Operation township

Jan 05 2014, 00:05 IST
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A township spread over more than 450 acres in Gurgaon’s Sector 37D on the Dwarka Expressway A township spread over more than 450 acres in Gurgaon’s Sector 37D on the Dwarka Expressway
SummaryMajor real estate players are all planning or building townships, touted as the way of the future.

Till recently, buying a property called for some painful compromises. Budget restrictions meant you could only buy in specific residential areas, regardless of whether there were educational institutions, playgrounds, hospitals, shopping centres, connectivity to your place of work, or entertainment hubs in the vicinity, apart from availability and reliability of utilities like power and water. Real estate players were quick to recognise this and come up with a creative solution—townships.

Almost every day, newspapers feature advertisements for one township project or another, signalling a new trend, which has been hastened by the fact that the only available land for large-scale residential complexes these days is outside city limits. And, the only way to attract buyers to such comparatively remote locations is to provide integrated services in the township itself.

Indeed, integrated townships are the way of the future, offering more open areas and an emphasis on creating a sustainable living ecosystem with residential and commercial spaces, supported by an infrastructure backbone of power, roads, water, drainage and sewage. Essentially, they are extra-large gated communities, which have everything a family would need—from schools, hospitals, playgrounds and parks to offices, shopping complexes and entertainment centres—all within a protected area with private security to monitor access. Because they are outside city limits, they offer affordability, comfort, convenience, social integration, infrastructure and a contemporary lifestyle in an appealing package deal.

Several such townships are currently under development in the NCR, Ahmedabad, Mohali, Chandigarh, Mumbai, Bangalore, Chennai, Kolkata, Jhansi, Kanpur, Jalandhar, Ludhiana, Panipat, Sonipat, Jaipur, Saharanpur, Pune and Nagpur.

It’s clearly an idea whose time has come. Spiralling real estate prices are dampening demand, while existing residential projects are mostly in the suburbs or on the outskirts of cities, where facilities are sorely lacking. The trend to move away from the city limits is gaining pace and offering developers the chance to take a huge leap in building new integrated spaces. It also coincides with the average middle-class citizen’s search for affordable housing and better facilities. With the entire infrastructure in the hands of the developer—be it electricity, water supply, transport, or even green spaces for children—it seems a win-win situation for both the developer and

house hunters.

Experts are unanimous in their view that this is a natural progression and a signpost to the future. Says Samir Chopra, chairman, RE/MAX India, an international property brokerage and analytic firm: “The concept of townships has emerged as a result of saturation of the main cities, where there is a scarcity of housing. In addition to this, the prices in the main cities are out of reach for the middle class. As a result, real estate developers have started creating integrated townships in the periphery/outskirts of the main city with all basic amenities, infrastructure and public utilities that a family needs. This is definitely a good substitute till the government takes a mass initiative to urbanise undeveloped areas.”

Shravan Kumar Govil, CEO-RFA (real estate specialist and financial advisor) at REPL, a project management consultancy firm, which specialises in urban planning and architecture, feels such a shift offers developers the scope of providing a wide product range to potential clients along with a complete range of facilities and infrastructure. “Townships offer a complete package to clients, including recreational facilities and large green areas, which adds to the value of homes and creates better living spaces,” he says.

Most prominent developers with a long-term view of the market are currently building townships, some are 50 km from the nearest city, but close to an industrial park or adjoining a highway. Townships by their nature are self-sufficient in all respects and those located near a highway provide access for those who work in the city. In most cases, like OneHub Chennai, they offer a walk-to-work option, thanks to industrial park zones that are next to the townships. The other advantage, especially for buyers, is that there are a range of residential offerings to suit every pocket, from apartments to townhouses and villas. The size also allows the inclusion of recreational facilities like golf courses, which require large, open spaces. In most cases, the homes are designed by a well-known architect who ties up with the developer for a series of projects.

Building townships is also a huge step up for developers in terms of scale, size and ambition, be it a commercial area or a range of residential offerings, from flats to exclusive luxury spaces, as well as building schools, hospitals and retail outlets. Says Ashish Jerath, vice-president, sales (Delhi and NCR), Emaar MGF: “Given the scale and size of such developments, townships add value to every development for a company.”

Large corporates are also shifting their focus to consider townships in such cities, which are rated high on maintenance, planning and features. Corporates can also buy or rent residential areas for use by their executives. In fact, one of the earliest townships to be showcased, OneHub Chennai, appeals to industrial concentrations, like Chennai’s auto industry, and is coming up in a location some 55 km from Chennai. This 1,600-acre park, built by Ascendas and a consortium from Japan, will house more than 60 Japanese companies and their employees once completed.

Developers are clearly sold on the idea. Says Pradeep Jain, chairman of Parsvnath Developers: “Township development as a concept was started to make life comfortable for the residents. Considering factors like lack of public transport, longer travelling time to the workplace and poor urban planning across most states; people are hardly left with time for other things in life. That’s where integrated townships come into play and provide all facilities like schools, medicare, sports complex, community centres, road network, electricity, water supply and management, shopping and entertainment facilities, garbage disposal and security. It simply makes one’s life very comfortable, which is encouraging people to invest in such projects. It also provides more scope for developers.” After OneHub Chennai, another joint venture between Japanese giant Sojitz Corporation and Motherson Group, India’s largest maker of automobile parts, is a 200-acre industrial park in Sriperumbudur near Chennai, which will house both Indian and Japanese companies across sectors like automotive, electronics and food processing. The JV is awaiting clearance from the government for the project since the official stand on such projects still remains something of a grey area.

The official view

What is the official definition of a township? The short answer? There is none. Only the guidelines over foreign direct investment in the real estate sector by the Department of Industrial Policy and Promotion (DIPP) provided a cursory definition of a township project. Under these guidelines, the minimum area to be developed by a company attracting FDI should be 100 acres for which norms and standards to be followed would go by local laws and bylaws. If such bylaws do not exist, a minimum of 2,000 dwelling units for about 10,000 people will be required to be developed by the investor.

However, the definition also creates a difference between an integrated township and a residential township. Says Sachin Sandhir, MD, RICS, South-Asia: “While an integrated township includes hospitals, schools, offices and large-scale commercial establishments, a residential township primarily comprises residential development with minimal shopping spaces or other social infrastructure.”

Some states such as Haryana, Maharashtra and Karnataka follow the area restriction for developing an integrated township project, while other states offer their own versions. States such as Rajasthan and West Bengal have relaxed the area restrictions. This can vary from as low as 40 acres to as high as 3,000 acres or more. In bigger projects, chances are that there would be multiple partners including a developer firm, construction companies, and the state government authority. Besides, there are other norms such as minimum road width, percentage of land usage, open space and civic amenities, as specified by the authorities. Depending on size, as a rule, all integrated townships must provide for schools and basic medical care facilities, while those above 1,000 acres in size must have a college as well.

What’s the future?

The future of townships in India is considered to be bright because of the growing population of working people migrating from villages to cities and cities to metros. The need for such townships is not only expected to increase, but the government regulations on clearances, which otherwise are a major hurdle, are expected to be eased. Getting clearances from the regulatory authorities takes a lot of time considering the large land parcels required for such townships. However, with the presence of schools, hospitals and large green areas in an area of approximately100 acres, it becomes simpler to get clearances in one go. Says Manu Garg, director, LandCraft Developers: “The future of townships is very bright in India, as its development is the best solution for the residential, commercial and civic developments along with the infrastructure development in the country in a well-planned manner.”

Developers and experts feel that with the continuing trend, it is likely that over the next five years, most metros and satellite cities will see an increased number of launches in the integrated township category, even though problems remain. For developers, rules and regulations are such that it takes a very long time to get clearances for any project, plus it varies from state to state. Such delay automatically increases input costs, which are passed on to the buyer. Moreover, the presence of commercial spaces in the form of small shops or offices within the same premises gives the developer an income source in the form of leasable assets, but land acquisition remains a key impediment because of different laws governing residential and commercial properties. For the buyers, townships provide a cheaper buying option and an attractive, clean, contemporary environment to live in. It

provides for a more homogenous society with increased social bonding.

Today, every developer has something to offer in a township project, so the options are quite extensive, and in all sorts of price points—affordable, mid-segment luxury or premium luxury. The latest trend in townships are theme-based structures like the concept of ‘Vedic City’, as opposed to golf courses being the key selling point. The Vedic City, originally started by Maharishi Mahesh Yogi in America, is spread across a vast area of 580 acres, and is reminiscent of the golden era of the dynasties of Ashoka and the great Mauryan rulers. From ancient to modern, townships are offering the widest spectrum of options and clearly are, on paper, the signpost to the future, but the tangle of red tape means that it could be a while before the future is here.

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