Build more integrated Townships to decongest our Metros

Large cities are getting over-crowded under the relentless march of urbanization. An estimated 160 million people have moved to India’s cities in the last two decades, and another 230 million are projected to move there within the next 20 years. The exponential rise in the number of city dwellers is leading to an ever-increasing demand for housing and urban infrastructure. At the same time, the massive influx of people has strained India’s urban systems to the point of breaking down, creating massive slums with inadequate housing, sanitation, basic services and security. The 2011 census indicates that there are 14 million households (or approximately 70 million people assuming an average household size of five people) living in slums in India’s cities.

To cope with this demographic pressure, all our bigger cities are stretching their boundaries. The extension of the traditional city limit is spurred in large measure by the expansion in real estate activity to accommodate the bulge in population. Even the new master plans for all major cities are being rejigged to facilitate the expansion of city limits.

To ease the pressure on big cities and improve the quality of urban living, town planners and policymakers are encouraging the setting up of integrated townships as an effective development tool for building infrastructure in the newly marked spaces beyond traditional city boundaries. Setting up of self-contained integrated townships in a decentralized manner offers a sensible solution to providing a more holistic living environment and preventing the proliferation of unplanned urban villages. In fact, integrated townships bring a raft of value propositions such as affordability, convenience, and a relaxing lifestyle in one very attractive package to modern urban planning and development.

As these townships have functional linkages with mother cities, surrounding areas and towns, they are better able to address the pressure on urban areas and its infrastructure and at the same time fulfil the need for higher residential density in the outlying areas of bigger cities. Varying in land use and size ranging from 20 acres to over 1000 acres, what also sets them apart is their unique and seamless blend of residential, commercial, industrial and retail features, which offer a holistic and sustainable urban development model.

Most integrated townships have at least 25 per cent of the total built-up area for residential use with the rest of the land parcel housing offices, commercial centres, clubs, schools, etc. However, there is no standard definition of integrated townships from a regulatory standpoint. Different states define integrated townships differently. Gujarat, for instance, has a policy that encourages development of six different types of townships: technology parks, education-based townships, medical and healthcare townships, tourism-related townships, logistics parks, and residential townships. The policy requires 80 per cent of the built-up area to be developed for residential use, while making housing for economically weaker sections (EWS) mandatory.

On the other hand, Maharashtra, which was the first state to come up with an integrated township policy back in 2004, requires such projects to have a minimum spread of 100 acres. However, a new policy to help develop integrated townships outside congested city areas to address the problems of population density and the real estate crunch is in the offing and would most likely be announced by the new government after the assembly elections in October. Probably, taking into consideration the pressure on land availability, Maharashtra could be looking at relaxing the minimum land requirement criteria.

For instance, the Haryana government has come forward to promote integrated township projects by proposing the easing of development norms. The relaxation of the land requirement norms by many state governments has encouraged developers to come up with more integrated townships. The Central Government has already opened the doors for External Commercial Borrowings (ECBs) in integrated township development. The easing of the FDI investment parameters for the real estate and construction sector, which is currently underway, would further help to create a more conducive investment environment for the growth of more integrated townships in India.

Now that the focus of the government is firmly fixed on providing “housing for all” by 2022 and promoting affordable housing across major cities of India, it makes eminent sense to develop and build integrated townships. Today, when even some of the big city corporations are scrambling for funds to maintain and improve their local urban amenities and infrastructure development, promoting the idea of integrated townships can help solve many of our urban development problems.

That explains why such townships are coming up in a big way on the outskirts of cities like Delhi, Mumbai and Bangalore. Even some 3-4 years ago, there were more than 200 integrated townships covering more than 200,000 acres that were under approval for planning and construction especially around the four metros, according to an infrastructure report by IDFC. In recent years, a number of integrated townships have come up or are under development in the NCR agglomerations of Gurgaon, Noida and Greater Noida.

Real estate analysts and consultancy firms such as Jones Lang Lasalle predict that over the next 2-5 years, most metros and satellite cities are likely to see increased launches of integrated township projects. Even Tier II cities and state capitals which see the population from the interiors gravitating towards them are also likely to see such projects being launched. A report by McKinsey states that there is a need to build around 20-25 new townships closer to 20 metros and cities across the country.

About P. Sahel

As Vice Chairman of Lotus Greens, Sahel is responsible for giving directions on overall business strategy and key investments decisions of the firm. Being one of the founding members of Lotus Greens, Sahel has been instrumental in formulating various company policies, setting up systems and processes, and building a strong team of professionals. Prior to Lotus Greens, Sahel worked for more than 16 years in some of India’s largest and most respected real estate companies like Jones Lang LaSalle for 13 years as the Managing Director of the Markets & Solution Development and DLF prior to that. The views expressed are personal

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