Sluggish demand, stable prices
In Ludhiana, the industrial plot segment is marked by a situation of low demand and more supply
Stability defines the industrial plot segment in Ludhiana, the industrial and business capital of the state. Even though demand in the sector has declined in the last few years, yet, prices are relatively stable. Also, a situation of over-supply prevails.
The industrial plot supply is available in both the private and public sector. While in the public sector, it is mainly in the secondary market, in the private sector, buyers can find properties both in the primary and secondary markets.
Deepak Badyal, 48, president of the Ludhiana Realtors Association, says ,“Ludhiana being a hub of industry, there are several locations in the city and the peripheral areas where the small and medium industry have large footprint. In the organised segment, there are Industrial Areas A and B, and there smaller focal points. There are also several older localities with a mix of industrial and residential areas. Then there are industrial estates, industrial parks and some cater to specific industries in the Greater Ludhiana area.”
INDUSTRY HEALTH AND REALTY SEGMENT
The segment’s fortunes are closely tied up with the local industry health. The demand in the segment, both end-user and investor, comes from the industrial sector.
Atul Monga ,38, a garment and fabric manufacturer based in the city, says, “The current market situation has its roots, firstly, in the slowdown in the industrial sector itself and secondly, the failure of the realty market to deliver results for both the end-user and the investor. In the industrial sector, overall in the country, there is sluggishness, and similar effect is being felt in the local industry. The industry no longer generates enough surplus es for the industrialists to invest in the industrial plots either for expansion purpose or for investment. It is only when the industry makes profits that we see investments increasing in the realty sector also, both from the end-user and the investor. As for the second reason for the low demand for industrial plots, the realty sector itself is to be blamed. Price corrections and even price stability dissuades the investor from entering the realty segment. For the last several years, the realty market, including the industrial plot segment failed to generate attractive returns for the investor. As a result, the inflow of money to the segment further deteriorated.”
Difficult to exit industrial plots also discourages potential investors to enter the segment.
“The averagesize of an industrial plot is significantly larger than in other realty segments, including the commercial segment. So, the starting investment in the segment is also relatively larger than the residential and commercial segments. An investor stands to lose more in the segment than in other realty segments if he can’ t exit at the time of his choosing. At present, the segment does not allow for an easy exit or an exit at one’ s choosing ,” says Pr aka sh Ag garw al ,43, a city-based real estate consultant.
The local realty market is plagued by slowdown and price corrections define most realty segments. But thei ndustrial plot
INDUSTRIAL PLOT SUPPLY IS AVAILABLE IN BOTH PRIVATE AND PUBLIC SECTOR. WHILE IN PUBLIC SECTOR, IT IS MAINLY IN SECONDARY MARKET, IN PRIVATE SECTOR, BUYERS CAN FIND PROPERTIES BOTH IN PRIMARY AND SECONDARY MARKETS
segment is better placed.
Atul Dhingra, 37, a Ludhianabased realtor, says, “While most other realty segments in the city are marked by price corrections, the industrial plot segment on other hand, has registered relatively stable price situation. In Ludhiana, the reason for this is the segment is directly related to the livelihood of the people. Though, in the recent past, there were some setbacks to the local industry, yet, most of the city population is engaged in the sector. So, the demand, even though dipped, yet is enough to keep the prices relatively stable in the segment.”
Vacancy rates in the segment depend on the locality.
“In older areas like Industrial A and B, which are also closer to the city, in fact, are now part of the city, vacancy rates are very low. In place of the industries that were closed, people have opened up storage spaces like godowns. In the other areas, though, the vacancy rates are more, for instance, in the focal points nearly 30% of the plots are vacant. In other peripheral and upcoming areas, the vacancy rates are still higher,” says Badyal.
Prices of the industrial plots in the city vary widely depending on the location of the plot.
“The average price range for plots generally varies between ₹6,000 per sq yard to ₹50,000 per sq yard. In the Industrial Areas A and B, the average price generally is around ₹25,000 per sq yard. In focal points, the average price hovers around ₹13,000 per sq yard. Prices increase in these areas depending on the location, size and the condition of the property ,” says Dh ingra.
Prices of the industrial plots in Ludhiana vary widely depending on the location of the plot.
There is slowdown in the industrial plot segment in Ludhiana.