Satellite cities: A reality check

Panipat and Sonepat have traditionally been industrial and business towns,typified by the presence of several small and medium enterprises (SMEs) — and,in the case of Panipat,petrochemical and textile industries. Literacy levels in these two areas have remained relatively low. As a result,the income levels of the population residing in these towns have never been able to breach the ‘average’ mark.

The additional drivers that would catalyse increased real estate demand — increased employment opportunities in a higher-profile class of workplaces,which would result in increased income levels — have been notably absent. Sonepat and Panipat have been unable to make any kind of headway in positioning themselves as corporate hubs. Indeed,there is no corporate presence at all to be seen in either of these locations.

Another important factor — the availability of cheap and skilled workforce (which is crucial for development of a realty market and an area’s ability to attract corporates) is conspicuously absent in these areas. The local,native population has consistently displayed a lack of aspiration in terms of transcending their traditional employment opportunities. Nor is there any significant influx of migrant population to help raise the profile.

Yet another vital ingredient for a real estate success story that is missing in these two locations is the availability of cheap surplus land. Since these are essentially small towns,no land parcels of significant magnitude are available. Although many residential projects and townships have come up in the vicinity of Sonepat,this residential supply has not resulted in new commercial activities. Thus,most of this not inconsiderable supply is lying vacant. Only investors have shown some interest in these projects,as end users lack the economic means to pursue home ownership even if they plan to settle there.

That said,this rather gloomy scenario at Sonepat and Panipat could take a turn for the better in the future. As the many new infrastructure initiatives such as the KMP-KGP Expressways and metro connectivity being pursued in these areas take shape and form,the realty fortunes of Sonepat and Panipat will certainly start to show improvement.

— The author is CEO-Operations,Jones Lang LaSalle India