Track2Realty: Omkar Realtors & Developers, one of the leading players in making the slum redevelopment a success story in Mumbai believes slum projects are generally feasible in Metro Cities and more particularly in Mumbai. Shifting focus on Slum Rehabilitation for ECB will really help the sector.

Manoj Paliwal, CFO of Omkar Realtors & Developers says that since land parcels with large number of tenants are available in Mumbai, requirement of capital is also more.

“We are taking up the matter with concerned authorities. Slum redevelopment projects are state level issues, guidelines are meant for the entire country. Therefore, some delays are logical. But ECB in SRA would be a game changer for Mumbai redevelopment as a new window for financing will be available to the developers at reasonable rates,” says Paliwal.

The moot point is why is the move to slum ECB stuck up in policy logjam? Requesting anonymity a Housing Ministry official says Reserve Bank of India has already come out with the guidelines. You have to understand that Government of India and NHB are also working towards issuance of their part of the policy guidelines. I expect that soon these guidelines should be made available.”

Diipesh Bhagtani, Executive Director, Jaycee Homes says the Government has to be proactive with regards to ECB in SRA projects. The lack of a clearly defined policy is the main reason for this logjam. The eligibility levels and related fundamentals need to be established clearly for this policy to take off.

“ECB in SRA would eventually be a boon for the real estate market in Mumbai. The cost of funding through ECB would be cheaper than private funding through normal schemes. Additionally, ECB in SRA will help the poorer sections of the society to benefit as loans will be far more accessible and cheaper. ECB for SRA has the potential to lift the slum dwelling population from slums to live in respectable and affordable houses. Thus, ECB in SRA has the potential to make ‘housing for all’ a reality in a congested city like Mumbai and other metro cities. So, yes, it will definitely be a game changer for Mumbai redevelopment,” says Bhagtani.

It is true that ECB in affordable or low cost housing has not taken off in metropolitan cities of India. The high cost of land, raw materials, labour and inordinate delays in granting approvals act as a deterrent to affordable housing in cities like Mumbai and Delhi. Due to high cost factor, affordable housing as defined by the government is not possible in metro cities.

So, as an alternative, it is better to have developers to access funds from external sources and channel it towards slum rehabilitation projects. But there is a need for a clearly defined policy with regards to slum rehabilitation projects also. Though the Housing Ministry is preparing guidelines for slum rehabilitation projects that can raise funds via the ECB route, but the delay may defeat the purpose for which the proposed guidelines are being framed.

Track2Realty Exclusive: The Umeda Exit of the Ikeda Route of the Hanshin Expressway system passes through this building. The expressway is the tenant of these floors. The elevator doesn’t stop on floor 5th-7^th; floor 4 being followed by floor 8. These floors consist of elevators, stairways, machinery and other stuff.

The highway passes through the building as a bridge, held up by supports next to the building, making no contact with the building itself. The building has a double core construction, with a circular cross section and special care is taken by providing surrounded structure to the highway to protect the building from noise and vibration.

Babulal Varma, MD of Omkar Realtors & Developers believes if policy incentives are granted, Mumbai is quite capable of replicating global standards, while providing its own unique solutions. According to him, the Urban Renewal Authority’s 4Rs strategy is now well established and gaining recognition in the community. The 4Rs are Redevelopment, Rehabilitation, Reservation and Revitalisation which, when applied together, enables a holistic approach to unlock the full potential of urban renewal.

“Today, Hong Kong has emerged as a world class city with tall vertical structures, sector-by-sector massive development, open spaces and greenery and most prominently, Floor Space Index (FSI) of 5–35. Similarly for urban revitalization, there are several policies and programmes in American cities. The pursuit of growth through economic development has become the key strategy in efforts to revitalize older American cities. All levels of government have come to play roles in the complex inter-governmental process of designing, funding and implementing economic development programmes,” Varma narrates as an example.

Pranay Vakil, former Chairman of Knight Frank, asserts holistic solution is needed for reaching global benchmark as urban infrastructure has not kept pace with the massive influx of people. Roads in a constant state of disrepair, perpetual traffic congestion and an overstressed rail network are characteristics of our transportation system. One only has to look global at leading western cities like Manhattan and London which have multiple efficient lines of commute into the CBD.

“Manhattan faces much of the same land constraints of Mumbai as well as the fact that it is a peninsular city. However, efficient and farsighted planning has ensured its evolution over and under the ground with skyscrapers and underground metros which maximize land-use. Its local railways connect locations up to 132 kms away and ferries provide connectivity to dense residential hubs like New Jersey. Using this example as a model, existing FSI norms for frontline city like Mumbai must be relaxed to maximize land-use,” says Vakil.

…..to be continued

Track2Realty: When the Reserve Bank of India made the announcement of allowing External Commercial Borrowing (ECB) in affordable housing, including slum redevelopment, there was an optimism and euphoria that cheaper money coming into the much-needed segment of real estate would redefine the property market in general and in the process help the country meet the housing shortage.

Much water has flown since then and the affordable housing could not get the benefits due to the defined parameter of below Rs. 25 lakhs as such projects are not feasible in the metro cities like Mumbai.

However, the Mumbai developers who were looking up to get the benefits of raising cheaper money for the slum redevelopment projects sooner realised that the intentions of the government were not beyond the populist rhetoric. Even after months of waiting for the clearance by the RBI, the Union Housing Ministry is yet to draft the guidelines for the same.

The RBI had set a limit of US$1 billion for FY2012-13, but the housing ministry is yet to issue guidelines for the Slum Rehabilitation Projects that can raise funds via the ECB mode.

Earlier the RBI had said that slum rehabilitation projects will also come under the low-cost affordable housing scheme. The eligibility of these projects for raising ECB will be based on the parameters to be set by the Central Sanctioning and Monitoring Committee of the Affordable Housing in Partnership Scheme (AHP) constituted under the chairmanship of Secretary, Housing & Urban Poverty Alleviation (HUPA), which administers the slum rehabilitation projects.

Slum redevelopment in Mumbai is a much-needed segment of construction but it is not clear why the policy makers have turned cold feet on drafting the guidelines. Pranay Vakil, Chairman, Praron Consultancy wonders what the policy was meant for if it could not move ahead of discussion stage after such a long time. According to him, slum redevelopment is something that is a win-win for all the stake holders as the developer gets the free land to develop and the inhabitants get a free house.

“In making slum redevelopment policy work from Mark to Market, a lot of will power is needed. If policies are not clear, it only deters the prospective investors. We have seen this in Dharavi where the delay for the last 7-8 years led to many financers back out of the proposed redevelopment. Frankly speaking, I don’t have an idea as to why ECB guidelines have not been framed,” says a candid Vakil.

…..to be continued

Track2Realty Exclusive: Mumbai city is leading the redevelopment process though the volume is still a fraction of the overall potential. Of course, Mumbai’s problems are unique and need solutions which are also unique as socio-political fabric of the society and ethnicity is diverse.

Urban renewal has led to economic rejuvenation of various countries and Mumbai shall have to find its own unique solutions while learning from best global practices. While Singapore and Malaysia’s transformation was led by sagacious leadership, Hong Kong, Shanghai, Chicago, Birmingham and New York effectively used their political process to drastically improve quality of life, economic output and employment opportunities.

What is needed in the redevelopment process of Mumbai is to experiment with innovation and value addition locally. Redevelopment in the city needs to be accorded a macro perspective rather than a micro outlook.

When Hong Kong initiated redevelopment projects, it had to ensure that the target locations and the priority project areas, upon completion of urban renewal, would be attractive places to reside and work. Accordingly, strategic planning guidelines were charted out to guide their developments.

As a redevelopment module, it shortlisted 200 priority project areas. Upon redevelopment of the 200 priority project areas; there were major improvements to the dilapidated urban areas, which were transformed and brought up to modern city living standards. The major urban decay problem of the city was, hence, largely resolved.

Similarly, the case of Japan is one of the most inspiring and creative as conviction of betterment leads the policy and practical solution formulations. Gate Tower Building is a 16-story office building in Fukushima-ku, Osaka, Japan. And what makes it notable is the highway that passes through the 5th-7th floors of this building.

The highway is part of the Hanshin Expressway, a network (239.3 km) of expressways surrounding Osaka, Kobe and Kyoto, Japan. The Gate Tower Building is Japan’s first building to have a highway pass through it. And it had been nicknamed “beehive” referring to its appearance as a “bustling place”.

…..to be continued

Track2Realty:

The residents, many of whom are senior citizens or have young children, have lived there for more than 25- years. They bought the apartments legally and duly registered, while the cooperative housing societies have paid property taxes in full to the government, to date.

The apartments were constructed on land leased to Pure Drinks Ltd in 1955, which was permitted by B.M.C in 1980 to develop it for residential purposes. Without getting the plans approved, Pure Drinks along with unscrupulous builders, Yusuf Patel, B.K. Gupta and P.S.B Construction Co erected seven buildings, two of which were high-rise buildings of 17 and 20 stories.

During the construction period, the authorities issued notices to the builders to stop work. The builders were fined and they paid the penalty and resumed work. After the construction was completed nobody prevented the buyers from occupying their apartments or the buildings from forming co-operative housing societies.

Unaware of these violations, the residents bought the apartments believing that they would get the occupation certificates in due course, as was the norm 25 years ago. Since 2005 the residents have been in litigation with B.M.C. trying to defend their homes and save their families from being thrown on the streets.

Strangely the SC verdict delivered on the 27^th of February, 2013, has instructed the BMC to pursue the demolition notices issued to all flats above the fifth floor. In the verdict the SC has even condemned those portions of the structures that are within permissible limits for regularization. The area threatened with demolition is far in excess that is beyond the permissible FSI. They have also included the water tanks and the lift rooms. While the demolition will destroy the homes of all the families with flats above the 5^th floor, those below it will have to suffer without water and lifts besides tolerating dust and noise pollution created by the demolition.

The litigation was necessitated as Pure Drinks Ltd who by manipulating the syste, misguided the courts as well as the BMC, sold the balance smaller portion of the land, on which stands the now defunct Campa Cola factory, to Krishna Developers. The perpetrators of the crime have a double advantage. The additional FSI that shall accrue as a result of the unreasonable demolition of area that is within the permissible limits, in the 7 residential buildings, de-housing the ignorant flat purchasers, will eventually go back to Pure Drinks Ltd and they will be able to once again encash the same by redeveloping that much area.

Interestingly the demolition order contrasts sharply with the laws applied to the Ulhasnagar buildings or the Mumbai slum dwellers and forest land encroachers who were permitted regularization if they could prove occupancy from 1995.

Track2Realty Exclusive:

In addition, with the sector going through a downturn, developers are facing challenges in acquiring funds to develop the high cost project. Furthermore, R&R issues such as inadequate compensation for land have resulted in inordinate delays for integrated township developers.

Owing to the execution delays, a number of PE funds are looking to exit their investments in large township projects as time and cost overruns have had an impact on the expected returns for the PE funds.

Due to the potential offered by large integrated townships in alleviating the problems associated with increased urbanisation and shortage of housing, it would be in the overall interest if the government proactively promotes development of integrated townships.

The government needs to be a facilitator, providing support to prospective developers for creating external infrastructure (power, roads, water), relaxation of stamp duty and development charges, green channel/single window clearing procedures and monitoring mechanisms.

“There is a dire need for planned suburban development which should aim at sustainability. In the course of suburb development, infrastructure and commercial development precede residential development. Governments must aim at encouraging infrastructural and commercial developments in an identified suburb which would spur residential catchment development. This ensures that the suburb becomes self sufficient for all needs at short distances,” says Surendra Hiranandani, Founder and Managing Director of Hiranandani Upscale.

Integrated township also needs a certain level of good urban governance and services in terms of water, sewerage, waste management, road network, transport and power. At present states like Gujarat, Maharashtra, Rajasthan and Karnataka have attempted to come up with their own township policies which have regulations in place for the multiple proposed townships.

…..to be continued

Track2Realty Exclusive:

Jaypee Greens not only stands up as a case study but also throws challenge for the future integrated townships in terms of size, value and overall holistic development of self-contained township. After all, how many townships can afford to be spread over 1162 acres of lush green land, the way Jaypee Greens Wish Town is positioned.

The township in Sector 128 includes five sectors. The mega golf view integrated township has Jaypee Greens Klassic in Sector 129, Jaypee Greens Kosmos in Sector 128, Jaypee Greens Garden Isles, and Jaypee Greens Kensington Park in Sector 133, Kalypso and Pavilion Court in Sector 128.

Mahindra World City in Chennai also stands out as a successful integrated township developed far away from the then existing commercial hubs in the city. It is extremely large, spread over 1500 acres, with multiproduct SEZs managing to attract prominent anchor firms across a number of industry verticals.

Magarpatta City spread over 430 acres near Pune needs a special mention as a model integrated township. It is an internationally appreciated model of self-sustainability. The township has solar water heating system, garbage segregation at source, bio gas, vermi-culture, bio-compost, tree plantations, cold storage in addition to the usual facilities.

All these amenities are managed by the developer through its property management services (PMS) arm. The Pune Municipal Corporation even reduced the property tax for Magarpatta City residents by 10 per cent in appreciation and in support of their efforts.

Another success story has been the Hiranandani Group’s Powai project. There are dozens of township projects across India at various stages and the average price range is between Rs 5,000-8,000 per sq ft. For Example, Vedanta City near Surat in Gujarat offers 2BHK flat at around Rs 15 lakh while Nanded City at Pune by Magarpatta Township is in the range about Rs 40-44 lakh. The 2 BHK flat would cost more than Rs 1 crore in Kohinoor City at Kurla, Mumbai. Villas will cost Rs 2-3 crore near tier-II cities while it will cost about Rs 5-6 crore in the suburbs of these cities. For example, Amanora Sweet Water Villas are quoted at Rs 4 crore and above at Amanora Park Town at Kharadi near Pune.

…to be continued

Track2Realty Exclusive:

The next important aspect is infrastructure and other basic facilities. Connectivity to arterial roads is essential and even within the township, a good road network with proper traffic flow planning, foot paths, service corridors are vital. Among common facilities, a sustainable water distribution system, water treatment, efficient drainage, sewerage and waste disposal systems and integrated security are essential.

Integrated townships also offer features such as balanced mix of facilities for its residents such as accessible open spaces, recreational facilities, medical assistance, school, retail spaces and a community hall amongst others. It also reduces pressure on the urban areas.

Anshul Jain, CEO, DTZ India explains development of integrated townships in the past two decade could be broadly classified into two periods, the initial phase between 2002-04, when a few projects, most of them well received, were launched. In the second phase, after the approval of 100 per cent foreign direct investment in townships under the automatic route, a slew of projects backed by PE funds, were launched.

In majority of these projects the residential units were launched first and were sold at a premium during the real estate boom of 2005-07. Work on these projects slowed down during 2008-11, and the development of commercial and other components were delayed due to limited interest.

No wonder, the performance and track record of integrated townships have so far been mixed, with only a handful of such projects being close to be labeled as model townships. A majority of such townships have been those that are either within existing commercial hubs or in close proximity to these commercial centres. And, of course, these are mostly moderately sized.

“Even such projects with limited scale have also been subject to inordinate delays in execution, sometime running into several years from the original schedule, primarily due to the less than expected demand,” says Anshul Jain.

…..to be continued

Track2Realty:

Envisioned as a modern world class institution, the School of Built Environment will offer a range of academic degree programs, including 3 year full time BBA in Real Estate and Urban Infrastructure. 2 year full time MBA in Real Estate and Urban Infrastructure (with specialization in Investment Finance or Marketing) and 2 year full time MBA in Construction Project Management.

The School will also offer Management Development Programs to meet the training and development requirements of existing professionals in sector.

This industry led academic initiative is supported by the Ministry of Urban Development, where the School aims to bridge the professional skills gap in real estate, construction, infrastructure and associated services – collectively termed as ‘built environment’, by delivering ‘industry ready’ professionals from the day students complete their education and step into the industry.

RICS also announced the appointment of Prof. K.T. Ravindran as Dean of the RICS School of Built Environment, Amity University. An internationally acclaimed academician, he has over 30 years experience in academia, and was the former Dean of the School of Planning and Architecture and the Chairman of the Delhi Urban Arts Commission. He is also the founder and President of the Institute of Urban Designers – India, which is a professional association of qualified urban designers.

 Globally, the built environment sector accounts for 10% of the work force, 70% of wealth, 60% of all utilized materials, 40% of carbon emissions and 60% of energy utilization. In India, the sector accounts for nearly 17.5% of the GDP, second only to agriculture and is the second largest employer with over 50 million people working in built environment.

Inaugurating the RICS School of Built Environment, Amity University, Kamal Nath, Union Minister of Urban Development, Government of India said, “I see this endeavour between RICS and Amity University in setting up the School of Built Environment as a first-of-its-kind initiative that will lay the foundation to setting new benchmarks that other institutions will subsequently try and emulate. The challenges of urbanization in India are already immense. India has a very young demographic profile that’s extremely mobile and we’re already seeing small towns becoming the hub of economic activity.”

“This is probably the largest aspirational society on the planet with growing disposable incomes – moving from the economics of sustenance to the economics of gratification and we see this reflected in the built environment domain as well. One of the biggest challenges facing the real-estate, construction and infrastructure sectors is that of good human resources. The RICS School of Built Environment, Amity University will therefore enable quality and relevant education for young professionals entering this sector. I also look forward to the School of Built Environment creating ‘next practices’ which in turn will lead to ‘best practices’ for the industry. The government will be happy to assist this partnership in any way possible,” Kamal Nath added.

Commenting on the importance of this initiative, Sachin Sandhir, MD-RICS South Asia said, “Built environment is severely being impacted by a demand-supply mismatch of professionals. The projected shortage of various core and specialized professionals to the tune of 44 million is a cause for significant concern, as it threatens the sustainability of high growth sectors of real-estate, construction and infrastructure, which contribute significantly to the nation’s economic development.”

“Considering the dearth of quality talent within built environment stems from the absence of specialized education in the sector, we are extremely glad to have set up the RICS School of Built Environment, Amity University as a world-class, industry led academic institution that will help bridge the skills gap in India by equipping 15,000-20,000 professionals over the next three to five years, thereby ensuring that the growing demand for quality real estate, construction and infrastructure in the country are adequately met, said Sachin.”

According to Atul Chauhan, Chancellor, Amity University, “With the establishment of the RICS School of Built Environment, Amity University has enhanced its commitment to provide world class education across disciplines within the real estate, construction and infrastructure sectors. India is one of the fastest growing economies of the world, where new townships and infrastructure development are rapidly changing the face of the country. We see this initiative as an opportunity to deliver quality education and serve as a hub for research and develop technical standards and best practices in the sector and ensuring that in the times to come ‘built environment’ will be viewed as a ‘career of choice’ by all aspiring professionals.”

Echoing the sentiments of the others, Prof. K.T. Ravindran, Dean, RICS School of Built Environment, Amity University said, “Although the real estate and construction sectors are key contributors to the economy, there is a complete vacuum of education and training options available for professionals to enhance and hone their skills. The School of Built Environment has been launched to provide students with a strong foundation for a specialized career in this fast growing sector. Top-of-the-line faculty sourced from around the world in a campus comparable to the best anywhere, along with an innovatively designed curriculum will ensure that the graduates passing out from the School are wholesome, employment-ready professionals that meet the changing needs of the industry.”

Track2Realty-Agencies:

IDFC set up its real estate investments business in late 2010 to acquire majority ownership in leased and rent generating IT parks and SEZs located in major Indian office markets. The focus is on developments with high-quality tenants, which offer opportunity for stable yield as well as capital appreciation.

Over the last 12-18 months, real estate-focussed private equity (PE) funds have increasingly started looking at buying developed commercial assets for rental yields as well as capital appreciation in the long term. These investors typically look for properties already developed and commercial space rented out with leases of over 8-10 years.

Both the parties declined to comment to Track2Realty, but sources maintain IDFC’s real estate investments arm is buying the constructed and rented part of the SEZ. The transaction is reportedly awaiting approval from the environment and commerce ministry and is expected in a month. The money raised will be utilized for funding further development in the SEZ.

The first phase of the 2.6 million sq. ft Pune SEZ development, which has an integrated township, includes six buildings with a total built-up area of 1.4 million sq. ft.

Earlier, IDFC acquired an equity stake in a special purpose vehicle (SPV) called Galaxy Mercantile Ltd that owns a fully developed 1.36 million sq. ft IT park at Noida in the national capital region (NCR).