HYDERABAD: The real estate sector is the second largest employer after the agricultural sector. Continuous increasing demand for infrastructure due to urbanisation has been the key factor for consistent growth.
However the development doesn’t come with just infrastructure; it goes beyond that like building community services, healthcare, integrated townships and institutions. The largest factor in building the infrastructure is land. With growing population, the biggest challenge is to get a land for construction and developmental purpose.
It’s a commonly held view that India needs to build sustainable infrastructure, resulting in sustainable cities and economy. With approximately 71 million people added to the urban population during the period of 2001-2011, our country needs a very well -thought out blueprint to support the urban expansion.
T Chitty Babu, co-chairman, Estate South 2013 and chairman Akshaya Pvt Ltd, says, “The government needs to bring some good policies, reforms and regulatory approvals. As a developer is the major stakeholder in real estate dealings, we need to make sure our deals are transparent.” There is clearly a lot of work to be done to get the eco-system going.
At present, urban populations in India constitutes around 30 per cent of the total population and at the present, rate close to 534 million people, (greater than the combined population of the United States, Russia and France) are expected to live in Indian cities by 2020. The urbanisation rate alone in Andhra Pradesh is expected to grow to 46 per cent, which was 28 per cent in 2008. The real estate sector in the country has witnessed buoyant growth during the last decade; however, in the recent years there has been a paradigm shift in its growth trajectory away from the traditional hubs of Mumbai and Delhi towards the southern cities like Bangalore, Hyderabad and Chennai.
Vijay Sarma, associate principal Mckinsey & Co, says, “There will be bottlenecks in real estate sector in next 20-30 years. We are facing the supply side constraints due to which the inflation rate is high. The Indian cities generate a lot of revenue but the key challenge is that very little goes into the development of that particular city. According to research, around 37 per cent of population is going to be urbanised. India will have four megacities of the world of which three will be from south India.”
South India today accounts for about 47 per cent of the country’s commercial office stock, which is primarily concentrated in the three large hubs of Bangalore, Chennai and Hyderabad. Vijay Sarma also explained that the key challenges to urbanisation could be mitigated through a focused strategy and effective implementation. The major and the most important factor, in his opinion, is funding followed by governance, planning and sectoral policies.
Given the projected size of the urban population in the country and its growing economic prominence, it is imperative to plan for development of sustainable urban clusters. To put Indian cities on a sustainable growth path, a holistic approach involving all stakeholders such as developers, environmentalists, municipal authorities and architects is required. This would involve integration of infrastructure development with land-use planning and effective channelization of public and private sector investments.
PG Ganpathy, senior advisor and adjunct faculty IIHS, strongly endorses the view, stating that “For building sustainable cities we need a conceptual approach. Inspite of creating large infrastructure, the quality of life hasn’t improved. Better roads, quicker travel, cleaner and greener public places are still a far cry. We associate infrastructure with just physical assets but actually sustainable infrastructure is a combination of physical assets, services, community benefit, social equity and eco-friendliness.”
In order to tackle the rapid urbanisation levels, the need for creation of newer cities, as well as providing for tier II cities to step up to the standard of tier I cities is important. “Today we have an opportunity to build sustainable infrastructure which will work for the coming generations also. The need for the hour is to think for long-term using minimum natural resources, respecting health and safety, budgeted constructions and preserving history and culture. It will give us unlimited growth with limited resources,” states PG Ganpathy, taking the long-term view.
Four stakeholders contribute in the development of infrastructure in any area; the developers, financial institutions (funding authorities), government and customers. Developers need to take charge to match amenities with development.
M Murali, managing director, Shriram Properties, put down his solution very strongly, “Stop planning and start executing. I think we have done enough planning and its time for some action and execution. India as a country is growing fast, but leadership is missing. India has many parallel economies and they account for very high growth rates.” He gave an interesting example to explain building infrastructure without sustainability. He said the value of number of cars parked on the 200 metre high-street road due to lack of parking space is worth crores. We own high value assets, but the infrastructure is still missing.
In the past few years, many big cities have also witnessed another trend of people moving out from the core city areas to the outskirts of the city. About people migrating to the outskirts of the city, PG Ganpathy said, “It can be a way ahead. This model cannot be discouraged. Since space is limited, affordability will become an issue, so migrating to outskirts is a good option. Sooner or later the city will expand and these areas will become a part of the city as residential areas make way for industrial townships.”
Areas which are not very well connected to the main cities now will become self sustained and can develop as a separate city altogether. But what is important here is to develop those new areas with a vision of future. Developers have started to explore options beyond the conventional real estate asset classes with increasing focus on segments such as logistics and industrial parks, residential projects for senior citizens, owing to growing demand for quality services. Comprehensive planning and visionary ideas will only lead to sustainable infrastructure.