KARACHI, March 15: Prices of open industrial plots in various industrial areas have witnessed a boom in the last one and half years. Its impact has also filtered down in many old industrial areas in shape of phenomenal price spiral despite non-availability of open plots.

The temperature of city’s industrial plots market has finally shot up as a result of continuous arrival of home remittances after 9/11 incidents followed by heavy entry of investors who earlier were virtually confused as to where they could take chances in view of flagging confidence in other investment avenues.

The industrial plot market has witnessed a mixed trend in the last one and a half years. Both investors and industrialists are buying new plots in various industrial areas. Investors are quite willing to grab small industrial plots of quarter, half and one acre owing to greater returns both in short- and long-run. Some investors are purchasing big plots and sell them by bifurcating in various small categories.

Many industrialists, who have been conducting their business successfully for the past over three decades, are also purchasing new plots for their next generations who are now ready to further foster their in-house business.

On the other hand, some industrialists, who could not undertake horizontal expansion in their existing plots and fail to buy new plots due to plot shortage in the existing area, are looking for future business expansion by purchasing new plots in other industrial estates.

Even some clever industrialists have now become eager to buy property since it has seen higher returns after 9/11 incidents. They feel that investment in open plots is the best choice under the current situation when other investment options like dollar, bourses and banks’ rates of return have been persistently losing their lustre. They think that investment in open plots looks set to be the best performer in the current situation.

A random market survey of some of the industrial areas reveal that investors and industrialists have to manage around Rs3 million for one acre plot in Port Qasim area as compared to Rs1.5 to Rs2 million a year back. A five acre plot can now be purchased at Rs10.5 million as compared to Rs7.5-10 million.

“Actually huge presence of investors’ has caused price spiral in industrial plots of Port Qasim area. Even multinational companies are not active in buying such plots,” chief executive of Parekh Estate, Abdul Wahab Parekh says, who deals in industrial plots.

Coming to Korangi industrial area, he says that in sectors like 14, 15, 16, 22, 23 and 24 — a one-acre plot price ranges between Rs25-30 million as compared to Rs17.50 million a year back and Rs10.25-10.50 million two years back. A one-acre plot in sectors like 18, 19, 20 and 28 is priced at Rs20-20.5 million as compared to Rs10.25-10.50 million, while in sectors 29 and 30 of Korangi industrial area — a one-acre plot is available at Rs10.50 million as against Rs9 million. Korangi has over 2,500 units in which 875 are large-scale units, 625 medium size and 1,000 are small-scale units. According to an official in Korangi Association of Trade and Industry (KATI), about 1,640 units are actively working with a labour force of 109,472 including 5,409 management personal. Approximately 600 units are lying vacant.

In Landhi industrial area, he said a one-acre plot price hovers between Rs8-9 million as compared to Rs3 to Rs4 million a year back.

In Site industrial area, which is short of industrial plots, has always been the first preference of investors and industrialists. According to Parekh, Site still enjoys high demand but it lacks supply. He said in case a one-acre plot appears — its price now hovers between Rs20-20.50 million as compared to Rs10.25-10.50 million a year back. If the sub-soil water is available in the area, the one-acre plot price is skyrocketed to Rs30 million.

In North Karachi, which is also short of new plots, has also felt the impact of rising plot prices in other areas. A one-acre plot is being sold in open markets at Rs8 to Rs9 million as compared to Rs3 to Rs4 million. However, F.B. industrial area, where hardly any new plots are available, has also seen upsurge of price. A one-acre plot is now priced at Rs20 million as compared to Rs10 million.

“The rising trend in price of industrial plots has been the highest after 9/11 incidents as compared to increase in price hike in the last 10 years,” Parekh says adding that Site and Korangi industrial areas excel with other areas due to short and quick sale and purchase options. Besides, the presence of community is also very important as top businessmen from Memon community have been here for decades in Site area, while Korangi marks the heavy presence of Chinioti businessmen.

Site Superhighway Phase II has been a new attraction of industrialists and investors. He says that the rate of a half acre plot in this area in open market ranges between Rs2.0-2.5 million as compared to Rs800,000-900,000 a year back. Its official price is Rs750,000 when it was allotted.

However, ex-chairman Site Association of Industry Zubair Motiwalla has a different view of Site Superhighway. He says a month back, the open rate of a half acre plot was Rs1.2-1.3 million.

“Around 60 per cent of genuine industrialists, who have been successful in Site area in the last two to three decades, have actually purchased plots in Site Superhighway as compared to 40 per cent purchase made by the investors,” he says.

He says that Site Limited has collected Rs100,000 extra from applicant as it will ensure all infrastructure facilities like gas, power and water. “I think industrialists will start construction of units in early 2004 and by 2005 majority of industries will start commercial production,” Zubair said.

He says some 10 per cent leading industrialists and exporters of textile and value-added items in Site area are already busy in expanding their business by investing huge capital.

Chairman Site Association of Industry, Haroon Farooqui said that many top tycoons in Site area are undertaking a vertical expansion of their business mainly in textile, garments, knitting etc., as there are no open plots in the area. He also confirmed that the price of plots has seen a marked rise in the last two years. He said Site has over 2,200 plots of various sizes and over 50 per cent are export-oriented industries.

He says investors in stock markets, dollar and banks have found their choices to be far riskier that is why investment money now continues to flow in real estate. He said if an industrialist has Rs10 million excess capital — he would expand its business or invest in lucrative options instead of investing in banks which offer six per cent rate of return as compared to 9-11 per cent few years back.

Member executive committee, F.B. Area Association of Trade and Industry, Muzzamil Hussain says that industrialists are putting up their money in expansion of their business particularly in terry towel and processing industries in F.B. Area, which is facing dearth of new plots. Over 2,000 units, 90 per cent export-oriented, are located in F.B. Area.