What to look for when purchasing an Industrial/ Warehousing land:

When buying industrial land, there are specific factors to consider to ensure the property meets the needs of your business and is a sound investment.

Let’s break all these factors down into 2 parts – one on attributes and the second on financials

Part 1 – Attributes: 

•  Location * 3 –
• Location –the first location stands for its literal meaning – where the land is situated A land that has Urban planning proposals (which simply means that it should come into the city limits in the near future) should be considered as the development process gets accelerated in this scenario.
• Location – the second location can be simplified to buying land in an upcoming area with long-term potential and capability of being converted for residential/ commercial use in about 25-35 years as this is the lifetime of a warehouse/ factory building
• Location – the third location means that the land should have great connectivity to existing state and national highways and upcoming expressways. Public transport should be available today to enhance development in the future.
• Zoning and Land Use

Zoning Regulations: Confirm that the land is zoned for industrial use and check any restrictions or permitted uses under the zoning laws.            Future Zoning Plans: Investigate any planned changes to zoning regulations or developments in the area that could impact the property

• Road width – the land should be on a minimum 40’ wide road on government records with tar laid for at least 30’ end to end currently 
• Safety & Security – we always suggest to buy land that is part of a plotted development/ industrial layout to ensure that you are in a gated community that ensures similar development and has an ecosystem that benefits all. Maintenance should be available for roads, lighting, cleanliness, landscaping, etc. for the plot and its surroundings 
• Physical Characteristics

Topography: Evaluate the land’s terrain, slope, and drainage to ensure it is suitable for industrial development.                                                                    Soil Quality: Check soil stability and load-bearing capacity, especially for heavy machinery and structures.                                                                              Size and Shape:  the shape of the land is a very important factor to be considered as it directly impacts the ROI. Ensure the land size and shape are adequate for your intended use and allow for future expansion if needed.

Part 2 – Financial /Cost Analysis:

• The land must be in good shape to achieve maximum FSI and ground coverage
• Land with no/ low filling costs is a great investment in the long run.
• Power infra – Getting power lines and installing infrastructure is a very expensive affair for any landlord 
• Conversion and zoning – property conversion is expensive and it takes a lot of time adding interest costs on your land value until the process is completed

Sample to show how the cost can vary depending on the points discussed above:

From the sheet above you can evaluate that while property 1 seems cheaper by Rs.55 lakhs per acre at the time of buying and also cheaper at every stage – it eventually turns out more expensive than property 2. This only shows that we have not done enough research.

Further, the rental is paid on the ground coverage area (FSI) and Property 2 is a whole lot more efficient – It delivers nearly 50% more efficiency over property 1 because of the shape, conversion cost, filling cost, and infra available. A buyer needs to take that extra time to evaluate the property with all the above said parameters and then decide on the investment.

The table speaks the whole story – Choosing the right land is just not about getting at the lower price!! There is more to it !!!