While railway redevelopment will help build the infrastructural force of the country, it will also provide a fillip to the nation’s real estate sector- as the commercial and residential segments would witness rapid development.
Indian Railways is looking at redevelopment of railway stations with the primary objectives of providing world class passenger amenities, making them hubs of economic development and re-establishing them as the nerve centers of their cities. This is envisaged to be achieved through leveraging the commercial development opportunity of land and air space surrounding the station and to create seamless travel and facilities experience to passengers with the aim to future-proof these important travel nodes. The government has been actively encouraging the participation of the private sector in this grand initiative, as it is an opportunity to reshape the urban landscape of the country. Recently, IRSDC has released a set of codes and guidelines to transform railway stations into a Railopolis. According to the industry experts, these codes will lead to a systematic standardization of railway development, which also includes the commercial development of the chosen railway land parcels. In an exclusive conversation with Financial Express Online, Preetham Mehra- Executive Director & Head of Government Practice, CBRE India said that with public and private sectors joining hands, there can be assurance of higher quality in the redevelopment projects. Excerpts:
Why have Indian railways been inclined to include the private sector in the redevelopment of railway stations and how is this going to elevate the nation’s infrastructure?
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Indian Railways is among the world’s largest rail network serving approx. 23 million travelers every day. The Railway Land Development Authority has already identified 62 railway stations to be redeveloped a strategy aimed at utilizing the surplus land assets for commercial purpose to generate revenue and creating value to the non-performing railway assets, thereby giving a required boost to the railway economy. Private partnerships ensure the flow of necessary investments into the public sector and more effective public resources management.
Moreover, with public and private sectors joining hands, there can be assurance of higher quality and scheduled development of the undertaken projects, further enabled with better risk allocation of resources. In return, dedicating their expertise and experience to these public sector projects entitles the private players to long-term remunerations, thus creating a symbiotic ecosystem for both the sectors.
What is the role of master-planning and design strategy in the redevelopment plans for railway stations?
In a bid to redevelop railway stations to create better national infrastructure, the government’s 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.
To enable an execution that is aligned with the vision of the government, a good urban design and master plan, which has the potential to change market perceptions and outcome by reimagining the entire development opportunity, comes into major play. Understanding and redesigning the urban structure, connectivity, and investments will help reposition these chosen 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.
A lot of urban local bodies are looking at setting up commercial centres around railway stations, how is this going to help the passengers in terms of accessing better facilities?
With a clear focus on commercial/residential development on vacant land parcels and multifunctional complexes in circulating area of railway stations, urban local bodies are viewing this as an opportunity.
Not only can they modernize the area around the railway station but also plan for better public and civic amenities. Along with setting up large commercial centres at the vacant spaces, they could also 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.
What is the scale and kind of investment opportunities that private investors can expect?
With many prominent railway stations including the New Delhi Railway Station and CST Terminal in Mumbai having been identified for the privatization and monetization by the Government, the sector will attract participation from many high-quality investors and developers from the private sector. While for developers, this will represent an opportunity to create new landmarks which are master planned and future-ready, low initial capital investment in land, ease of doing business, and flexible mechanism of payment for lease premium, 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.
Currently, the expected capital infusion for railway station redevelopment projects is estimated at INR 96,000 crore including railway asset creation component of INR 28,000 crore over a period of 8-10 years.
Any expectations on how much this will benefit your sector and overall economy in terms of growth and revival?
While earlier locations near railway stations would lose their “premium value” due to the poorly kept surrounding, the station re-development program and with India shifting focus to smarter connectivity post pandemic, the development of railway stations and the larger surrounding areas will be a major step to further the economic growth of the country. While railway redevelopment will help build the infrastructural force of the country, it will also provide a fillip to the nation’s real estate sector- as the commercial and residential segments would witness rapid development.
Also, 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.