Mumbai
Urbanisation Rather than being a side effect of economic growth, urbanisation is in fact an integral part of the process. As in most countries, India’s urban areas make a major contribution to the country’s economy generating both investment and employment opportunities. Although less than a third of India’s people live in cities and towns, these areas generate over two thirds of the country’s GDP and account for 90% of government revenues. India’s towns and cities have expanded rapidly as increasing numbers
migrate to urban areas in search of economic opportunity. Jones Lang LaSalle India reports that the country’s population grew by 18% over the last decade while its urban population grew at almost double that rate (at 32 %). Currently, 31.2% of India’s population live in urban areas. Simultaneously, there has been a significant increase in real estate stock in India’s cities and towns with a growth rate of 4.5% per year compared to a population increase of only 2.8% (JLL India).
Infrastructure Such a massive growth in real estate stock necessitates additional support from urban infrastructure. However, India is dealing with critical infrastructure shortages and major service deficiencies with most of its cities facing issues with roads, public transportation, sanitation, storm water drainage and waste management. An age-old problem in India, urban infrastructure problems were pushed to the background in the economic development policy drafts. Consequently, poor budgeting for efforts to eradicate infrastructure shortcomings mean India is struggling to keep pace with other areas of business development, such as real estate. According to Subhankar Mitra, Head of Strategic Consulting at Jones Lang
LaSalle India, the increasing volume of real estate stock in the cities creates an acute problem with the basic needs like energy and water for urban India, highlighting a disconnect between the increase in real estate stock in the country’s cities and the development of infrastructure in these areas.
Public versus private According to Mitra, one of the major issues impacting the development of India’s urban areas is the fact that the private and public sectors pursue opposing interests. While the private sector contributes most of the development of real estate stock, the responsibility of infrastructure development lies entirely with the public sector, he said. Mitra adds that
India’s investment pattern in the cities shows a similar trend, with the private sector investing in the development of real estate stocks while the public sector invests into infrastructure development. Weak financing of infrastructure projects and the reluctance of the private sector to invest in them means that effective policies have to be implemented if urban real estate investments are to benefit the population on a larger scale and if the quality of life in India’s cities is to be improved as a whole.
Mumbai – an example With a total metropolitan area population of approximately 20.5 million, Mumbai is India’s most populous city and the fourth most populous city in the world. As the country’s financial capital, the city attracts massive investments in the real estate sector and stands as the nation’s epitome of high real estate prices while infrastructure augmentation lags way behind (JLL India).
In 2005, India liberalised rules in relation to foreign direct investment in
the real estate sector and allowed up to 100 per cent foreign investment in development projects, attracting investors and precipitating massive investment in land in Mumbai, especially in the city’s southern zone, JLL India reports. At the same time, investments in infrastructure projects amounts to only 60% of the investments made in prime land in the city in the same period. “Had the authorities had the kind of money that the private sector invested in prime land, the city of Mumbai would have been transformed much faster,” Mitra said. “In the future, the funds requirement for infrastructure will increase further. While many mega projects which are extremely critical in terms of enhancing mobility and clearing up traffic congestion have been planned, large investments in the infrastructure sector over the next five years are needed if these projects are to be completed on schedule,” he said. Mitra adds that paradoxically, despite sitting on immense investments buried in land, Mumbai is unable to fund its most essential requirements.
Te way forward “Tis would be an apt time for the authorities and policy makers to focus on
breaking this deadlock,” Mitra said. He added that today, there is an urgent need for authorities to recognise real estate and infrastructure as a holistic entity. “Te need of the hour is to view real estate and infrastructure development in Mumbai cohesively, not as isolated phenomena,” Mitra concluded.
MAY 2012 I CITYSCAPE I 15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64