DELHI: Creation of 100 new smart cities, focus on infrastructure, and affodable housing are the cornerstones of the new government’s agenda for the real estate sector.
Sanjay Kaul, BJP spokesman, says: “Our government will do everything to kick-start the economy—the market sentiment in the last couple of years has been at the lowest ebb. Infrastructure will certainly be high on priority list—we will address projects that were stuck up, and remove bottlenecks, and will also explore new areas of development.” Issues related to the land acquisition bill will be resolved by evolving a transparent mechanism which would take into account all the concerns of farmers, developers, corporates, the spokesman said. Policy renaissance tops the wish list of real estate developers.
“We expect the new government to be more efficient in granting approvals to real estate projects,” Lalit Kumar Jain, chairman of Credai, says. The new government also needs to get the Real Estate Regulation and Development Bill passed. The industry expects REITs to become operational in India so as to increase liquidity.
“We need an industry status,” Vikram Datta, the vice-president (marketing) of DLF says. He says that initiatives in providing better connectivity and infrastructure would give a fillip to the sector.
The land acquisition act in its current format affects the cost and viability of all real estate, manufacturing and infrastructure projects. Amitabh Kant, secretary of the Department of Industrial Policy and Promotion (ministry of commerce and industry, Government of India), says: “There is a need to amend the existing Land Acquisition Act since in its present form acquiring land for construction of roads, ports and creating other such infrastructure has become virtually impossible.” A good number of road and port projects have been stuck up on account of the act. Kant says that on account of proto-type laws, India’s manufacturing has suffered so much that it virtually bottomed out last year and fell to negative zone this year.
A major challenge currently is to develop new cities, especially Tier 2 and 3 cities, as alternatives, to the metro cities. The urban infrastructure of the major metropolitan cities has been bursting at the seams due to increasing migration from rural to urban areas therefore, the development of new integrated cities is the need of the hour. Building 100 new smart cities is on the BJP manifesto.
Sachin Sandhir, the MD of RICS, South Asia, says: “With growing needs of a burgeoning population, the demand for smarter cities has now become imperative. This will serve in two ways-one, as more and more smart cities come into existence, housing shortage will get addressed; two, it would boost employment”, Sandhir says that the creation of new smarter cities will also boost the formation of new growth corridors.
“The Delhi-Mumbai Industrial Corridor is one example but there would be a need to create more. A direct impact of this kind growth would be on infrastructure. Growth in infrastructure and industrial corridors will create large-scale employment, which is a fundamental need for the overall economic growth. As people expect a rise in employment opportunities, the government has to find ways to revive manufacturing and create employment by way of building smarter cities,” Sandhir said.
Projects like DMIC are important as they spur development of infrastructure and new cities alongside the transport axis. DMIC will pass through six states-Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra and make the people and goods move efficiently. A dedicated freight corridor or DFC will develop alongside DMIC.
The creation of some 25 cities is aligned to the development of DMIC itself. Mega industrial clusters of 200-250 sq km each, power plants, industrial estates, residential colonies, and related social infrastructure like schools, hospitals, and recreation facilities have been envisaged.
Some of the early bird projects in the DMIC region include Manesar-Bawal Investment Region in Haryana. This belt is expected to have an integrated multi-modal logistics hub at Rewari, an exhibition-cum-convention centre in the NCR and mass rapid transport system connecting IGI-Gurgaon-Manesar-Bawal-Rewari-Neemrana.
The second is the Dadri-Noida Ghaziabad Investment Region in Uttar Pradesh. The belt will see the development of Boraki Railway Station as a passenger and commercial cargo hub and a multi-modal logistics hub at Dadri as well as a power project at Greater Noida.
There will also be a Mass Rapid Transit System (MRTS) between Dadri-Noida-Ghaziabad Investment Region and Delhi. The third is Khushkhera-Bhiwadi-Neemrana Investment Region in Rajasthan.
The belt will see the development of an Aerotropolis between Jaipur and Neemrana, a road connecting Bhiwadi and Neemrana as well as the development of a knowledge city.
The fourth is Pithampur-Dhar-Mhow Investment Region in Madhya Pradesh.
There will be an economic corridor between Indore airport and Pithampur, an integrated multi-modal logistics hub and a knowledge City near Ujjain.
The fifth is the Ahmedabad-Dholera Investment Region in Gujarat, which will see a mega industrial park come up at Dholera. The sixth is Shendra-Bidkin Industrial Park in Maharashtra while the seventh is Dighi Port Industrial Area in Maharashtra. Developers are already betting big on this corridor and nearly all national developers have land banks on the DMIC corridor; many of them purchased these plots as soon as DMIC was announced.
Griha Pravesh Buildteck bought 700 acres in Raigarh, at the intersection of Goa highway and DMIC corridor in Maharashtra, around eight years ago. Abhay Kumar, the CMD of Griha Pravesh Buildteck, says: “We are sure that this place will become plum property in the near future. The DMIC will provide impetus to great development along its entire track.“
The next thing that is high on the agenda of the new government is affordable housing. The country currently requires 18.78 million additional houses, of which 95.6% are in the Economically Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Group (MIG).
“Taking adequate and appropriate decisions to increase affordable housing alternatives will not only be a GDP multiplier, but also improve the living stan dards of Indian citizens,“ Rana Kapoor, the president of Assocham, says.
Some of the ways to incentivize Affodable housing include rationalization of direct and indirect taxes in the real estate industry to enable competitive pricing for end users, making it mandatory for developers across the country to construct EWS and LIG units, an enabling environment with increased Floor Area Ratio (FAR), and incentivizing low-cost and innovative technologies like prefab for producing large volumes of affordable housing units. Also availability of higher FSI with relaxed density norms will boost the construction of affordable housing projects. A lot of promises have been made. The road map to development also looks promising. It’s time now to walk the talk.
Decision-making will have to be speeded up, big-ticket projects must be put on fast track, and new areas of development explored. Infrastructure, connectivity, and favourable regulatory and financial reforms will give the real estate sector the much-needed impetus.