Industrial Space Investment: Why Industrial Land is Cheaper than Industrial Parks
Finding suitable industrial space with reliable infrastructure in the right location is a significant challenge for many businesses. This challenge led to the development of industrial zones and parks, designed to offer optimized solutions for industrial activities. Understanding the cost differences between industrial land and industrial parks is crucial for making a well-informed investment decision. This blog delves into the cost aspects of both options, highlighting their advantages and implications.
What is Industrial Land?
Industrial land refers to real estate specifically designated for industrial activities such as manufacturing, logistics, warehousing, and distribution. Unlike residential or commercial properties, industrial land is subject to zoning regulations that facilitate industrial operations. Investing in industrial land typically means acquiring a raw plot that requires development and infrastructure.
Key Features:
- Zoning and Permits: Dedicated to industrial use with specific zoning regulations.
- Development Requirements: Requires significant investment in infrastructure like roads and utilities.
What is an Industrial Park?
Industrial parks are pre-developed areas designed to support various industrial activities. They provide ready-to-use facilities, such as Centralized Labour Quarters and recreational parks. These industrial parks streamline operations by offering existing infrastructure and amenities, making them an attractive option for businesses looking for a hassle-free setup.
Key Features:
- Complete Infrastructure: Includes roads and drainage, utilities such as water, electricity, telecommunication lines, and infrastructure such as sewerage system.
- Strategic Location: Typically located near major transport routes like highways, railways, airports, and ports.
Why Industrial Land is Generally Cheaper
1. Lack of Developed Infrastructure
Industrial Land: Typically refers to raw, undeveloped plots of land. The cost of industrial land is lower because it does not include infrastructure like roads, utilities, and drainage systems. Buyers must invest additional funds to develop these essential facilities.
Industrial Park: These are pre-developed areas with existing infrastructure and amenities, including roads, drainage, utilities (water, electricity, telecommunications), sewerage, security, and landscaping. The higher initial cost reflects the significant investment in creating and maintaining these comprehensive facilities.
2. Location and Accessibility
Industrial Land: Mostly located in less developed or peripheral areas where land prices are generally lower. The lack of immediate infrastructure and accessibility might contribute to the lower price.
Industrial Park: Often situated in strategic locations with excellent accessibility to major transport routes and logistics hubs. The premium for these locations is included in the cost of the industrial park, reflecting its advantageous positioning.
3. Investment in Amenities and Services
Industrial Land: Does not come with added amenities or services. Buyers are responsible for providing their own facilities, such as security, waste management, and maintenance.
Industrial Park: If located within a Managed Industrial Park (MIP), shared services like security, landscaping, and waste management are included, with costs incorporated into the maintenance charges for the land within the park.
4. Immediate Operational Efficiency
Industrial Land: Requires a significant amount of time and effort to develop before it becomes operational. This delay in usability can be a factor in the lower initial cost.
Industrial Park: Offer immediate usability due to the existing infrastructure. Businesses can start constructions and operations more quickly, which can justify the higher upfront cost.
5. Market Demand and Supply
Industrial Land: The price can vary widely based on supply and demand in less developed areas. The market for raw land might be more variable, contributing to lower prices in some cases.
Industrial Park: Often have higher demand due to convenience and reduced setup time. This demand can drive up prices, especially in well-established industrial parks with high-quality infrastructure and connectivity to ports and highways.
Conclusion
Industrial land is generally cheaper than industrial parks primarily due to the lack of developed infrastructure and additional amenities. The lower initial cost reflects the raw nature of the land, and the extra investment needed for development. In contrast, industrial parks come with ready-to-use facilities and tapping of utilities that justify their higher price.
By understanding these differences, businesses can make informed decisions about their industrial space investments, balancing initial costs with long-term operational benefits.
Explore Your Investment Options
To learn more about industrial spaces and find the best option for your needs, visit our website. Our experts are here to help you navigate the complexities of industrial property investment and find a solution that aligns with your business goals.
By understanding these differences, businesses can make informed decisions about their industrial space investments, balancing initial costs with long-term operational benefits.
