Destination development: First mover advantage
Dec 06, 2013
Source : The Times of India


PUNE: Beyond the oft-repeated developers’ rhetoric ‘location, location and location’ as the USP of the project, lies the fact that today’s prime location was once a deserted area that most developers were not ready to bet on with the kind of huge investment that realty projects demand. It has not just been the huge investment involved but the infrastructure, or rather lack of it, which often made them play safe. Though, in some of the cases, the government authorities took the initiative to provide the necessary infrastructure and auctioned the land to the developers; in some of the other cases, it was the developer who spotted opportunity in a virgin territory and reaped the first mover advantage.

It would be easy to vouchsafe that while the state, in most of the cases, has been a reluctant urbaniser, destination development actually demands a daredevil’s vision and that is precisely the reason why only a handful of locations could see the first mover changing the dynamics of urbanisation in general and the realty market in particular.

The first such case study in India has been the emergence of Gurgaon, at a time, when urban land development was in the controlled regime of the state. Facing many challenges at the policy level, it was the vision of KP Singh, chairman, DLF, to replicate a global city in India that Gurgaon was conceptualised, ahead of its time. According to Sanjey Roy, spokesperson, DLF, “Gurgaon was initially conceptualised as DLF Qutab Enclave and the plan was visualised ahead of its time. It was not an easy job, particularly at a time when the urban land development was in the controlled state regime. The success story of Gurgaon eventually led to the development of many such destinations across the country.”

He also adds “One needs to have a vision to transform a nondescript location into a property hotspot. Once it is developed, it is much easier to do a cost-benefit analysis and say the location could have been developed this way or that way. When DLF first ventured into Gurgaon, Delhi needed to outgrow its boundaries with the growing urbanisation. Gurgaon, for one, was picked up as an extension of what, at that point of time, was the most sought-after tourist hotspot, Qutab Minar,” explains Roy.

Similarly, in Mumbai, it has been the developers’ vision that has created destinations in far off suburbs such as Powai. The fact remains that had the Hiranandanis also thought about playing with the land competence of ‘location, location and location’, Powai would not have emerged the way it has shaped up today. Some other locations, like Malad, Goregaon, Kalyan and Dombivli, are also shaping up as excellent destinations. Interestingly, these destinations were spotted by developers who recognised an opportunity in an area which had, for others, been the road less travelled.

Similarly, the Nahar Group’s initiative of developing a new township in Chandivali has resulted in making Chandivali a destination suburb. The Group had begun development in this lesser known area, at a time when not much development was happening in that suburb.

The idea was to, in the next few years, make this location one of the most-preferred destinations in Mumbai city. Today, Chandivali competes with other locations such as Powai, in residential real estate. Manju Yagnik, vice-chairperson, Nahar Group, agrees that to some extent, it is risky to venture into new destinations with no habitation and infrastructure. Hence, developers undertake some research or study before starting with a new project. Location has its own importance in real estate development but creation of residential projects can also be undertaken by the developer, from a futuristic point of view.

“A developer can also create new destinations, by providing amenities and facilities essential for smooth living. Earlier, this suburb was hardly known for residential or commercial development, as a major part of this area was deserted land. Today, the vast 125 acres of land, is full of greenery and plush residential towers and commercial complex. Besides proximity to the domestic and international airport, business districts in Mumbai and arterial roads of Mumbai, have made Chandivali a new destination of Mumbai city,” states Yagnik.

Similarly, when the Knight Frank report, last year, rated south Chennai’s Pallikaranai and Medavakkam, as two of the most promising destinations, many within the built environment of realty business, were taken aback. Even though, Pallikaranai and Medavakkam are about 12 kms from the Chennai International Airport, through the Pallavaram-Thuraipakkam Road, it was not seen as a ‘destination’ till some of the developers spotted an opportunity and shifted their focus to the region, for developing it as the destination next.

There are not many case studies in Indian real estate, where a developer has a vision and has shown the audacity to take the road less-travelled. Experience also suggests that some of them had to take a beating but for those who could spot the right location to be developed as a destination; it proved to be a goldmine. Those who want to capitalise on sheer land competence, established location is all that matters but for those who do not want to be ‘me too’ in the established locations, there are still virgin territories to be explored.

Latest Realty News

Home away from home near Mumbai
Dec 06, 2013
MUMBAI: Driving out of the city on a weekend to the beautiful landscape in the western ghats within a 200-kms distance from Mumbai is now seen more than a weekend getaway. Given the plethora of options in housing available in the scenic spots nestled in the hills, people increasingly prefer the option of driving to their second homes and relaxing over the weekend. With the Konkan coastline with its verdant landscape and lush greenery on one side and the Arabian Sea on the other, a second home in
What's your real return?
Dec 06, 2013
MUMBAI : This tax-saving season, before buying a traditional money-back insurance policy, ask a vital question to the insurer or the agent — what is the internal rate of return (IRR)?
Pune-based property tax system on cards
Dec 06, 2013
NAGPUR: The Nagpur Municipal Corporation (NMC) is all set to implement Pune Municipal Corporation's (PMC's) ready reckoner plus rental-based system to calculate property tax. "There will be upper and lower ceilings on increase or decrease of tax. It will not increase beyond double the monthly rent prevailing in the market nor will it fall below 50% of this amount," said NMC's tax committee chairman Girish Deshmukh.
Metro and monorail: A boon for Mumbai suburbs
Dec 06, 2013
MUMBAI: P Nagarajan, a resident of Andheri, is upbeat about both, the monorail and the metro project, even though the projects have been delayed. For many like him residing in the suburbs, these projects are going to make life much easier. According to property analysts, these projects are being envisaged as game-changers in terms of connectivity and will reduce both, traffic congestion and commuting time.
Godrej Properties buys out PE firm in Kolkata project
Dec 05, 2013
MUMBAI: Godrej Properties Ltd has bought out private equity (PE) firm Red Fort Capital’s 49 per cent stake in its subsidiary Godrej Developers Pvt Ltd (GDPL) for an undisclosed amount.
Why India needs REITs?
Dec 05, 2013
MUMBAI: A real estate investment trust (REIT) is a fresh investment mechanism being planned by the Securities and Exchange Board of India (SEBI). A REIT manages and owns income-generating developed property and is intended to offer common units to the public as an option for investment. These units represent ownership in the business of managing income-producing properties. REITs will make available away to real estate developers to commercialise developed property, providing an exit path. It wi
Conditions on RTI access to building plans lifted in Maharashtra
Dec 05, 2013
MUMBAI: State information commissioner on December 4 withdrew an order issued last month that imposed certain qualifications on obtaining building plans approved by the BMC under the Right to Information (RTI) Act.
Single-window clearance will cut housing cost, Pune realtors says
Dec 05, 2013
PUNE: Higher input, finance costs, non-availability of bank finance for real estate projects and exorbitant taxes are some of the problems that will be debated in the forthcoming Credai Conclave 2013, which will take place in New Delhi on December 13 and December 14.
Focus on delivery makes Mumbai realty realistic
Dec 05, 2013
MUMBAI: A perception is gaining ground in Mumbai that the city’s property market has reached a saturation point, with critics citing the standing inventory of 48 months as evidence. However, a closer look at the market suggests that even though it is facing the effects of an overall slowdown, like any other part of the country, the high inventory level is not necessarily a sign of stress at the project level or with developers’ balance sheets.
Buying a house? It’s right time for realty check
Dec 05, 2013
MUMBAI: A recent report from property consultancy firm Knight Frank says that real estate prices in certain Mumbai areas have declined by 10%. The same report says almost 45% of the new properties that are coming up in the city are unsold.

Latest Realty News Of State

Realty Talk's