Monday, January 22, 2007

Stop treating urbanisation as an evil

From the Hindu
What is it that has actually made Bangalore develop a robust clime for the real estate boom? Anurag Mathur of Cushman & Wakefield, India, spells out the USP of the Garden City to RANJANI GOVIND

Bursting at its seams, the Garden City is all poised to spread itself the horizontal way, even as the skyline is witnessing a veritable burgeoning of tall buildings both in residential and commercial sectors. The exponential growth steered by IT and ITES is gripping the city with terrifying traffic and infrastructure snags. Cloudy as it may seem now, sunshine is expected with developments like Greater Bangalore taking shape to envelop the contours and lighten the nucleus of the city, Metro Rail to ease road chaos, peripheral ring road expansions to bring in better connectivity and mechanised garbage collection for a more organised and cleaner lifestyle.

Amidst plans, developments and government proposals for the city's improvement, PropertyPlus caught up with Anurag Mathur, Deputy Managing Director of the global real estate consultants, Cushman & Wakefield, to get a grip of the `real' situation and ascertain the effects of resultant spread out.

Buildings are mushrooming at an alarming rate... getting urban is an uphill task.

As with any other major city in India, there has been a feverish activity with respect to land development within Bangalore. The Indian economy is booming, mainly with the backing of services and manufacturing industry; both of which require developed urban infrastructure. Unfortunately, the country has lagged in creating new urban centres unlike countries like China and Malaysia; this has resulted in a huge (and continuing) pressure on developed urban centres like Mumbai, Bangalore and the National Capital Region. The time has come for us to stop treating urbanisation as an evil and focus on creating planned urbanisation that allows a balance between built space and open areas, resulting in quality life for its inhabitants.

The actual city expansion over the last few years...

Bangalore is relatively a circular city and over the years has grown in concentric circles. In the last five years Bangalore has added nearly 10 to 15 km in all directions. As per the Comprehensive Development Plan, the existing urbanised area in the city amounts to 512 sq. km. with 300 sq. km. of proposed area to be urbanised. The increasing growth in North Bangalore is due to the new International Airport. East Bangalore has grown beyond Whitefield and South Bangalore has crossed the Electronics City. While this growth was basically with office space, it is trailed closely by residential, retail, hospitality and logistics/warehousing.

The upcoming peripheral ring road, with a circumference of more than 110 km, translates into a diameter of around 35 km. Development has moved way past the outer ring road, to beyond the peripheral ring road in a period of less than five years and this is indicative of the growing borders of the city.

What is the ratio of built land area when compared to other IT cities?

While it is very difficult to present statistics in this regard, presently, the Bangalore market constitutes the largest organised market for commercial development in south India. From 4.30 million sq. ft. in 2003, Bangalore received a supply of 17.25 million sq. ft. of built space in 2006, which is a 230 per cent increase from last year. Other emerging IT hubs like Hyderabad and Pune witnessed a supply of 2.94 million and 4 million sq. ft. respectively in 2006.

How much of the construction activity is hampering traffic?

No matter how large the construction "yard" is or the location of ongoing construction, most construction activity would create pressure on the immediate surrounding traffic. That being said, by using modern construction techniques, this can be reduced significantly as has been demonstrated so well by the Delhi Metro Rail Corporation over the last six years when they went about constructing the Metro Rail network in some of the denser parts of Delhi, with remarkably low nuisance to surrounding areas.

Bangalore in the next two years, when the Metro Rail zooms through...

The pace of growth would lead to expansion of Bangalore's geographical boundaries to a great extent, as has been already proposed in the CDP 2015.

However, it is expected that the proposed peripheral ring road once operational, coupled with the five townships proposed along this ring road, will help to decongest the city.

The Metro Rail, expected to get operational by October 2008, is proposed to have two tracks, from Mysore Road to Byappanahalli (west-east) and from Yeshwantpur to R.V. Road (north-south), both via the Kempegowda bus terminus. This would help significantly in decongesting the city as there will be less reluctance to live in the suburbs. Airport City has been planned for non-aviation activities, which will include fully equipped business centres, restaurants, hotel rooms and other facilities expected to be on a par with international standards.

Other developments like conversion of the Bangalore-Hosur stretch of the national highway into a six-lane road and road-widening along the 141-km stretch of state highway connecting Bangalore and Mysore further reiterate the geographical expansion in the next 5 to 10 years.

Growth post-2012 would largely depend on projects and infrastructure initiatives announced in the next 4-5 years.

What is the boom primarily due to, only IT?

The boom started due to IT and was further fuelled by the ITES sector, the same is evident from the absorption figures which have increased from approximately 1.08 million sq. ft in 1999 to approximately 11.43 million sq. ft of office space in 2006. However, it is interesting to note that as of Q1 2004, Bangalore housed 92 of India's 180 biotech companies, with total actual investments of over Rs.1,000 crore.

India, being on the `threshold of biotech revolution', currently has 280 biotech and 180 bio-suppliers contributing to the total biotech market worth $100 billion, of which a major percentage is located in Bangalore.

With regard to property rates, what do you predict?

Marginal price increase is expected in the months to come in the Central Business District, off CBD locations as well as Koramangala and Indiranagar which are no longer considered as suburban areas; rental and capital values in the peripheral locations of Whitefield and Electronics City are currently stable and are expected to remain stagnant in the near future owing to the oversupply situation. North Bangalore (Yelahanka, Devanahalli) as well as areas around the NICE corridor (West) are the favoured investment destinations.

With regard to the residential market, prices may not escalate at a rapid pace, but the trend over a 5-10 year horizon continues to be robust. Investment in peripheral locations may be a good option with a medium to long-term view, since connectivity to these areas is expected to improve significantly.

No comments: