What differentiates a city like Dubai from cities found in India? Better planning, better infrastructure, more jobs and efficient administration systems that make use of the latest technology. Well, good news, such cities are now going to be set up right here in our nation. The Indian Govt. has launched the Smart Cities mission to renovate and retro lift urban Indian cities to make them more friendly towards global citizens while also being sustainable.
The initiative, which was first introduced in 2015 aims to build at least 100 such cities under the guidance and collaboration of Union Ministry of Urban Development with respective State Governments. As of 2018, 99 cities have already been picked to be upgraded to Smart City standards by the Govt. This is set to be a 5-year-old program and the results of the development are expected to start showing by 2022.
What Are The Characteristics Of A Smart City?
As mentioned before, a Smart City is an urban area that combines technology, infrastructure and planning to make for a more citizen-friendly and sustainable place. Upon completion of development, here are some of the core features that the infrastructure of a smart city would encompass.
- Dependable and adequate power supply
- Adequate clean water supply
- Efficient sanitation and waste management systems
- Reliable public transport and urban mobility
- Accessible and efficient health and education systems
- Efficient security and safety measures, especially for women and children
- Affordable housing options for all the citizens
- A sustainable environment
- Solid governance, in particular, e-governance
- Good IT connectivity and digitization of administration systems
The ultimate aim of implementing smart cities would be to drive the economy towards prosperity and economic growth in turn which would not only improve the quality of life of the Indian people, but would also harness technology for smarter solutions.
Will Introduction Of Smart Cities Affect The Indian Real Estate Space?
To understand this, we first need to briefly understand how our Govt. plans to go about implementing smart cities. As of now, the Govt. strategy to build such cities consist of the following for independent steps
- Retrofitting: Which involves the introduction of better planning in an already built up area and implementing visions which will help make the area achieve smart city parameters.
- Redevelopment: This method involves replacing an already built up area with elements that allow the creation of a new layout that supports smart city goals.
- Greenfield development: This is applying a combination of the above two steps to set up a smart city in a vacant or underdeveloped area.
- Pan-city development: This envisages the applications of select smart solutions to an already existing infrastructure. This largely includes application of technology to make current systems and solutions better.
As you can see, all of the above will require planning, execution and ultimately building of residential and commercial structures, which is fundamentally what the real estate sector exists for. Since smart cities are aimed at improving the quality of life and maybe even at putting India on the world map as a role model, the Govt is working tirelessly to make sure they are executed well. This is undoubtedly going to give a huge boost to the Indian real estate sector.
Potential Impact On Real Estate
As per the experts, smart cities will have a “multi-prong” impact on the real estate industry in the following ways.
1. Higher demand for commercial real estate
This one takes the spotlight. Smart cities will call for more office spaces, especially since companies with a worldwide footprint or International biggies are expected to pitch tent here. A lot of investment is expected to come in because office spaces are going to be in high demand.
2. Enhance private-public partnerships
Stronger partnerships between these two sectors will be instrumental in raising the necessary capital required to build smart cities. This will also ensure efficient delivery of services and utilities. Indirectly, this will boost pooling of capital by developers and private enterprises for creating joint ventures within smart cities.
3. Improved and affordable housing schemes
In tabs with the Prime Minister’s PMAY scheme and the general aim to have “housing for all”, developers will be roped in to achieve the target of 2 crore homes by 2022. This will be a huge boost to the smaller real estate developers as well because fresh demand for housing will arise.
4. Improved Infrastructure
Due to a combination of factors, smart cities will ultimately open up multitudes of job openings for the people, which will call for improved infrastructure, commercial and residential spaces and an overall rise in the standard of living. Through this, the job openings in the real estate sector is expected soar very high as infrastructure development requires manpower and labor.
As you can see, developers as going to play a crucial role in seeing smart cities implemented. With a minimum of 100 cities planned to bear the smart city flag, a GDP increase of 10-12% is expected in the real estate sector by 2022.
As a reflection of all this, land prices too are expected to go up. Areas in and around or even well connected to proposed smart cities will soon start reflecting this. However, since Govt. may step in to regulate all aspects related to smart cities, experts are refraining from commenting on this further.
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