Redevelopment of Railway Stations: A green signal for the overall economy and real estate
April 9, 2021 11:53 AM
The costs of redeveloping terminals and rail-side amenities can be cross-subsidized to a large extent by exploiting the real estate potential in these locations.
Agencies such as the RLDA, IRCON, IRSDC, etc. have been actively engaged in this process and have already identified 62 stations across the country for redevelopment and privatization.
By Anshuman Magazine
Indian Railways is among the world’s largest rail network serving approx. 23 million travellers every day. Major part of the existing rail network has been in existence since the pre-independence era and deserves to be reimagined to keep up with the demands of New India. In this context, Indian Railways has embarked on a much needed and exciting endeavour to redevelop significant railway stations in India’s major cities to provide enhanced travel experiences to its passengers with a view to modernize and future proof these important travel nodes. Agencies such as the RLDA, IRCON, IRSDC, etc. have been actively engaged in this process and have already identified 62 stations across the country for redevelopment and privatization. This provides a tremendous opportunity to reshape the urban landscape of the country, setting up exemplary Transit-oriented-development (TOD) projects in Tier-1 cities and catalysing development in various Tier 2 and Tier 3 locations across the country.
Interestingly, the focus is not only to develop the rail side facilities and amenities, which are of course extremely essential but also to develop the cityside amenities to commercially utilize excessive land holdings available in some of these stations. The costs of redeveloping terminals and rail-side amenities can be cross-subsidized to a large extent by exploiting the real estate potential in these locations. Additionally, there has been a clear intent to motivate increased participation of the private sector in the redevelopment of these railway stations.
Various positives are likely to emerge rapidly for all stakeholders involved and likely to drive significant transformation in the short to medium term.
Building a future-ready India
A good urban design and master plan has the potential to change market perceptions and outcome by reimagining the entire development opportunity. Understanding and redesigning the urban structure, connectivity, and investments will help reposition these locations. The value of well-planned and designed locations is not just in financial terms but also through the social and environmental value that impacts the quality of life and well-being of a community.
Changing the game with Connectivity
With a clear focus on upgradation of the existing station infrastructure and development of large-scale commercial centres in the excess land available at these stations, Urban local bodies will have a significant opportunity. Not only can they modernise the area around the railway station but also plan for better public and civic amenities. Additionally, they could potentially transform the station location into a multi-modal transit hub by providing local bus and train networks interlinking them with the station & possibly connecting them to the airports in their cities. All this will help passengers get access to modern facilities along with the opportunity to commute smarter and faster within the city and across the country.
New and Larger project opportunities
Many prominent railway stations including the New Delhi Railway Station and CST Terminal in Mumbai have been identified for the privatization and monetization by the Government. With such large projects in the fray, high quality investors and developers from the private sector are likely to show higher interest in participating in these projects. For developers, this will represent an opportunity to create new landmarks which are master planned and future-ready, whereas for investors, these projects will bring in relatively low-risk investment opportunities given the volume of passenger traffic with the possibility of multiple exit options.
Premium value near stations
Earlier locations near railway stations would lose their “premium value” due to the poorly kept surrounding. But this is likely to change with the station re-development program With India shifting focus to smarter connectivity post pandemic, the development of railway stations and the larger surrounding areas will be a significant step. The areas near railway stations will soon become prime locations as connectivity and accessibility become increasingly significant for investors and occupiers. This is expected to revitalize the nodes that once used to be the most significant landmarks in most cities.
While the above positives are fairly exciting, factors such as realistic valuation of real estate, fair contractual terms and conditions, optimal financing options and greater autonomy during the development phase of the projects, etc., are likely to ensure increased participation of the private sector and eventual success of this partnership model.
(The author is CEO & Chairman, CBRE India, South-East Asia, Middle East & Africa. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)