Builders and international property consultants are keenly watching the possible effects of the 1,483-km Delhi Mumbai Industrial Corridor (DMIC) project that has received approval on August 16, 2007 from the union cabinet to be jointly developed by India and Japan. Anuj Puri, country head and chairman, Jones Lang LaSalle Megharaj told FE, ?The Delhi-Mumbai industrial corridor which will include six mega investment regions of 200 sq km each is all set to create a momentous boom in all sectors of real estate as the project will directly translate into massive investments in real estate development, SEZs, ports, airports, roads and the logistics infrastructure. Moreover, the new railway line that will be laid to support the DMIC will give birth to new residential locations.?
These investment regions are: Dadri-Noida-Ghaziabad in Uttar Pradesh; Manesar-Bawal in Haryana, Khushkhera-Bhiwadi-Neemrana in Rajasthan, Pithampur-Dhar-Mhow in Madhya Pradesh, Bharuch-Dahej in Gujarat and Igatpuri-Nashik-Sinnar in Maharashtra. The minimum processing area in these regions is likely to be about 40% of the total designated area. This project, expected to run through Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra, and built along the proposed Delhi-Mumbai dedicated rail freight corridor, will be handled by a corporate entity.
Niranjan Hiranandani, managing director, Hiranandani Construction said, ?The central and state government has yet to define the areas of development of DMIC. Only then we will decide as to which areas we would look at for setting up residential projects. We have yet to get the details of all these. Once we get the details then we will definitely consider plans to set up residential projects that suits the market needs.?
Pranay Vakil, chairman, Knight Frank India comments, ?Whenever there is a new infrastructure coming up, residential, retail and commercial development springs up giving rise to new destinations. For example, with the infrastructure development of Pune-Bangalore Road, Hinjewadi has now emerged as an important IT destination where lot of car show-rooms and other residential and commercial developments have sprung up on the entire stretch.? Otherwise, prior to the development of Pune-Bangalore Road, no one knew what Hinjewadi was. The good news is that now a new flyover is coming up near Hinjewadi. Also, in Jaipur, the development of a 150 km long Ring Road, a lot of developments including industrial parks, discounted retail (like factory outlets) are springing up near these roads, he added.
Further, Vakil explained, ?We have seen a similar situation also where the metro is being planned, say in Mumbai or in Hyderabad, and land parcels which were otherwise idle suddenly come to life and there is a flurry of activity in terms of both commercial and residential developments. Another example is the Sewri Nhava-Shewa Transharbour bridge where, from the time it has been announced, there is a flurry of activity on the Nhava-Sheva end of the bridge and many developments are being considered. We have also seen this happen in Noida.?
Interestingly, this is not new to India. But this invariably happens in other developed countries as well where either a destination pushes the infrastructure or infrastructure leads to surrounding developments. Initiatives from the government in developing the infrastructure becomes the key and the faster this infrastructure is allowed to come up faster is the progress that one could see on the ground. ?Some of these infrastructural projects are quite frankly not an option but a compulsion. Since it would help decongest cities and reduce the pressure on the existing services within the city,? Vakil added.
As for DMIC, a corporate entity, it is understood to be formed to undertake the planning, development of various components, coordinating with all stakeholders, monitoring of implementation and raising all finances of the project. The DMIC project would be overseen by an apex steering authority, headed by the finance minister and would have concerned central ministers and state chief ministers as members.
Work on the DMIC is expected to commence in 2008 with an estimated $90 billion to $100 billion of investment, most of which would be financed through private funding to create the infrastructure in the first phase of the project. Japanese companies, particularly small and medium enterprises, are expected to invest over $10 billion in the proposed corridor during the first phase.
Each investment region would be a green field or a brown field area having a combination of production units, public utilities, logistics, environmental protection facilities, residential areas, social infrastructure and administrative services. In addition to the investment regions, the DMIC will also have six industrial areas of 100 sq km each.
Industry experts believe that by the time the project reaches completion, it will have transformed the real estate landscape in the pertinent parts of Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra. It will mean a new lease of life for areas in these states that have been witnessing slower growth.
Says Akshay Raheja, vice chairman, Globus Stores Private Ltd, fashion apparel retailing major, ?We would look at setting up Globus stores in these locations as this will be the new emerging market and even the logistics services needs will be met easily as a new railway line will give birth to new residential locations from where we would see the demand.?
According to Hemant Shah, chairman, Akruti Nirman Ltd, ?Akruti will participate strategically in enhancing the government?s vision by supplementing the overall initiative with private sector contribution by way of logistics and warehousing, townships, and other residential and commercial structures. Connectivity acts as catalyst for the growth of industries. It will bring in efficiency through cost reduction. This will lead to creation of warehouses and warehousing will bring in opportunities for tertiary activities. The agri sector will develop on account of creation of the dispersed storage and development of a cold chain.?
Further, Shah added that Tier II and III cities will grow on account of increased business and employment. These cities are expected to be the backbone of sustained economic growth. Therefore, there will be an excellent opportunity for investment in the real estate not only across the corridor but also in the hinterland and small towns connected to the railway network. Overall a win-win situation for the people, government, the farmers and for accelerated growth of real estate and infrastructure in the country.
Ali Lokhandwala, managing director, Lokhandwala Builders said, ?The land prices at the six investment regions where DMIC will come up is expected to go up by almost double than the existing rates. But, by the time the project commences and residential projects come up, it would take almost about four to five years for the new destinations to get established. As for Igatpuri in Maharashtra, we would look at developing residential projects there to enable people to stay closer to the vicinity to the new project locations and reap the benefits.?