Low on returns, high on expectations
The industrial plot segment in Amritsar has so far failed to deliver attractive results for the realty investor, but, in the last one month, there is renewed optimism for its revival
Industrial plot segment is struggling for relevance in the Amritsar real estate market. Demand levels are low and price stagnancy is the norm in the segment. But, the pessimism about future prospects is giving way to heightened optimism for a turnaround after formation of the new state government.
In terms of investment yields, the segment has lagged behind other realty segments, including commercial and residential.
Though all the realty segments are struggling to yield investment returns to the investor, but, for the industrial plot segment the situation is the worst. The supply is way more than the demand and this is causing a glut in the market, keeping prices stagnant, say local realty experts.
NOT MANY TAKERS FOR INDUSTRIAL PLOTS
There are not many takers for the industrial plots. Both the end-user and the investor have deserted the segment. For the end-user, the industrial growth in the state was not encouraging enough to buy industrial plots for either expansion or starting new projects
“For the investor, the returns from the segment are the lowest in the realty sector,” says Rishi Khanna, 40, a local real estate consultant. The key to growth in the segment rests on the industrial growth. “But, for the last many years, there has been a sharp dip in industrial growth in the city and this has negatively impacted the demand for industrial plots. In most of the areas, due to low demand, price has remained stagnant. The price corrections weren’t sharp because the prices in the industrial belts have already hit the bottom and there is not much scope for further price reductions,” says Khanna.
AVAILABILITY AND PRICES
“Industrial plots are primarily available in government-built industrial focal points, and Model Industrial Park (MIP) in the private sector. The available plot sizes vary between 250 sq yard and 5,000 sq yard. Plot prices range from Rs 5,000 sq yard to Rs 15,000 per sq yard depending on the location,” says Nitin Mehra, 31, a local real estate consultant. A buyer looking to explore the segment should not face any problems regarding the availability of plots. Most of the plots in the city’s industrial zones are lying vacant. “The vacancy rates in the segment are relatively high. In the older and more developed focal point, the occupancy is around 80%. In the new focal point, nearly 60% plots are lying vacant,” says Mehra.
HOPE AND EXPECTATIONS
The segment fortunes aren’t expected to change in the near future, but, local realty experts, say, better prospects are expected in the medium and long-term. Rohit Sharma, 31, a city-based developer says
THE SEGMENT FORTUNES AREN’T EXPECTED TO CHANGE IN THE NEAR FUTURE. HOWEVER, LOCAL REALTY EXPERTS SAY BETTER PROSPECTS ARE EXPECTED IN MEDIUM AND LONG TERM.
“There is a renewed optimism in the city with a new and stable government taking over. All the indications coming from the state government, so far, are positive for both the industry as well as the realty sector. A new industrial policy for the state is expected to be announced in the near future. This has given a flip to the local expectations regarding the revival in the realty sector. Though the actual impact will be seen when the new government starts implementing their so far stated intentions.”
Other realty experts advise against being too optimistic about the segment. “For the realty investor, the city’s industrial plot segment seldom gets a priority. If and when the sector’s revival starts, the realty investor will prefer other segments rather than the industrial plots. Also, the demand-supply fundamentals of the segment aren’t expected anytime soon. The enduser demand can only make marginal impact on the segment’s fortunes unless the industrial growth increases sharply. For the realty investor, the best option is to wait and watch ” says Khanna
Most of the industrial plots in Amritsar are lying vacant