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Thursday, January 29, 2015

How the Indian Smart City could affect your own Real Estate dreams!

If you are a real estate builder in one of India's many vibrant cities, this smart city blog post is a must read for you. Firstly, please note that there is no definite definition of the term Smart City. Think of a smart phone, a smart shirt or a smart person you have seen. What makes them smart? Its all really hazy and there could be numerous points of view. 

By far, this is the easiest infographic we found on the web, and simply loved. Its placed below for your perusal too and should help you see better through this foggy environment.

Image Source: Forbes 
Event: New Smart City Announced Publicly

Knowing PM Modi and his penchant for new launches, follow up campaigns, social media affinity and that strife for perfection, a smart city launch in India will be a serious event and will create a lot of buzz at the local and national levels. 

Lets say you wake up one morning and before you had your first sip of tea, the newspaper in your hand informed you that a new smart city shall be built. A brand new/ re developed city which promises its citizens all the smart things mentioned in the infographic above. Plus, it is being designed and put together by the best national and international organisations, that have experience in building evolving global cities. 

This time, India cannot afford to make compromises and I have a feeling that we won't.

Question: What will happen to your real estate dreams after that new smart city announcement?

Tool Used: The IREFD Smart City Blast Radius: 

With stable governance, focus on infrastructure like roads, railways, bridges and numerous other things, rural India will begin to migrate to urban centres (yes, smart cities) at much faster rates than today. IREFD estimates that a smart city announcement will have a blast radius of 300 kilometres! This is purely a theory but I have done my homework and think that this will happen is already happening. [Take a look at investor sentiments around Allahabad]

Result #1: Your City falls within the Blast Radius

If you are building real estate for a living in a city that falls within the blast radius (300 kilometres) of a smart city, you should start looking at farming or producing zero gas under arm deodorant as an alternate business plan immediately. Within 5 years from the announcement date, a smart city will suck up all real estate demand & investments in it's blast radius; and will continue to do so for years thereafter. 

Or, you could await the numerous housing and retail development tenders that originate from this new smart city. PPPs and BOTs should be the ideal way ahead. That would be 3 years from now and there will be ten builders making a beeline for every single project. This means that you have 3 years to build a credible real estate brand, deliver your projects and be ready to encash the great Indian smart city dream by building legit real estate in one of them.

Result #2: Your city is The New Smart City

This is a simple copy paste from Result#1. You should await the numerous housing and retail development tenders that will originate from this new smart city you are already building real estate in. That would be 3 years from now and there will be ten builders making a beeline for every single project. This means that you have 3 years to build a credible brand, deliver your projects and be ready to encash the great Indian smart city potential that has opened up for you, right in your city! 

Please remember that you will face serious competition from property builders who are not in your city but whose cities lie within your smart city's blast radius. Also have this uncanny feeling that big builders from India's metro cities will also compete with you.

Life will be tough but it will do the nation and its people good. I reckon there could also be significant price corrections in existing real estate local markets. 

Result #3: You want to Invest in Smart City Real Estate

If you are a real estate investor, which in 9 out of 10 cases means; you have invested in real estate once upon a time and are still cursing your luck. Plus, you have no money to make further property investments till you can sell off your old 'investment(s)', which suddenly, no one wants to buy anymore. You also have no real friends, so on Sundays you do property site visits just for fun. Of course the all important local real estate trend and innovations excite you. 

There is no quick fix for you. In fact, you are a living example of what they call A-Catch-22-Situation. Catch 22 is not an urban legend after all. 

Result #4: You have nothing to do with Real Estate

That is just awesome. Ignorance is bliss. However, if you are bored of bliss, why not check up on our stupid explanation of ever increasing land prices in India or read our comic on how to sell realestate on the beach?

Cheers,
Rahul

Resources for further reading on Indian Smart Cities

Web: Indian Smart Cities - Ministry of Urban Development
Download: Draft Concept Note on Smart Cities (Edited as on 3rd December, 2014)


About the author
Rahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!

Connect with Rahul Mishra on Linkedin. Add Rahul Mishra to your circles in Google+

3 comments:

  1. Thanks for the article. Your article was very inspiring. Keep on posting.
    Thanks
    Mick Jones
    www.sabari.co
    One of the oldest and most reputed construction firms

    ReplyDelete
  2. Hahaha... This is classic 'for dummies' stuff. Very cool. On a more serious note, I have a humble counter point to 'Result #1'. When so many people are going to rush to the proposed smart urban centre, wouldn't there be a positive spill-over effect which could result in an expansion of residential or commercial boundaries beyond the geographical boundaries of the smart city? If this happens, I think those fringe real estate developers could see good times. Of course, this would apply only to the fringe developers and not those who are as far as 300km away. What say, Mr. Mishra...

    ReplyDelete
    Replies
    1. Hey Nitesh. I agree with you. If the inward rush of people to a smart city is that robust, it would positively affect the fringes. Certainly.

      Delete