreen in India. Among other properties, apartments are a profitable choice for first-time buyers and for urban areas.
What is an Apartment Investment?
It is a Private living space, which is often referred to as a flat, located within a multi-unit building or complex. Many units will access the Amenities like elevators, parking, and leisure areas.
Types of Apartments in India
From compact studios to spacious multi-bedroom homes, apartments are designed to suit all kinds of lifestyles.
1 bhk or 2 bhk apartment
- Ideal for single, joint, or small families
- 1 BHK is great for individuals or newlyweds who are looking for low-maintenance, budget-friendly houses.
- 2 BHK suits small families and is the most demanded section in Indian real estate.
Advantage:
Cheap to rent or sell again and perfect for the first time.
3 bhk and big apartments
- Perfect for large families or extra space
- You can simply turn a home into the guest room, even an office space.
- Popular among growing families, NRIs, or those with long-standing comfort.
Advantage:
More privacy, better future value, and long-term purposes.
Luxury apartment
- Premium finish and featured homes
- Luxury apartments come with cosy amenities and smart technologies.
- More features include a lounge, pool, gym, and concert services.
Advantage:
- Lifestyle upgrade, premium rental, and better rest.
Studio units
- Compact and convenient for a single-life
- A single room with a kitchen, living area, & toilet.
- Popular in metro cities for students, graduates, or short-term stays.
Advantage:
- Cheap, low-maintenance, and ideal for urban life.
Co-living apartment
- Shared place for young professionals and students
- Private bedrooms with shared kitchens, lounges, and services.
- To gain popularity in major cities for strength and community life.
Advantage:
- Affordable, well-organised, and attractive living space.
For example, ASN Housing offers 2- and 3-BHK apartments with thoughtful designs and necessary amenities in communities like Chromepet, Pallavaram, and Nungambakkam. ASN Housing Projects is where you can view their current offerings.
Pros of Investing in Apartments
Steady Rental Income
Apartments located in prime or emerging neighbourhoods can yield reliable rental returns. If they are near schools, IT hubs, or public transport, they have more possibilities.
Easier Financing and Loans
Most major banks are willing to finance apartment purchases.
99% of the Builders also have a tie-up with top banks.
Some Popular Amenities in Apartments
- Security systems
- Elevators
- Backup power
- Beautifully landscaped gardens
- Individual parking Space
Faster Liquidity and Resale
In urban areas, immediate possession apartments have more demand, and they sell faster than plots of land or custom-built homes.
Favorable for NRI Investors
For Non-Resident Indians (NRIs) seeking a straightforward investment with the possibility of rental income, apartments are a fantastic option. Thanks to RERA regulations, digital documentation, and dedicated support from builders, the whole process has become much easier and more transparent.
Read our full guide for NRI homebuyers from ASN.
Factors Impacting ROI in Property Investment
Buying cheap and selling high is not only a strategy for return on investment in real estate. It's about making smart choices around location, legal clarity, property type, and a long-term approach.
Location, Location, Location
The most crucial factor in real estate investment. Simply, a good location can increase the value of your property by 20–35% over five years.
Key things to look for:
- Infrastructure: 18 % of the property value can be increased when Proximity to metro stations is within 1–2 km. Easy access to roads and airports also matters.
- Social amenities: 15–25% faster growth can be attained when the property is in areas with schools, hospitals, and shopping centers within 3–4 km.
- Job hubs: Higher rental demand for properties within 5–6 km of IT parks or industrial zones.
- Future growth: Check on areas listed for government projects or smart city missions.
Market Dynamics
Market fluctuations will have an impact on investment and returns.
- Economic factors: Inflation, interest rates, purchasing power, and GDP growth–all of these factors influence market dynamics.
- Developer reputation: Check previous projects and portfolio. Read testimonials on their website and Instagram.
Property Type and Size
Not every property fits every buyer. ROI depends on matching the right size and type with demand.
- 1 BHK / Studio: Popular in student or working-class hubs.
- 2 BHK: Best all-rounder for both end-users and rental income.
- 3 BHK / Larger: Ideal for bigger families and people who prefer high-end living.
ROI Shaped by Location
ROI Shaped by Location
Let us share one of our clients’ stories. In 2019, a young couple bought a 2 BHK home in Guindy. The price was ₹45 lakhs, and the area lacked proper roads. But the couple researched and found out that the metro extension was already under construction. Even a new hospital and school were scheduled to open nearby within 2 years.
By 2023, the metro had opened, and the school was fully operational. Property prices in their area went up by 32%, and they began earning steady rental income when they relocated abroad. Their flat is now valued at ₹59.5 lakhs.
Policy & Regulations
Prevent the legal issues that can be a problem for your returns or delay resale.
- Check the RERA compliance to ensure accountability.
- Check the mother document and RERA approval.
- Try to avoid properties under pending court cases or built on agricultural land.
Management & Regular expenditures
Most of the people do not care about recurring costs. But this affects the ROI!
- Property Tax: Depending on location and size.
- Society Charge: Depending on features, 1.5 to 4 per sq ft.
- Repair and maintenance: More frequent costs may be necessary for older structures.
Investment Strategies Matching Your Budget
Small Budget (₹40L to ₹50L)
Smart Choice: In small townships or expanding urban areas, you can select studio apartments or one-bedroom apartments.
Approach: It focuses on early-stage infrastructure development, and it is a long-term hold.
Medium Budget (₹60L to ₹80L)
Smart Choice: You can choose 2 BHK apartments in well-connected localities.
Approach: You will get rental income & capital growth.
Large Budget (₹80L and above)
Smart Choice: You can opt for premium apartments, commercial properties, and large plots.
Approach: High rental yield and risk management.
Tax Implications: Plot vs Apartment
Capital Gains Tax
- Long-term (>2 yrs) gets indexation benefits.
- Section 54/54F exemptions apply when reinvesting in residential property.
Rental Income:
- Taxed under "Income from House Property."
- Get a 30% standard deduction and a loan interest deduction.
Tax & Registration:
Keep in mind, registering a property typically adds about 6–8% to the overall cost.
Loan Benefits:
- Apartments: Eligible for 80C and 24(b) from Day 1.
- Plots: Tax benefits only after construction begins.
Financing Options
For Plots:
- Loans up to 70%
- Higher interest and shorter-term
For Apartments:
- Loans up to 90%
- Financial benefits from Pradhan Mantri Awas Yojana (PMAY) – If eligible
- Low investment rates and EMI flexibility
Risk Assessment: Plots vs Apartments
Apartment Risks:
- Construction delays
- Rental management issues
- Builder reliability
Plot Risks:
- Delayed development in the surrounding area
- Lack of resale liquidity
- Legal/title complications
2025 & Beyond – Future Real Estate Trends
- Rise of gated plot communities
- Stronger RERA regulations to improve transparency
- A hybrid work culture is equal to an increasing demand for living space.
- Surge in suburban buying due to hybrid work
- Digital buying journeys (online booking, site visits, payments)
Note: Real estate market trends always vary from one location to another. If you're buying a property in a prime area of Chennai, you'll likely pay a premium. On the other hand, if you're looking in the outskirts, prices tend to be a bit lower. So, the numbers we've included in this blog post may vary depending on the location. Before making any decisions or investments, we strongly recommend speaking with industry experts.
Conclusion
Do your research! Check the data for at least 10 years. For example, Rejith, our team manager, bought a property in T Nagar in 2010. He bought his apartment at 40 lakhs then. Now, the market rate in the area for the same 2 BHK is around 55 lakhs. Almost a 37.5% increase in ROI. So, the point is that Real investment has a high appreciation over time.
Plot or apartment, Real investment takes time to grow. People with patience win over time.
Want help with property selection or legal guidance? Reach out to the team at ASN Housing for expert support backed by local knowledge and real-time project insights.
