After the success of their 3.5 marla residential plots in Harmony Park Block, Capital Smart City has launched 2.5 marla commercial plots (2.66 marla to be exact) on 22nd June 2020. The response of the market to the launch of 2.5 marla commercial plots has been surprising for many. Owing to high demand, the plots were already selling for a profit of Rs.300,000 within a few hours after being launched. In this post, we share all the details of the plot including size, price and payment plan of 2.5 marla commercial in Capital Smart City.
We also present an analysis of the overwhelming market response. So, if you’re also wondering whether the high profits are justified or not, scroll down to see the answer!
Details of 2.5 Marla Commercial Plots by Capital Smart City
The dimensions of the new commercial plot are 20′ x 30′ which converts to the exact size of 2.66 marla. The name “2.5 marla” has been given because the original news released by Capital Smart City was that they will launch 2.5 marla commercial plots.
Price and Payment Plan of 2.5 marla Commercial
The launching price of the 2.5 marla (or 2.66 marla) commercial plot is Rs.4,680,000. In addition, there is a market profit of Rs. 300-400k on the files (More on that in the next section).
Booking can be done at 20% down-payment. So, the total down-payment required for booking is Rs. 936,000 along with the market profit. The best modes of payment for quick confirmation of booking are cash and pay order.
The remaining amount will be payable in easy installments of 3.5 years.
Update: The booking price of 2.5 marla commercial plot has been increased to Rs.5,550,000 on 24th June 2020. The new down-payment is Rs.1,110,000 (11 lacs and 10 thousand).
Current Market Price
The smaller size commercial plot has been taken by the market quite generously. Booking on the 2.66 marla commercial plots opened on the official launching date 22nd June 2020. The pricing details and exact size were also revealed on the same day.
In a matter of a few hours, the limited number of files were selling in the market at a profit of Rs.300,000 (which has increased even further as we speak). Moreover, even at a huge profit, the number of files available to investors is limited.
Why is there a huge profit on the newly launched files? Why is the supply so low? Does it mean the files are being sold in black market? Does it mean something is unfair?
We have done the research on your behalf and in this section, we will try to explain the market dynamics that led to this situation. Let’s break it down for you.
1. How demand for 2.5 marla commercial escalated!
Capital Smart City announced the news of their upcoming product “2.5 marla commercial plots” only a few days before launching date without revealing any information about pricing and payment plan. Mainly, the following reasons created an instant high demand for the upcoming product.
1.1. The recent success of 3.5 marla residential plots
Just about two months ago, Smart City had launched Harmony Park block with 3.5 marla residential plots at a very reasonable price. The 3.5 marla plots were sold within days and are selling at a profit of Rs. 30,000-40,000. After the success of Capital Smart City’s 3.5 marla residential plots, the market anticipated a similar response for the new smaller commercial plots.
1.2. Commercial does better than residential
Also, commercial plots usually do better than residential ones in general. The commercial plots of 4 marla and 8 marla in Capital Smart City had been a huge hit and investors had earned significant profits from them. Therefore, the market was anticipating high returns from the new commercial plots as well.
1.3. High affordability
Smaller the size, smaller is the investment and higher is the affordability. Therefore, there was an even higher demand for the smaller sized commercial plot due to increased affordability.
This is why, investors were ready with their funds to purchase the upcoming product of Capital Smart City. This created a high demand for this product even before it was launched.
2. Under-pricing Strategy by Capital Smart City
Capital Smart City has strategically launched their smaller 2.5 marla commercial plot at a very low rate. Here’s how!
2.1. How is it under-priced?
The market price of commercial plots in Capital Smart City is more than Rs.2,625,000 (26 lacs 25 thousand) per marla. Click here to see the current market prices of all plots of Capital Smart City. The price of the new 20′ x 30′ plot translates into about Rs.1,760,000 (17 lacs 60 thousand) per marla. So, there is a difference of Rs. 8.65 lacs per marla.
This shows that the commercial plot of 2.5 marla is highly under-priced. It is expected that the market price will increase to Rs.300,000 per marla in the next 3-4 months, and to Rs.500,000 per marla in 6-12 months.
2.2. Under-pricing Trend of Capital Smart City
This is not the first time that Capital Smart City has used the under-pricing strategy. Recently, the 3.5 marla residential plot was also launched at a lower price of Rs.430,000 per marla while the price of 5-marla residential plot is Rs.482,000 per marla. Therefore, the market price of the plot increased by Rs.30,000+ soon after launch.
2.3. New Rate of 2.5 marla commercial
The booking price of 2.5 marla commercial plot in Harmony Park Block was increased to Rs.5,550,000 on 24th June 2020 (an increase of Rs.327,000 per marla). Demand stayed high even after the increase of price and booking has been closed even at this rate due to shortage of supply.
In short, the sudden increase in profit amount on the 2.5 marla commercial plot is largely a result of the under-pricing strategy followed by Capital Smart City. So, this explains that there is no black market for these plots; this is simply demand and supply interacting in the market.
On an important note, investors who are familiar with this trend try to purchase the new products of Capital Smart City as early in the product cycle as possible (implying at or right after launch). This creates an instant demand as soon as any new product is announced.
3. Why is the supply so low?
By now, you must be wondering why is the supply so low that booking has already been closed? Some say that the booking for 3.5 marla residential is still open, even though at a higher rate. So, why is there a shortage of 2.5 marla commercial plots already?
3.1. Commercial plots are more scarce than residential
Well, you cannot compare apples with oranges. Commercial area only covers a small percentage of any residential housing project. The regulations for urban town planning permits only about 5% of area to be reserved for commercial use (See page 6 in the Punjab Private Housing Schemes and Land Sub-division Rules).
So, if there are 100 residential plots of 3.5 marla in Harmony Park Block, there will be about 7 commercial plots of 2.5 marla. This is why the quantity of commercial plots is usually lower than residential plots.
Clearly, we cannot compare the quantity of commercial plots with residential plots. Supply of commercial is inherently lower than supply of residential area.
3.2. Limited supply at a given rate
Capital Smart City has also been following another interesting yet natural strategy in addition to under-pricing. Those who have been following smart city since it’s launch must know that they have been increasing their booking price from time to time. It seems that the society increases the booking price after a certain amount of inventory has been sold.
It is possible that there will be some more of 2.5 marla commercial plots that the society will release later at a higher price. We’ll have to wait-and-see for that! Moreover, even if they are not holding any inventory, it is also likely that the society converts plots of some other category (or size) into highly selling category, 2.5 marla commercial in this case.
Thus, under-pricing strategy with limited supply and escalated demand have led to such overwhelming response of the market towards the newly launched 2.5 marla commercial plots by Capital Smart City, and the plots were already selling for a profit within a few hours after being launched.
Like we mentioned above, it is expected (projected) that the profit on these plots will increase to 6-8 lacs in the next 3-4 months (Rs.3 lacs per marla) and even further to Rs. 12-13 lacs with the next year, implying huge profits for investors.
If you are interested in some passive income, check out the booking details below!
Very limited number of plots have been launched, booking at investor rates is available. Fill out the simple sign-up form below for booking of 2.5 marla commercial plots by Capital Smart City.
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