Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

As Narendra Modi turns PM, holy city Varanasi on realty compass

Jun 07 2014, 13:23 IST
Comments 0
Varanasi, one of the world’s oldest living cities, is now expecting a radical change in its urban infrastructure and civic amenities. Varanasi, one of the world’s oldest living cities, is now expecting a radical change in its urban infrastructure and civic amenities.
SummaryVaranasi, one of the world’s oldest living cities, is now, after election of Narendra Modi...

Varanasi, one of the world’s oldest living cities, is now, after election of Narendra Modi, expecting a radical change in its urban infrastructure and civic amenities. The Prime Minister has already held out some thoughts on his priorities for the city including cleanliness and a vision for it as a thriving hub of tourism.

One sector that is watching the developments with a sense of optimism is real estate that sees a new lease of life, given that there is hope that Narendra Modi would be able to get his vision for the city implemented.

“Narendra Modi is unequivocally pro-development and also pro-tourism, both of which are good news for a city like Varanasi,” says Anuj Puri, chairman and country head, JLL India. “A determined focus on infrastructural upliftment in general will mean that tier-III towns will see a stronger emergence, especially if they already have decisive economic drivers in place. This is definitely the case with Varanasi, which has been seeing gradual but steady growth in both economic activity and real estate dynamism.”

Urban problems

The current area under the Varanasi Nagar Nigam, the municipality, is 79.79 square kms, according to its website, making it a mid-sized city. Municipal administration in Varanasi dates back to 1959 when the first municipal board was formed. According to the latest figures available, its expenditure budget for FY14 stood at around Rs 568 crore. As a comparison, the municipal corporation of neighbouring Allahabad spent Rs 469 crore.

But, Varanasi also covers a substantial area outside the municipal jurisdiction, called the Varanasi urban agglomeration that is around 112.26 sq km. There is the Banaras Hindu University, the cantonment and a vast railway settlement. For coordinated regional planning, the Uttar Pradesh government established the Varanasi Development Authority (VDA) in 1974. In 1994, the authority had formulated a Master Plan, 2011 and created several zones for the city. Interestingly, this plan is only for the west of the Ganga. The eastern half is as yet untouched by the Master Plan.

In 1994, the land use pattern recorded by the VDA showed that 37 per cent was taken up for residential purposes, while 20 per cent was for recreational use. The 2011 Master Plan placed the maximum emphasis on housing, apportioning 53 per cent of the total land use. Neighbouring Allahabad had 34 per cent land used for housing in 2001, which was envisaged to be 36 per cent in the city’s Master Plan 2021. Currently the VDA is playing the leading role in meeting the housing demand.

However, the emphasis on housing under the land use plan under Master Plan 2011 has come at the cost of recreational space and industrial infrastructure, says the report on the Varanasi City Development Plan under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM).

This shows the extent of demand for housing in the city, which is rising at 16 per cent a year, as per the report.

Under the JnNURM, Varanasi applied for a grant of Rs 3,072.59 crore for essential infrastructural needs and basic services for urban poor. As per current data, none of the projects are anywhere near completion.

Emerging market

The huge demanD-supply gap in housing has got real estate players interested, which has developed into positive sentiments after the general elections.

However, the action is not happening in the old areas housing the Ghats, the typical Varanasi postcard. As the JnNURM report says, the old city presents a very unique challenge in urban renewal for the essential requirements are provision of modern services without disturbing its cultural character. “Plot owners who have small and old structures on them have managed to demolish them to give way to new constructions,” says Raj Yadav, who works in Mumbai, but is a registered voter in Varanasi and cast his vote in the 2014 election.

“Many new areas are also developing around the city as suburban units,” adds Yadav.

The business opportunity is being seized by developers from other cities who see a viable proposition in this tier-III market. “The mega township known as Shree Sai City by Delhi-based Rudra Real Estate is coming up in the airport area while Mumbai-based S Raheja Realty is coming up with SDS Residency, a 14 storey complex which will be one of the tallest buildings within the city,” says Anmol Agarwal, national manager, network acquisition, RE/MAX India.

There are other established players include Awadh Constructions and Visionary Buildtech.

“Apart from being a great tourist attraction, Varanasi is in demand for its residential property due to its spiritual aspect. People invest in these properties in search of peace,” says Advitiya Sharma, co-founder and marketing head for Housing.com, a leading real estate portal. “The Varanasi market has seen a substantial escalation of 40 per cent in the last few years and the VDAs’ plan to develop the city has also grabbed the attention of investors,” adds Sharma.

The approximate average range of residential flats today across the city is at Rs 2,600 to Rs 6,000 per sq ft. There are high-end options available in different pockets of the city starting from Rs 8,000 per sq ft.

Land is rarely available within the city are available aplenty outside the city. The land in some areas is as low as Rs 500 to Rs 600 per sq ft. The average land cost in the city is in the range of Rs 1,200 to Rs 2,000 per sq ft. In several high demand and fast developing areas the asking rate has shot up in the range of Rs 2, 500-Rs3,000 a sq ft.

A Ray of Hope

With the primary focus on cleaning the Ganga, residents can hope to have piped supply from the holy river into their homes.”Cleaning of the Ganga will get pure drinking water in the houses, which are currently getting it through private bore wells dug in a most haphazard manner across the city,” says Vijay Kumar Singh, another Varanasi resident who is now employed with a nationalised bank in Mumbai.

“Electricity is another issue. One gets it for an average of 4-6 hours daily. How can one expect to grow with that? The Ghats need repairing and beautification, which in turn will get more tourists and pilgrims bringing more revenue for the city,” says Yadav.

Lack of roads and bridges, adequate sanitation, mushrooming of houses and industrial units without any plan, pollution are the other problems.

“If the proposed ring road is developed, then Varanasi will expand. There are also 60 flyovers planned within the city, connecting the banks of the Ganga, which will also impact the real estate market,” says Ram Raheja, Director, S Raheja Realty, whose project is slated for completion next year.

There are three reasons for Varanasi to be on the path of the overall development fuelling real estate momentum as well. One, the pro-development and pro-infrastructure-growth tilt of the new regime, secondly, the BJP, with its sights set on the UP state election must prove their commitment for development.

With Varanasi being the Prime Minister’s constituency, expectations are high that development plans that are currently stuck would get going with an emphasis on speeding essential infrastructure development.

Ads by Google

More from Infrastructure

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...