Smart Cities in India

Recently, CM Fadnavis informed that 10 cities of Maharashtra would compete with other states to bag the ‘Smart City’ projects which meant to get the more advanced and well developed urban infrastructure.

Maharashtra CM Devendra Fadnavis stated that there are 10 cities from our state which is being nominated for the Centre’s “Smart Cities” project and we will compete with the entries of other states to bag funds from central to develop more advanced and developed urban infrastructure. Edged out emerging towns from the developed cities of Maharashtra are in the race to bag the funds from central. However; the name of shortlisted cities are; Mumbai, Kalyan – Dombivali, Navi Mumbai, Thane from MMR (Mumbai Metropolitan region), Pune, Solapur, Pimpri – Chinchwad from Western Maharashtra, Nagpur and Amravati from Vidarbha, Nashik from North Maharashtra and Aurangabad from Marathwada.

Recently, Central Government of India, has identified development of new towns close to those cities which are well developed because its key behind the smart city initiative where central government will contribute Rs 50 crore each year towards the smart city project. According to Comptroller and Auditor General (CAG) of India there are lacks of infrastructure and basic amenities in the new emerging towns of Maharashtra and due to that soon CM will announce next plan for development, which will focus on the urban areas or Maharashtra. This report observed that out of 36 none of the town has even the basic service level benchmarks for solid waste management, sewage management and water supply, however; the audit was for the period of 2011 to 2014. According to CAG report, water supplied in 50 per cent of the audited towns are between 25 to 69 litres per day per person, however; according to government norms it should be between 70 to 70 litres per day per person. It was observed that due to loss from distribution system, treatment plans, reduced efficiency of water the problem of irregular water supply comes in existence.

Almost there is no town which found to be segrating municipal waste; the more CAG added that the numbers of towns are not even authorized by the state pollution for the waste disposal facilities. However; the CAG has also identified irregularities in the main irrigation projects in all over the state and there are many mini projects which don’t have approved master plan.

few takers are available for new homes in Mumbai and Delhi

In Mumbai and Delhi, real estate developers are finding it difficult to get the buyers and they are facing worse condition because due to unaffordable prices are leaving only non takers for new projects. As per the statement of Anuj Puri who is Chairman and Country Head at JLL India, currently the real estate market is so sluggish and due to that inventory is increasing day by day.

While facing these situation most of the developers are trying to enhance their price for new projects. Samantak Das, Chief Economist and Director Research at Knight Frank India, stated that with the absorption of current rates new builders are trying to get their numbers back. However; price reflection is first sign fo to 20 per cent, stated by Anil Kothuri who is Presidentr bear market in real state sector, whereas; the price is remaining flat for the projects which are in existence from past two years. Some experts are saying that investment in other domains can provide good returns.

Why only few takers are available for new projects?

`Howevver the picture of real estate market is not so much different from Mumbai city as the current supply is higher than current demand. Mumbai is the only place where people can still find the pre-leased commercial properties. Buyers are still waiting for low interest rate however due to correction of price in real estate market they could have to wait for some more time, but after holding the property for one to two more years now investors and builder both are losing hope as well as patience and because of that now they are ready to offer small offers and discounts in the form of different things such as; freebies in flash sales, free parking, low interest of loan, attractive payment plans, free stamp duty and registration and more.

Whereas; with better research you can also find the few builders who are offering big price discounts for those who are buying in bulk because discount largely depends on kind of area, location and property. In big deals, because of economies of scale, builders are ready to provide 15 to 20 per cent discount for those properties which are under construction. But discount is still small that is 5 to 10 per cent for those properties which are ready for possession and available in secondary market. All the differences in price and property trend is differ as per area too. In the absence of large supply there are less price pressure in the western suburbs, but for central Mumbai areas such as; Parel and Worli the price pressure is more.

How long the latest trend will continue?

Another most important question is that till what time the recent property trend will continue? Changes in policy by the Maharashtra government can add a lot of supply in current market and then there will be possibility that real estate prices will become more affordable, but it will take some more time. Real estate market in Mumbai had seen very much price correction in between the year 1995 to 2001; however the prices are crashed by half in many pockets.

What end users and sellers can do?

While analyzing the recent property trend you can classify the real estate sector into two categories; end uses and investors. The correction has just started because there are no room for panic selling in real estate market, so buyers who are waiting for right movement to buy property should wait for 1 to 2 years, but still end users are restricted by many other factors such as; birth of kids, financial capability, marriage, getting a better job, and more.

Potential investors considering investing in the Mumbai Metropolitan region are in for a shock as the realty market around the MMR is competing with that of California, in the U.S. Added to the existing rush is the proposed metro rail project which is all set to catapult the market price further.

The illogical rise in prices of land — residential and office spaces — may act as a stumbling block for the growth according to the industry bodies and NRIs. Bankers too opine that such a scenario would prove to be counter-productive to the expected industrial eco-system.

The California-based NRI are put off by the mad realty rush. “This is a never-before-price and there is no logic behind it. When I make a realistic comparison, land around California is cheaper than the eastern Mumbai region. Investing here doesn’t make any business sense” they say.

While an acre near Livemore in California costs about Rs. 5.5 crore, the same stretch is priced at Rs.24 crore on the outskirts of Thane.

The Confederation of Indian Industries (CII) is of the opinion that the development is definitely a setback for the potential investors. “Not a happy situation. Industrialists are expected to invest on machinery and other aspects besides land. The break-even period will be delayed significantly which may discourage potential investors,” he felt. On the other hand, the present situation is seen as once-in-a-lifetime opportunity for the small and big real estate firms to make a quick buck. The government has banned conversion of agricultural land and named hundreds of illegal layouts to prevent price rise but it did not yield any result. Market experts say that it’s realty bubble in the making.

“The local people are becoming millionaires overnight, purchasing swanky cars and blowing up money on luxuries. Now you see the bubble bursting as the economy is slowing down and the people have stopped making much inquiries about investing in the region. Illogical rise in prices of land may act as a stumbling block for growth.