India's Manesar Property Market Trying to Realize Full Potential

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Manesar's property market continues to grapples with market conditions and strategic focus.

Rohan Sharma of Jones Lang LaSalle India tells World Property Channel that Manesar was once envisioned as a model township encompassing residential real estate as well as commercial office and industrial establishments. Hence, it was appropriately christened as IMT (Integrated Manesar Township). This area was primarily expected to see development riding on the back of industries setting up shop there. With a plethora of operational industrial units, it would be appropriate to call it an integrated industrial park.

With an area of 1,750 acres, development in Manesar has been regulated since 1997 by the HSIIDC, which is primarily creating an industrial area that will enable the state to take centre-stage in North India in terms of industrial competitiveness. The vision is to provide and upgrade existing facilities which will encourage industries to set up shop in this area.

Sector-8 in Manesar was auctioned by HSIIDC to various development companies and corporates to set up speculative office buildings and captive campuses. Existing campuses include those of HCL, Agilent Technologies and Bharti Airtel.

Speculative developments include IT Parks by Anant Raj, Shapoorji Pallonji, Aarone Group, Vigneshwara Developers and Spire World, among others. These projects are currently suffering from a lack of occupier interest, which has considerably delayed project completion. There are other small industrial buildings in various stages of development in Sectors 3 and 4.

This industrial belt is favored by automobiles and auto components manufactures, as seen by the presence of Toyota, Mitsubishi, Honda and Munjal Showa, among others. Maruti Suzuki has set up its second manufacturing plant in Manesar and is making huge investments in expanding its manufacturing strength in this location. In fact, Manesar figures prominently as an automobile and auto component hub in the proposed DMIC (Delhi Mumbai Industrial Corridor) project.

Infrastructural improvements in terms of the under-construction KMP Expressway (Western Peripheral Expressway) and the upcoming Dwarka Expressway are also expected to make this area more investment friendly. All these elements are expected to spur investments, primarily in the automobile and ancillaries sector in Manesar. Also, with the KMP to serve as the route for heavy vehicles passing through NCR, this area should also see significant investments in terms of developing as a warehousing and logistics hub. Captive and speculative warehousing activity should see more private players getting active in this area. Sourcing firms can also look to set up their supply chain nerve centers in this region.

Industrial units will continue to remain active in this area. Due to its distance from the established IT hub of Gurgaon, Manesar has seen only limited activity by IT/ITeS players. Such projects in the region are limited to campus developments and marginal leasing activity by a few IT/ITeS players. On account of its low rents, this sub-market should serve as a viable destination for setting up Disaster Recovery or Work Area Recovery sites by big players. This will open up a totally new avenue for IT activity in this area.

Distance continues to remain a major point of concern in the minds of occupiers. The bottleneck at the second toll plaza at Kherki Daula burdens travel time to and from Manesar towards Gurgaon and Delhi. Infrastructural gridlocks caused by the slow development of arterial and sector roads; their upkeep and maintenance are also major hurdles. Power availability continues to be challenge, and with the erratic supply forcing firms to invest hugely in power back-up arrangements.

Government efforts to promote industrial activity at Manesar are at odds with the efforts being made to provide the services and facilities which will attract industry and other firms to this region. Most of the speculative stock in Manesar is facing a lack of occupier interest. Upcoming projects are also delayed, as this region figures low on their priority list of expansion or consolidation destinations. All the above factors contribute towards this region's unrealized potential. All efforts to promote the area will come to naught if the Government continues to drag its feet in creating the required infrastructure at Manesar.

Currently, only Sector 1 has residential property developments in the form of individual plots and Group housing plots allocated by HSIIDC. A few private developers are active in residential property development in Sector M-1, and a handful of large townships are also under planning around Manesar. The prominent ones include the Vatika Next and DLF Garden City townships. Large land parcels are held by developers like Raheja and Unitech among others, and more residential projects are expected going forward.

A host of residential townships are planned in sectors 91-95 near Manesar, by the likes of SARE, Anant Raj, Ansal API, Sidhartha and DLF, among others. As these projects come closer to their possession dates and the area becomes more densely populated, the surrounding social infrastructure is also expected to come up alongside. All this should spur the commercial developments in the region.

The Government of Haryana and HSIIDC have also envisioned setting up IMT-2, for which around 1,800 acres of land have been identified for acquisition. However, the acquisition prices and possession of fertile land for industrialization has led to protests by farmers in this area. Also, as the existing IMT is still grappling with high vacancy rates and slow growth, there is pressure on the Government to drop plans for IMT-2 or to go slow on the land acquisition. It is suggested that the focus should be on developing the existing IMT by providing adequate infrastructure, which will create an atmosphere conducive for industrial activity to thrive in this region and enabling Manesar to realize its full potential.