India's biggest RE investment opportunity
Author: Ramesh Menon
Demystifying Delhi Investment opportunities under master plan MPD 2021 In the last few months that I have started attending seminars and conferences on real estate, I am further more amazed at the consistency of Ignorance about one of the largest investment opportunities ever The Delhi Master Plan MPD 2021. Being considered as someone with expertise on land & projects under the MPD 2021, I am inevitably posed the following three questions a) WHY & WHERE Delhi? b) Why and when should I invest in Delhi? c) Size of the opportunity and how to go about? Inadvertent or deliberate, it is our firm conviction that the Delhi opportunity is not well publicised amongst the masses. Besides, there are a lot of myths concerning Delhi opportunity which I intend to dispel through this article. Without getting into detailing, here are some quick reasons why the serious investor should not & cannot ignore the Delhi MPD 2021 opportunity. Political Strong Intent & Ability to develop Delhi into a modern megapolis Demographic Population expected to increase by 80 lakhs in 10 years Demand 2 million dwelling units is the forecasted demand for housing Economic Growth driver for the investments into India. Hub for business activity in Northern India, with multi billion dollars investments in the next 5 years. Policy New favourable policies on investment climate Proposed enhancement of ground coverage and FSI norms Events Delhi is already investing more than a few billion dollars for the commonwealth games 2010, and might be a bidder for the Olympics in 2020 or 2024 Let me try and address some myths on the Delhi Master plan 2021 along with the answers to the above questions. A pictorial representation produced here below would be helpful to the readers too. Myth 1 - Land is scarce in Delhi. Delhi has more land than the entire Gurgaon City - ready to be developed, and infrastructure in place, and available to be brought under development over the next 10 years. I use this sentence to shock people who are under the myth. Delhi city state is a total of 1483 sq. Kms out of which the current urbanized area is approx. 702 sq. Kms. There is a WHOPPING 700 sq. Kms yet to be developed. Look at both the illustrations below for your own understanding. Illustration A - Map of Delhi with New urbanizable areas marked with surrounding cities Maps available at
www.delhi-masterplan.com Illustration B Total area in the Opportunity zones which to be developed through PPP, private and DDA initiatives. Illustration B ZONE NAME OF ZONE Area in Ha P - 1 Narela 9866 P - 2 North Delhi 8534 N North West Delhi - 3 13975 K - 1 West Delhi - 2 5782 L West Delhi - 3 22840 J South Delhi - 2 15178 The above two illustrations surely would have helped dispel the first Myth. Myth 2 Delhi is costly I would not be misplaced in saying this with reasonable authority that Land is still cheaper in Delhi than in surrounding cities. Lack of knowledge and vested interests has compelled investors to be fed the information that land is scarce, and out of reach in Delhi, CONTRARY TO THE PREVAILING TRUTH. Even today, the landed cost of FSI within Delhi can be managed below Rs. 300 per sq. Ft if well transacted. Myth 3 Private sector cant participate in Delhi Yes, historically, the major developments in Delhi were undertaken by the DDA, which would find itself severely constrained with the scale of development that Delhi envisages over the next 10-15 years. Hence, the townships, residential and commercial segments would either be developed on the PPP model, or by the private developers. Relevant directions have already been set in motion towards the same, till now. Myth 4 Surrounding markets are more attractive today I would rather express my own investment rationale & sentiment to this myth. I would rather invest in the capital of the country, with a pent up demand for 2 million homes with the prices being lower than the surrounding cities, where whatever I may decide to develop would sell faster than anyplace else. What else reasoning do I give to the queries? Myth 5 Delhi would have limited development potential My good friend Ashok Jain always counters my queries with his favourite quip Where in India do you find a city which requires everything from low cost housing units to the top end farm houses, office space to malls, race courses to golf courses, amusement parks to Industrial parks, guest houses to warehouses, all willing to be developed yesterday. To top it all, the Delhi master plan MPD 2021 has identified most of these needs and encourages the private participation in all these segments. Do I close my eyes to this piece of the pie? As for opportunity zones, one can seek participation both in the New 05 cities being developed under Delhi or for the redevelopment of the existing habitation areas. The five new cities that Delhi would create like Dwarka & Rohini, spread over more than 10,000 hectares each, would be self sustaining economic cells which would offer everything for walk to work to quantum increment in the QUALITY of life. These are essentially spread over the three primary zones of P-II, N and L zone of Delhi MPD (see chart above) My mother always says this If you have and well intentioned and capable friend, you wont need a mirror. The same logic applies to the business environs where we work, sometimes as the MIRROR, and sometimes as the impression. Our solemn advice is for the investors to seek out a consultant who has deep rooted insight into the opportunity zones, someone who understand both ends of the spectrum, birds eye view of policy & future resonance as well as the Ground reality of MPD 2021. This article is to express our conviction drawn over years of research, diligence and investments which have yielded more than expectations. I would only be willing to paint every critic and cynic with our optimism. I am just one phone call away. The author is part of the Founding team of
www.delhi-masterplan.com and can be contacted on
help@delhi-masterplan.com About the Author:
Ramesh Menon is the Head- strategic consulting for Certes Realty Ltd, a boutique real estate consulting company, based out of New Delhi NCR (India).
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