Author
Gurbir Singh is an award-winning senior journalist with over 30 years experience. He has worked for BW Businessworld since 2008, and is currently its Executive Editor. His experience ranges from covering 'Operation Bluestar' in 1984 to pioneering coverage of the business of Media & Entertainment and Real Estate for The Economic Times.
There couldn't be better news for home buyers who are short-changed by builders. The Competition Commission of India (CCI), in a first-of-its-kind order has fined India's largest developer DLF Rs 630 crore (7 per cent of its average annual turnover for 3 years) for using its dominant position to build additional floors and delay its Belaire project in Gurgaon. The anti-monopoly watchdog is now considering proceeding against other realtors.Property buyers continue to be at the mercy of slick-talking space sellers. Most of the big developers sell flats on the basis of ‘super built-up' area that has nothing to do with the actual floor area available. Similarly, completion clauses are routinely violated by companies like Unitech have become the norm. In this context, CCI's order against DLF is a wake-up call for both builders and the government. The Centre, which for years has been mulling a regulatory body for the real estate sector to protect hapless consumers, must act before the pressure cooker blows up. STRICTLY BUSINESSBrands such as Canon, Coca Cola and Future Group who had designed ad campaigns around Sachin Tendulkar scoring the 100th century are now back-peddling furiously. Team India's disastrous England tour has given cricket a bad name, and no one wants a share of that, at least for now.(This story was published in Businessworld Issue Dated 29-08-2011)
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There are satellites and satellites. Some towns have been planned to serve specific commercial needs of the mother city, such as HITEC City in Hyderabad; and there are those that have naturally evolved from villages or small transport hubs such as Faridabad or Pimpri-Chinchwad near Pune. Here, we sample five typical satellite cities on India's fast-expanding urbanscape.Delhi's Two Sparkling SatellitesWhile the North Okhla Industrial Development Authority (Noida) was a planned greenfield development, Gurgaon has been spurred on by private developers such as DLF and Unitech. Noida, though just 20 km south east of Delhi across the Yamuna, is part of Uttar Pradesh's Gautam Budh Nagar district. Spread over 20,316 hectares, it was created as an integrated township with planned sectors. About 36 per cent was set apart for residences, sector 18 for markets, and another 175 acres for an industrial zone. There is also the 200-acre Noida City Centre under development that will serve as the city's hub with hotels and corporate parks.Gurgaon, 30 km south of Delhi, has a more chaotic history and developed from a rustic Haryanvi small town to a swanky corporate and mall city. Unlike Noida, its development was driven by acquisition of farm lands by developers who initially set up corporate offices and attracted companies to glass-clad buildings close to both the international airport as well as to the seat of power. Says Anshuman Magazine of broking house CB Richard Ellis: "Gurgaon is the last in a long line of satellite extensions of Delhi - first there was Vasant Kunj and then Rohini, and Dwaraka in the 1980s and 1990s." Gurgaon is a typical example of urban infrastructure being retrofitted after malls and corporate parks came up. The 1990s and early 2000s saw an influx of multinationals to Gurgaon, but infrastructure linkages came much later. Other civic facilities like electricity, water and public transport are a nightmare even now.Boom And Bust At Whitefield Whitefield is a name synonymous in the real estate lexicon with crashing property prices. The small village in eastern Bangalore made a name as a retirement enclave for the Anglo-Indian community in the 1980s. Its growth impetus came from being selected as Bangalore's first planned technology hub. Tata Elxsi was the first to move into Whitefield, followed by IT and ITES giants such as TCS, Accenture and Wipro.Developed by Ascendas, the largest and best known IT campus in Whitefield is the International Tech Park (ITPB). It went onstream in 1998, and hosts nearly 250 firms and 350,000 professionals. Spread over 26 acres, it is the first hi-tech park to create the integrated 'work and play' environment through its six posh towers. Supporting Whitefield's large IT community is a clutch of upscale hotels such as the Vivanta by Taj, Hilton Whitefield and Mapple Resorts.Expectedly, Whitefield saw a residential boom with all of Bangalore's developers frenetically constructing homes for what they saw as a bottomless IT market. The result: heavy over-supply. With the IT industry at a standstill during the 2008-09 recession, Whitefield was among the worst hit. At one point, prices in the enclave fell 40-50 per cent from the highs of Rs 4,000-4,500 per sq. ft. Currently, residential housing has recovered to a Rs 3,500-4,000 per-sq. ft range, but still far below the boom-time highs.break-page-breakNavi Mumbai: A Dormitory Town New Bombay, or Navi Mumbai as it is known now, has been in gestation since 1964, but has prospered only in the past decade. Planned as a 'Twin City on Water' with several nodes linked along the railroad across the harbour, it covers about 345 sq. km. spread over Raigad and Thane districts. It probably has succeeded in absorbing 2 million or more people that may have gone on to crowd Mumbai, but most other targets have remained on paper. Rahul Mehrotra of non-profit Urban and Regional Development Institute (UDRI) notes the government never moved to Navi Mumbai as was originally planned. This deprived the new city of the core catalyst that would have propelled autonomous growth. Ultimately, Navi Mumbai remained dependent economically on the mother city, becoming a 'dormitory' suburb with trainloads of commuters shuttling in and out of Mumbai every day. "With prices touching Rs 10,000-12,000 a sq. ft, even Navi Mumbai has become out of reach for middle classes over the past 5-6 years," says UDRI's Pankaj Joshi. Sirish Patel, structural engineer and one of the original trio of planners that conceived Navi Mumbai, told BW he would give the satellite city 3 marks on a scale of 10. "The only area it has succeeded in is it is self-financing through land sale," says Patel. But Mehrotra grudgingly concedes: "New Bombay, yet, holds the hope for structured growth in the Mumbai Metropolitan Region." Rajarhat, Kolkata's Modern HubSalt Lake City in Kolkata was conceived in the 1960s as a 3,000-acre township for middle-class housing and an infotech hub. It was built by filling up tanks of old fisheries by dredging slurry from the Hooghly river. Then came the bigger and better Rajarhat Newtown in the north-west of the city. Today, Rajarhat is a planned layout of 7,625 acres, nearly two-and-a-half times that of Salt Lake City. It integrates high-quality residential complexes, an IT and electronics hub, and malls and retail outlets. For Kolkata, ever suffering from traffic snarls, Rajarhat has given an alternative route to the airport, giving it a geographical advantage.Rajarhat has been carved out with four action areas stretching from Salt Lake Sector V to the Netaji Subhash Chandra Bose Airport. Land was allotted to developers such as DLF, Bengal Shrachi, Ambuja Realty and Bengal Peerless. City Centre: Newtown, for instance, has a 400,000-sq. ft mall by Ambuja Realty that has a catchment area spread over Kolkata's outskirts of Ultadanga, Baguiati, Dum Dum, Barasat and Birati. Axis Mall, by Bengal Peerless, targets the prospective 200,000 IT professionals.The recession hit real estate activity hard and many of the 7-8 malls in the pipeline have been converted to commercial space. While many ser-vice and office complexes have got operational, the success of the township will depend on how fast residential projects can go live. Retail sales are dependent on a high density of high-income, residential population, and it remains to be seen if Rajarhat will become another Gurgaon.gurbir(dot)singh(at)abp(dot)in(This story was published in Businessworld Issue Dated 20-06-2011)
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Maharashtra chief minister Prithviraj Chavan is determined to reengineer Mumbai. Following the Adarsh scam, Chavan has the mandate from Congress president Sonia Gandhi to clean up the real estate sector, and he seems to be taking his job seriously.Over the past few months, a series of decisions considered ‘soft' on developers have been rolled back. The controversial public parking policy that allowed builders to build multi-storey public parking lots in exchange for 50 per cent additional floor space index (FSI) has been scrapped recently. The policy, introduced in 2008 by the previous chief minister, Ashok Chavan, had cleared 28 projects. The beneficiaries of this policy included all the big developers including Indiabulls, DB Realty, and the Lodhas, but fortunately only five of them took off before the axe fell. A new parking policy has been introduced last month, but it restricts vertical development and ensures the government gets a 40 per cent share of the additional revenue generated.Further, two huge slum redevelopment projects — in exchange for equivalent FSI for saleable realty — have been unilaterally cancelled. The Malvani project had a layout of over 100 acres, while another in Chembur covered over 60 acres. Both these projects were cleared under the Section 3-K(1) of the Maharashtra Slum Areas Act, 1971, which allows the state government to award a slum redevelopment project to a builder on the grounds of "public purpose" without seeking the normal statutory consent of 70 per cent of the slum families. TOUGH ACT: After the Adarsh controversy, Maharashtra chief minister Prithviraj Chavan is tightening real estate laws (Bloomberg) Not surprisingly, the recent Medha Patkar agitation demanded the repeal of this controversial section and the government has agreed to review it. In another move, Chavan has also put on hold the policy of allowing builders to go vertical, squeezing slum dwellers into multi-storey buildings, while helping themselves to large swathes of slum lands. Chavan is in favour of a height cap of 10 floors.To give teeth to his policies, the chief minister has inducted a set of senior bureaucrats with clean records. One of them, Subodh Kumar, the new municipal commissioner, has taken a dim view of builders ‘loading' their building projects with free-of-FSI embellishments such as canopies and balconies, which are then sold as part of the apartment as ‘super-built-up area' to unsuspecting customers. Referring to the trend of regularising violations by builders through the use of discretionary powers endowed on the municipal commissioner, Kumar told BW: "We are rewriting the rules wherein I will be the first to abolish my own discretionary powers. The new norms will be clear and nobody will have the scope to bend them."But beyond the clean-up campaign, Chavan is a worried man. He is grappling with the problems of a financial capital that is slowly dying because high real estate prices have over the years made it an unviable destination.Chavan recently admitted as much: "The population of the island city has actually fallen. There are jobs that can fetch you Rs 5 lakh a month in Mumbai, but these executives can't find a home easily. Many of them find it easier to locate careers in Bangalore or Hyderabad."Ironically, the Mumbai clean-up has made real estate even scarcer as building permissions have dried up. Chavan is keen to get a mass housing policy going, which will include developing affordable rental housing. But till this pans out on the ground, the dilemmas of an unaffordable city will continue to hound him.(This story was published in Businessworld Issue Dated 13-06-2011)
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The recommendations of the high-powered Expert Committee (HPEC) on Urban Infrastructure, set up by former urban development minister Jaipal Reddy, have to traverse some more distance. Constituted in 2008, HPEC submitted its findings last month on the problems of leap-frogging urbanisation and the financial measures necessary to make our cities more efficient and liveable. Kamal Nath, the current minister, has asked the committee to "revisit the report and come up with a concrete roadmap to help implement its recommendations".The HPEC, mandated to estimate investment requirements for urban infrastructure for the next 12 years, was headed by Isher Judge Ahluwalia, chairperson of Indian Council for Research on International Economic Relations (Icrier), and included Nasser Munjee, deputy chairman, Infrastructure Development and Finance Company (IDFC); Hari Sankaran, managing director, IL&FS; and P.K. Srivastava, joint secretary and mission director of Jawaharlal Nehru National Urban Renewal Mission (JNNURM).The HPEC doesn't sound the normal doomsday warnings. Figures show that India — with 30 per cent of its population living in towns and cities — is far behind other developing markets such as China (45 per cent) and Brazil (87 per cent). Unmistakably, though, the growth of Indian cities is striding forward. The number of cities with more than one million people will go up from 50 to 87 by 2020, and India's urban populace will be 600 million by 2031. HPEC sees cities as the future engines of growth. "India's economic growth momentum cannot be sustained if urbanisation is not actively facilitated," and predicts that as much as 80 per cent of the country's GDP will come from the urban sprawls by 2031.The report's recommendations are divided into three parts: First, investing Rs 39.2 lakh crore in urban infrastructure over 20 years with the bulk targeting development of urban roads, water and waste management and for re-housing slums. It also pleads for giving much more importance to urban planning and seeks a hike in investment from 0.7 per cent of GDP in 2011-12 to 1.1 per cent by 2031. Next, it pitches strongly for strengthening of governance particularly of the urban local bodies. The only way urban transformation will happen is when the current bungling and financially bankrupt municipal and local bodies are souped up with efficient and autonomous administration, improved tax collection, and the ability to raise funds from the market for specific programmes and projects.Finally, the Ahluwalia report argues for a programme-based roadmap instead of the current piecemeal project-based approach. In this context, the analysis of the JNNURM implementation is interesting. Kicked off in 2005, the JNNURM was allocated Rs 66,000 crore by the government of India. Of this, less than half — Rs 28,650 crore — has been disbursed so far, and, of the 526 infrastructure projects sanctioned, only 84 have been completed.Asked to comment on Nath referring back the Urban Infrastructure report to the committee, HPEC's chairperson Isher Ahluwalia told BW: "The minister asking for a roadmap is a compliment. The work of the Committee is over but we will constitute a small working group and submit a ‘roadmap' in a month or so."The committee has in fact put forward specific reforms and proposed delivery structures. These include creating an urban affairs ministry and an accountable and empowered Mayor at the level of the urban municipal bodies, pooling of taxes and resources between local bodies, and a suggestion for training 300 IAS officers annually as dedicated ‘urban specialists'.(This story was published in Businessworld Issue Dated 16-05-2011)
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For real estate companies, it has been an unusually bad year. Poor sales, few new launches leading to poor ‘booking' income, and a race against time to reduce high debt have defined the year. In case of some of the big realtors such as DLF, even while total income increased in FY 2011, net profit declined on poor margins and high input costs.DLF reported a consolidated total income of Rs 10,144 crore in 2010-11, up from Rs 7,851 crore in the previous financial year. However, net profit fell 4.7 per cent to Rs 1,640 crore from Rs 1,720 crore in the previous year. For the past quarter, net profit fell 19 per cent to Rs 345 crore as the company adjusted Rs 475 crore towards "one-time cost reset due to input price inflation". The company admitted sales volume had declined 20 per cent to 10 million sq. ft in FY 2011 from 12.5 million sq. ft in the previous year.For Unitech, too, total income rose 9 per cent to Rs 3,187 crore for FY 2011, but net profit slumped by over 16 per cent to Rs 581 crore from Rs 695 crore in the previous year. Another big Delhi realtor, Omaxe, pushed up consolidated sales from Rs 1,001 crore to Rs 1,522 crore through FY 2011, but net profit plummeted nearly 18 per cent to Rs 93 crore from the previous year's Rs 113 crore. Mumbai-based realtor HDIL performed marginally better. The group's annual top line grew 24 per cent to Rs 1,900 crore, while net profit went up 45 per cent to Rs 823 crore for the year ended 31 March.The fourth quarter has proven to be the biggest drag with a slowdown in sales volumes and high input costs squeezing margins. According to an Enam Securities report on the Q4 performance of realtors, revenues for the January-March quarter of 2011 for most developers (with the exception of Godrej Properties and Indiabulls Realty) declined 10-30 per cent due to slowdown in sales. Simultaneously, high input costs hit margins in the range of 2-10 per cent. DB Realty, whose credibility has taken a knock with its promoters Shahid Balwa and Vinod Goenka jailed for their role in the 2G spectrum scam, saw its Q4 profit-after-tax sink to just Rs 8 crore on sales of Rs 392 crore for the quarter. Click here to view enlarged image Interestingly, there has been some spin-off effect from the slowing realty sector on engineering, procurement and construction (EPC) companies, which came under severe earnings pressure in the latest quarter. An analysis by Angel Broking of construction companies showed that except for Sadbhav and MPL, which showed robust growth in net profits, most others including Simplex reported a fall in net profits. "Margin pressure due to high commodity prices and spiralling interest cost resulted in disappointing earnings despite decent top-line growth," the report said.Investor confidence, or the lack of it, has been ahead of the results. In the past 18 months since January 2010, the BSE Realty Index has plunged 44 per cent, compared to a 5 per cent rise in the BSE Sensex. "The market was expecting capital infusion from operations would help improve the financial health of real estate companies. But failing to sell sufficient stock has led to a poor show by these companies," says Varun Goel, head of equity-PMS at Karvy Private Wealth. Property pundits feel the paralysis in the market may pan out over another 3-4 quarters before sales begin to move. "There is sufficient demand in the market, but property buyers are waiting for a 15-20 per cent correction in prices, while sellers aren't willing to bring down prices," explains Goel. Governance issues have now become evident after a string of scams, and that has further eroded market confidence.(This story was published in Businessworld Issue Dated 20-06-2011)
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Ugandan businessman Hardip Singh's father did the sensible thing. He had four sons, but just one great asset: a luxury bungalow in south Delhi's posh Friends Colony. He sold it a few years ago to the Jhunjhunwalla family and bought four large 1,000 square-yard plots for each of his sons in Noida's in-demand Sector 15. All the four now own modern, resplendent homes with well-manicured lawns and thank their father for his foresight. Hardip and his brothers are not the only ones wanting to escape the crowded core of India's big cities. The country was initially slow to urbanise, but the early trot is now turning into a gallop. In 1951, there were only five metropolitan cities with a population of over one million. By 2001, there were 35, and their share in the urban population increased from just 19 per cent to 38 per cent. Today, there are 50 big cities with more than a million people, and there will be 87 by 2031. The urban-rural ratio is also changing rapidly with 35 per cent of the country now living in urban sprawls, and the figure is expected to touch 45 per cent by 2031.More importantly, cities will propel the country's future growth. As the 2010 McKinsey's report on India's urbanisation says, over 2010-30, Indian cities will create 70 per cent of all new jobs, and these jobs will be twice as productive as those in the rural sector. But urban governance and infrastructure development in the form of housing, water supply and roads do not match the big demographic shift towards cities. On an average, more than 25 per cent of most Indian cities live in slums. In Mumbai, the latest National Sample Survey data suggest 60 per cent of its populace live in slums. To give a better quality of life and to develop planned 'counter magnets' to over-crowding cities, the concept of satellite towns came into the planning lexicon in the 1970s. Today, there are hundreds of satellite towns that dot the hinterland around big metropolises. Some of them are old transport nodes and habitations that have naturally grown, like Faridabad near Delhi or the Virar-Vasai belt in Mumbai. Others have been specifically planned, such as Noida, Navi Mumbai and Rajarhat in Kolkata. Have they worked? Have they given new inhabitants a better life?Counter MagnetsThe natural sequel to the growth of capitalism and concentration of manufacturing and services in central hubs is the concentration of people in towns and cities. Urban expansion takes the form of radial growth in concentric rings around existing cities when there is a hinterland available to 'colonise'. Simultaneously, too, small towns and large villages bloom. They abut metropolises as centres of industry or 'dormitory' adjuncts to the mother city. Faridabad and Ghaziabad, once sleepy villages, became important 'satellites' to Delhi as they rapidly expanded as industrial centres. So were Pimpri and Chinchwad to Pune. For Mumbai, the expansion was initially northwards. Villages such as Kashi Mira and Virar became satellite towns as expanding families left their one-room tenements in Dadar and Central Mumbai to relocate to larger flats 60 km away.But this was a town planner's nightmare, as satellite towns sprouted without infrastructure and layouts. "This has been the predominant form of expansion. First build, and then retrofit the town with roads and civic facilities," says Pankaj Joshi, executive director of the Urban Design Research Institute (UDRI) in Mumbai.To introduce some method to the madness, planners began pushing for planned satellites around big metropolises in the 1970s. The fourth and fifth Five-Year Plans (1969-79) first envisaged planned smaller towns to prevent growth of population of large cities. The concept of 'New Bombay' - now Navi Mumbai - was born in 1964 with architects and planners Charles Correa, Sirish Patel and Pravina Mehta proposing the 'twin city on water' on the eastern mainland as a counter-magnet to the rash and unplanned growth towards the north. More recently, in 2007, the Hyderabad Urban Development Authority (HUDA) put plans in motion to create 22 satellite townships along the proposed 162-km Outer Ring Road. Work on two - Tellapur in Medak district, and Srinagar in Ranga Reddy district - has kicked off. The Karnataka government, in 2006, announced five satellite towns to decongest Bangalore. Spread across 5,000-15,000 acres, these are located at Nandagudi in Hoskote taluka, Kasaba and Bidadi in Ramanagaram and Solapur and Sathnur in Kanakpura. They will be connected with an Outer Ring Road beyond the Peripheral Ring Road. "It is perpetually the never-ending last mile," urban planner Keller Easterling once said on the radial expansion of satellite cities as nodes on a multiplying number of ring roads. Satellite Wars As satellite cities proliferate and become unmanageable, there is a raging debate on whether planned 'satellites' should be the way forward or should development take the 'natural' course of nudging along developing villages and towns on metropolises' periphery with plans and funds. Joshi says Navi Mumbai was a set of dead enclaves in the early 1990s, and grew only after the railway corridor came into existence. "The planning perspective should have been to develop old towns such as Bassein and Virar. It is an inversion of values. You should conceive a planning environment for these areas, which have a marked potential for growth," says Joshi. Echoing him is P.K. Das, an architect who is planning the Adani Port City near Jamnagar. He says planned satellite cities such as Navi Mumbai have taken away funds and planning focus from 'natural' nodes such as Panvel and Pen. "Rather than the mother city engulfing the outer hinterland, you should allow existing nodes around the metropolis to grow with decentralised plans, and the state providing transport links and budgetary support."Satellite towns are successful if they provide quality services that equal the mother city and have good transport corridors. Gurgaon was 30 years in the making, notes Anshuman Magazine, CMD of property consultant CB Richard Ellis. It has been seen as a success only in the past six years as it offered the middle class everything from malls to massages, he says. "It started with the DLF Corporate Park promoting the concept of 'walking to work'." But then, Maraimalai Nagar near Chennai lay dormant for decades as it had no schools or hospitals of high standards, while Kalyani, the last stop on Kolkata's Sealdah corridor, did not succeed as it had no quality schools though it boasts a university.Planned townships often have not been able to take off as they have run into farmers' agitations against acquiring cultivable land. Like the protests on the Agra Expressway, Chennai too faced protests against its 'Thunai Nagaram' (satellite city), and the DMK government had to drop its 'de-congestion plans in 2006. Three satellite towns reappeared in Chennai's second draft master plan along the Old Mahabalipuram Road (OMR), currently a thriving commercial and residential hub, the Outer Ring Road and the Poonamallee Road. But the Chennai Metropolitan Development Authority made it clear it would only be providing the infrastructure, and it left the land acquisition to the private sector. break-page-breakKolkata's Rajarhat, too, had its share of controversies as it was also built on farm lands. The media was splashed with charges that CPI (M) operatives in the know of the acquisition bought land from unsuspecting farmers at Rs 1.2-1.8 lakh an acre, and sold it at a five-fold profit for Rs 6 to 7.2 lakh an acre. "The problem is satellite development is seen as a real estate opportunity. Planning becomes a tool for that, and not as a matrix for human development," notes Das.From NoidaVillage To NoidaVilleMost urban think tanks are cool to the idea of satellite cities. Chetan Vaidya, director of the National Institute of Urban Affairs (NIUA), says they have not been successful as demographic tools. They have not been able to stop migration into mother cities. But Vaidya admits "Gurgaon, Noida and Navi Mumbai are partially successful as real estate developers of Delhi and Mumbai did not allow access to affordable housing." He, however, says that PPP models such as the town planning scheme in Gujarat are more successful than the model of large-scale land acquisition and development in Navi Mumbai or Noida. In Ahmedabad and Surat, landowners became willing partners in town-planning as they knew land prices would shoot up the moment an urban layout was notified. Government investment has been, therefore, limited to roads and infrastructure development. Vaidya also says that instead of looking for counter magnets, governments should promote medium-sized cities and focus on governance in metropolises.But Magazine says satellites such as Gurgaon and Navi Mumbai have stemmed migration, kept real estate prices in check in metropolitan centres and reshaped the lives of the urban middle class for the better. "A couple in Gurgaon can go to work together, and in the evening enjoy a round at the bowling alley. You might see a cow on the road, or a few potholes, but the lifestyle is no different from Dubai or London." This excerpt from a post by 'Aparna' on noidascoop.com sums up the middle class sentiment: "When I dated my husband, I liked everything about him except that he lived in Noida. In 1994, when I came to Noida nothing was available. We had to go cross the Nizamuddin bridge and shop at South Ex (in Delhi). I felt isolated, lonely. But slowly I started going for Atta (market) and (Sector) 18. Every week, there was a new shop, an eatery, hospitals, movie halls, hotels… Now, the latest malls are just icing on the cake. Life has become so comfortable that I don't want to move out. Our lovely city is converting from NoidaVillage to NoidaVille!"On the real estate front, property pundits point out that had satellite town, not been there to ease the pressure of short supply, prices in the inner core of the city would have risen astronomically. According to CB Richard Ellis, Gurgaon and Noida in 2010 contributed 9 million units to the housing market while Navi Mumbai, Thane and Mumbai's northern satellites supplied an additional 9-10 million units. In Bangalore's Whitefield and Electronic City, new supply was about 7 million homes.Again, relative prices in satellite towns are cheaper than in similarly positioned locations in the mother city, giving consumers a viable budgetary option. For instance, in Navi Mumbai's Panvel or Khargar, prices average around Rs 4,500-6,000 a sq. ft. In comparison, at crowded Borivali and Kandivili in north Mumbai, new bookings cost Rs 8,000-12,000 per sq. ft when the rail travel time is about the same. But that is just the problem some planners are critical about. Successful satellites have become plush suburbia for the middle class with little space or affordability for the poor. Pointing to gated communities such as the NRI Complex in Navi Mumbai and ATS village, Parsvnath and Eldeco colonies in Greater Noida, Das says: "Leave it to the market, and the builders will only build gated communities for the rich." Engines Of GrowthDespite these doubts, satellite development has become an integral part of urban planning. HDFC chairman Deepak Parekh in his 2009-10 company report said: "Satellite cities have to be built as connected cities, having sophisticated transport networks like trans-harbour links, bridges and underground links." Guidelines by the Union Ministry of Urban Development for urban infrastructure development in satellite towns note: "There is an imperative to plan for development of new townships/satellite towns around million-plus large cities. The satellite towns/ counter magnets should be spatially separated from the mother city." The guidelines name 35 key cities for 'satellite development' and propose initial funding from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for creating 300,000-500,000 (populace) towns as satellites for million-plus cities and towns in case of mega cities with population exceeding 4 million.As part of the planning for the Mumbai Metropolitan Region (MMR) that encompasses a humongous 4,355 sq. km. of hinterland around the island city spread over four districts, nine municipalities and over 900 villages, a crucial project on the anvil is the Virar-Alibaug transport corridor. Proposed by Surbana Consultants, who have anchored Singapore's urban planning, the corridor will run 140 km and will aim to develop 5-6 satellite towns as nodes along the corridor. The new towns proposed are around the existing towns of Bhiwandi, Kalyan, north and south of Panvel.India is better positioned than other developing economies with much of its urbanisation still to come in the future. Just 30 per cent of Indians are living in towns and cities, compared to China (45 per cent), Indonesia (54 per cent), Mexico (78 per cent), and Brazil (87 per cent). But time is obviously catching up. By 2031, the urban population will be touching 40 per cent or around 600 million. The United Nations projects that urban India will be larger than its rural cousin by 2045. Talking of creating economically vibrant, inclusive and efficient cities, Union Urban Development Minister Kamal Nath said he saw them as "engines of economic growth". Hopefully, this will not remain just another pithy statement for intellectual gatherings.gurbir(dot)singh(at)abp(dot)in(This story was published in Businessworld Issue Dated 20-06-2011)
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The Maharashtra government has indicated that it will try and enforce the Maharashtra Housing (Regulation and Development) Rules, 2014 before the coming Assembly election in the state. However, with the Code of Conduct due anytime now, it may be a difficult task. If the Prithviraj Chavan government does succeed in enforcing the Rules, Maharashtra will become the first to bring in a housing regulator. The state government has sought objections and suggestions from the public till 10 October, following which the provisions are likely to be notified. The Rules are part of the Maharashtra Housing (Regulation and Promotion of Construction, Sale, Management, and Transfer) Act that was passed by the legislature in 2012 and provides for the setting up of an independent regulator. However, the Union Ministry of Housing and Poverty Alleviation did not give clearance on the plea a central act was under consideration. In December last year, the Housing minister Girija Vyas finally cleared the state act after the Maharashtra CM Prithviraj Chavan agreed to incorporate the more progressive provisions of the central act, once it was passed. The rules, once notified, will empower the regulator to bring to task developers who fail to deliver in terms of their sale contracts. For instance, builders who are unable to complete their projects can be forced to make way for the setting up of an entity constituted by 60 percent or more of the buyers, who can take possession and complete the project. The rules provide an elaborate registration process for builders. Without registration, advertising and selling projects will be prohibited. Registration will involve full disclosure of title, layout and period of construction; and these details will be available on the website of the Regulator. The regulating authority in the state act will be headed by a retired government official of the rank of principal secretary, who will be assisted by two member-experts. The authority will have powers to deregister defaulting developers and ban them from launching new projects. It can also impose fines of up to Rs 1 crore. The Act also has the provision of an appellate tribunal, to be headed by a retired High Court judge, assisted by 2 other members. The fast-tracking of the Housing Regulator for Maharashtra by the Congress-led Prithviraj Chavan government is obviously being done with an eye on the assembly elections in November, this year. The Congress-NCP government, clearly on the back foot because of an ascendant BJP, is leaving no stone unturned to show they are serious about issues that afflict the Aam Admi. But with the Code of Conduct likely to be notified in the third week of September, it is unlikely that the Rules governing the Housing Regulator can be notified before the assembly elections. No one can however say that the Congress government did not bat for the hard-pressed home buyers. gurbir@businessworld.ingurbir1@gmail.com
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Finance minister Arun Jaitley’s budget proposal must have been music to the ears of Virendra Mhaiskar, chairman and managing director, IRB Infrastructure Developers. Development of roads, especially the Golden Quadrilateral, and the vision of 100 ‘smart’ cities using the infrastructure of arterial roads were presented as focus areas of the new government. Though not a huge outlay in the business of infrastructure, an allotment of Rs 7,060 crore, specifically for the development of modern, smart cities in the current financial year, is a sign few can miss. For IRB — a holding company for a clutch of subsidiaries and special purpose vehicles (SPV) engaged in road construction, build-operate-transfer (BOT) concessions, real estate and even hospitality — good days are ahead, if it plays its cards right. Since 2009, the company has recorded great growth. Between 2010-11 and 2013-14, its net sales revenues expanded almost ten-fold from Rs 267 crore to Rs 2,212 crore. However, growth slowed in the last fiscal. IRB is a fairly young company. Incorporated only in 1998, it speedily made a mark by pioneering the BOT model of highway and road development. In fact, the first BOT venture in the country was undertaken by IRB before incorporation in 1995, when it executed the 25-km-long Thane-Bhiwandi Bypass (Phase I). The company has two key streams of revenue. First, from construction and development contracts. The second is BOT projects, which are again mainly roads. Though the ratio of revenue from construction and BOT concessions is 60:40, it is the BOT model that IRB has mastered. It has also proved lucrative for IRB. In its BOT business, some of IRB’s milestones include the 196-km Ahmedabad-Vadodara project of the National Highways Authority of India costing Rs 4,880 crore in 2011. More recently, it was awarded three national highway projects for the Solapur-Yedeshi (Rs 1,500 crore), Yedeshi-Aurangabad sections, as well as in Kaithal on the Rajasthan border. Over the years, IRB has developed one of the largest BOT portfolios in the country, with a total length of over 9,000 km. It holds a market share of about 11 per cent on the Golden Quadrilateral. The company was lucky to have slotted its initial public offer (IPO) in 2008 before the recession hit, raising Rs 945 crore. There are some interesting factors that make IRB a high-growth company. It has very few competitors in the large project category. It has a healthy order book position of Rs 11,973 crore, though it has to still achieve financial closure on many of these projects. Around 16 projects are expected to begin operations during the current fiscal. The company has managed to keep its operating margins at a steady 30 per cent for its construction projects. IRB has also been actively diversifying to related areas of business. Principally, it is looking at real estate development alongside the Mumbai-Pune Expressway. It has, over time, acquired around 1,200 acres along the arterial road and will be kicking off more acquisition and realty projects soon. It has also successfully bid to build an airport in Maharashtra’s Sindhudurg district. The Maharashtra Industrial Development Corporation (MIDC) has handed over 263 hectares of land for the Rs 350-crore project, and the company has paid Rs 21 crore for the 95-year land deal and concession. There are, however, some serious issues of concern that the company may have to address. As can be seen from the annual performance figures, FY2014 has not been particularly bright for IRB. Net sales revenues grew by just 8.8 per cent, the slowest in four years. The company will, therefore, have to ramp up its business operations both in the number of live projects as well as kicking off new verticals. Mhaiskar did not respond to BW | Businessworld’s queries. As things stand, IRB is overly dependent on Maharashtra (41 per cent) and Gujarat (23 per cent), which together account for 64 per cent of its BOT projects. The concessions for road building and toll revenue are extremely ‘political’ and there is a major move in Maharashtra today for ending road tolls because of the popular upsurge against the charge. A regime change in Mumbai or Bangalore can reverse a healthy order book position overnight into a drought. It is not known whether the company has taken adequate steps to counter these trends. (This story was published in BW | Businessworld Issue Dated 11-08-2014)
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Mumbai had many things going for it in the year gone by. Several infrastructure projects were launched — or are close to opening. The 14-km Eastern Freeway that runs from South Mumbai to the eastern suburb of Chembur has opened, providing a quick exit and entry point to those commuting by car from the satellite towns of Navi Mumbai, and the more distant Pune. Then, the much-needed flyover connecting the suburbs of Santa Cruz and Khar to the Western Expressway and the airport was finally inaugurated. The first leg of both the monorail network and the Metro is complete and they are ready to go. In the first phase — Chembur to Wadala — the monorail will have a run of 9 km. The Metro’s first phase, Versova on the coast to Ghatkopar, will create the first east-west corridor for the city. Having missed six deadlines, the Santa Cruz-Chembur Link Road, a double-decker flyover — a 6.5-km link between Mumbai’s eastern and western suburbs — is now ready. These projects, worth some Rs 6,500 crore, have helped keep Mumbai at No. 2 in the City Competitiveness Index of 50 cities across India. Delhi beat Mumbai by a whisker. While Delhi scored 69.89, Mumbai was just a fraction of a point behind at 69.88. Expectedly, Mumbai topped in financial infrastructure and in terms of access to high quality business inputs, including natural and human resources and capital availability. However, it fell behind in ‘administrative’ performance — a poor show at No. 26; and was also marked down in ‘physical’ outlook, where it stood at No. 7. The old ‘inner city’, bounded by the sea, has a sprawl of just 603 sq. km and houses more than 12 million people. The key to the city’s survival and growth lies in connecting to the hinterland by a network of roads and rail corridors; to the new towns in the extended metropolitan region. A crucial project to serve this end is the Sewree-Uran Sea Link, a 22-km sea bridge connecting the district of Raigad to the city. It will also provide access to a new airport at Navi Mumbai. Within the city, where long commutes are a way of life, the Rs 24,340-crore Metro phase-II will connect Nariman Point in the south to Bandra-Kurla Complex — two key commercial hubs — and then go north to the international airport and Marol industrial centre. Expected to carry around 22 lakh commuters daily, it will ease the pressure on Mumbai’s overcrowded trains. But, nobody has a clue to when the project will start — and its completion date. Mumbai’s nearly 150-year-old industrial past has given it a work culture and access to human resources that can scarcely be rivalled. However, for want of investment and administrative bungling, the city has seen little modernisation. The roads are a mess and every monsoon the city shuts down. Mumbai’s famous storm water drains are of British vintage. Good residential property is exorbitantly expensive. “A lot of talent is leaving this city because the quality of life is poor and too expensive,” admitted Maharashtra chief minister Prithviraj Chavan in an earlier interview with BW|Businessworld. Key to building a modern city is providing good transport infrastructure, including mass rapid public transport and a network of roads and bridges that allow people to commute easily and quickly. And, expanding the urban sprawl to take the pressure off the city’s inner core. Can the government come up with a workable plan for affordable housing in satellite towns? There is a plan for a multi-modal corridor, 126-km long, that will run in a semi-circle, skirting the city, from Virar in the north to Alibaug, south of Mumbai. It will connect the towns of Bhiwandi, Kalyan, Dombivili and Panvel. The Rs 10,000-crore corridor will have eight lanes; with dedicated lanes for buses, two-wheelers and non-motorised transport. The corridor will become a magnet for alternative and modern city development, the government is hoping. Again, nobody knows if the plan will materialise and, if so, how long it will take for fruition. gurbir1@gmail.com twitter@stayalive (This story was published in BW | Businessworld Issue Dated 27-01-2014)
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Most people discover the joys of life amidst their families, their hearth and homes. And they spend half their lives in the warmth of their homes. Considering this, to splurge on creating a nice, exclusive little world for themselves is not such a bad idea. Those who have the money can do it with aplomb; luxury homes can be built or bought off the shelf. Those who don’t have the money slave and save, and hope to get there; others have to settle for leafing through smart, gleaming brochures. And dream.So how does one define a luxury home? Is it determined by the cost? Yes, cost is one crucial factor. Builders define a luxury home in Mumbai or Delhi as one that costs Rs 5 crore or more; Rs 3 crore or more in the other metros. “More money buys you a larger space, which is necessary for luxury living,” says Anshuman Magazine, CEO of property consultancy CBRE South Asia. “But that is not all. A luxury home is defined by many things — locality, the quality of design and fittings, the level of maintenance and the character of the community around.” Providing air-conditioned apartments in gated communities with a gym and pool, Magazine says, is passé. Things have moved on and the luxury hunter wants his apartment to be automated: where lights come on when he enters his bedroom; and in which he can control his television and curtains by tapping on his iPad. “We have moved ahead from providing just nice marble flooring,” says Abhisheck Lodha, managing director of the Lodha Group. Over 50 per cent of the group’s Rs 8,700-crore revenues come from luxury sales. “We have evolved to the next level where details of design and interiors are crafted to indulge the senses,” he adds. The Lodhas were among the first developers to begin selling branded homes with elegant interiors — an Armani tag for their World Towers in Mumbai, Philippe Starck for their New Cuffe Parade project and Jade Jagger for Fiorenza. What is in it for the builders? Anuj Puri, CEO of property consultants Jones Lang LaSalle (JLL), estimates the “market for super luxury does not represent over 5 per cent of the overall residential market”. However, a class of builders is focusing on the luxury segment because of the higher returns. “Quality sells. Luxury homes give us between 30 to 50 per cent premium over the market,” asserts Lodha. NO LIMITS: Akshaya Homes' Abov in Chennai is a 38-storey tower with just 31 apartments of an indulgent 6,700 sq. ft eachBut in a slump, doesn’t the larger ticket size make marketing more difficult? Notes Shveta Jain, executive director of residential services at broking house Cushman & Wakefield, in a recent report: “The share of high-end segments in new launches has increased... in spite of stagnant demand. It is largely due to aspects like high land prices and development cost that developers have chosen to go for higher ticket size projects even while demand is more for affordable and mid-end segments.”The Luxury Of SpaceLuxury homes are defined by a mix of many attributes, but at the centre is providing the user the freedom from urban claustrophobia. One such project is Chennai’s Abov by Akshaya Homes, promoted by T. Chitti Babu. “Luxury living in Chennai was thought of as a build-it-yourself bungalow with a large garden. A house on a 1,500 sq. metre plot in Poes Garden would cost Rs 70 crore,” says Babu. “So, I decided to give the same luxury at one-tenth the price.”Babu’s project is a 38-storey tower in Chennai’s OMR area. It has just 31 apartments, each of them an indulgent 6,700 sq. ft, and one apartment to a floor. Each apartment has it’s own plunge pool, with a larger community pool on the ground floor. The club house, on the 34th floor, and the Ocean Bar, offer a panoramic view of Chennai. Each home is fully loaded. It includes touchpad-operated controls, 10 years of maintenance provided by the developer, exclusive suites for guests, a private movie hall, and even a grand piano in the lobby. Price tag: Rs 6.5–7.2 crore. break-page-break“Ten years ago, apartment culture was unknown to Chennai’s rich. Luxury apartments are a recent phenomenon,” says Babu. He has sold 11 of the 31 apartments and expects to complete the project by 2015. Babu is set to launch his next project with apartments priced in the Rs 15-20 crore range. The Kingfisher Towers in Bangalore, developed by the Prestige Group on Vittal Mallya Road, has a similar offering of space-in-the-sky with 8,500 sq. ft apartments, each with just four large, luxurious bedrooms. The community of 64 flatowners will spread themselves out over five floors of parking, a swimming pool on the 15th floor, clubhouse facilities on the 6th floor, and round-the-clock concierge services. The cherry on the project is the Mallya family occupying all 50,000 sq. ft of the top two floors. “The exclusivity of just 64 apartments among the who’s who has driven up prices to Rs 25 crore a flat,” says CBRE’s southern head Ram Chandnani. The Lodha Group, having bought the famous 17-acre Mumbai Textiles Mills from DLF for Rs 2,727 crore, has also decided to provide ‘bountiful space’ as the unique selling point for its new project, The Park. “We have learnt from London and New York where the best residences abut Hyde Park and Central Park,” says Lodha. Community spaces include a one-acre children’s park, large gymnasiums designed by Evander Holyfield, a cricket ground and even a spice garden. The pricing is equally stunning. The smallest two-bedroom flats start at Rs 3.5 crore, the 5,500 sq. ft ‘town houses’ will cost Rs 25 crore and the independent 1,000 sq. yard bungalows will touch Rs 100 crore and more. Branding Adds ValueWhat was started by Lodha and a few others has become a stampede in the luxury segment. Branding interiors or entire apartments with tags such as ‘Casa Armani’ has found good response. Those who did not have the patience to get their interiors done themselves felt western designers added elegance and modernity to homes. It gave them a ‘status address’ too. Branding around sports and golf-themed projects are an increasing trend too, says JLL’s Puri. “Golf is fast becoming a status symbol and lifestyle statement of the Indian super rich.” For builders, this means faster sales and a higher premium. STEP UP: Bhagtani Krishaang by Jaycee Homes in Mumbai offers apartments priced at Rs 5 crore for the upper middle class (Photograph by Umesh Goswami)In Gurgaon, for instance, London-based Homestead Infrastructure has launched the Michael Schumacher World Tower. Offering selling points such as a cantilevered helipad, a glass dome atop the building and a Michael Schumacher café, the 28-storey project is offering around 100 homes in different sizes at Rs 14,000 a sq. ft. More recently, IREO has announced an agreement with Hyatt Hotels for developing ‘Hyatt’ branded residences as well as a Hyatt hotel franchise for its township in Gurgaon. The 29-acre layout will include 265 ‘Hyatt’ homes managed by the hotel chain, a 460-room luxury hotel, office space and high street retail. The interiors will carry the ‘Tony Chi’ branding for residences. Interestingly, this niche luxury homes market is growing with developers targeting the aspirational upper middle class. One such Mumbai project is the 25-storey Bhagtani Krishaang that overlooks the Powai lake. With car parking and clubhouse amenities rising to level 6, residences start from level 7. A 30-ft lobby with a mural running through it adds grandeur to the tower. “The 2,400 sq. ft apartments are a cut above the rest. At Rs 5 crore apiece, we have made luxury homes affordable,” boasts Dipesh Bhagtani, executive director of Jaycee Homes. Agrees Lodha: “Luxury living need not be the exclusive preserve of the very rich. It should be available at all price points.” gurbir1@gmail.comgurbir.singh@abp.intwitter@gubir110(This story was published in BW | Businessworld Issue Dated 07-10-2013)
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