New Delhi Builds Ambitions

[BTinSF]

Wall Street Journal on New Delhi development:

New Delhi Builds Ambitions
Housing Expansion Attracts Foreign Investment, Developers;
Infrastructure Poses Challenge
By BINNY SABHARWAL
May 9, 2007; Page B12

NEW DELHI -- A government plan to transform New Delhi from a chaotic city into a clean, organized and world-class metropolis faces political and social resistance. But it could be a jackpot for developers and builders.

The Delhi Master Plan 2021 -- the third such plan for India's capital following plans in 1962 and 1991 -- was proposed by the Ministry of Urban Development in February.

To increase the available housing stock and accommodate newcomers from villages and towns who have flocked to the capital amid an economic boom, the plan proposes making available about 66,690 acres of land over the next 14 years. It aims to use that land to build 2.4 million housing units as Delhi's population is expected to increase to 23 million by 2021 from about 14 million.

Some of those units will be in high rises in a city where buildings higher than a few floors are rare. Private developers are being given the chance to pitch in since the government relaxed rules to allow 100% foreign direct investment in real-estate sites such as new townships and housing developments.

"We are quite excited by the plan and will definitely be the front runners once the plan is implemented," said Kunal Banerji, vice president of marketing of Ansal API, one of the largest real-estate development firms in New Delhi.

Under the master plan, developers will be able to acquire land directly instead of going through the Delhi Development Authority, a government body set up in 1957 to carry out a planned development of the city but which required an onerous process for investment.

"The good news for builders is they will no longer be coerced into buying land only from the DDA," a report by real-estate services firm Cushman & Wakefield said. "For the first time, the private sector will be allowed to directly buy land from farmers and other land holders."

The plan could contribute to a vibrant -- some would say overheated -- real-estate market in India. A slew of shopping malls, houses and business parks have sprung up across the country. The real-estate sector has also seen a lot of global interest from such companies as Ascendas Investment Pte. Ltd., CB Richard Ellis Group Inc., Goldman Sachs Group Inc., Wachovia Corp. and Tishman Speyer Properties LP. ICICI Securities forecasts that the Indian realty sector will rise to $102 billion in revenue by 2015 from a current $14 billion.

Wachovia has invested $57 million in a local company based in India's National Capital Region, which includes Delhi. "NCR is the biggest real-estate market in the country and it has tremendous opportunities," said Sandip Kundu, director of real-estate capital markets for Wachovia. "We will be extremely interested in participating in Delhi's redevelopment as and when the master plan is fully rolled out."

Tishman Speyer, a U.S. real-estate company, has entered into a venture with ICICI Venture Funds Management Co., India's largest private-equity fund-management company and a unit of ICICI Bank Ltd. "We are actively looking at Delhi and the Delhi Master Plan is very attractive to us," said Kishore Gotety, ICICI Venture Funds' director of investments. Citigroup Venture Capital has invested $80 million in Indian realty, including $50 million in Emaar-MGF Group, which has property-development projects in various cities including Delhi.

Despite positive interest from developers, the master plan comes with caveats. It is focused mainly on low-cost housing and doesn't address other real-estate gaps in Delhi, such as lack of office space.

"Delhi needs to plan for at least four to five million square feet of office space but unfortunately the master plan fails to address that void," said Anshuman Magazine, India managing director of the U.S. real-estate consultancy firm CB Richard Ellis.

Ajay Maken, India's minister of state for urban development and the originator of the plan, said in an interview, "We have looked at Delhi as a trading city and have earmarked area in the plan to offices but we cannot demolish existing residential areas to build swanky offices."

Critics of the plan also note it doesn't talk about building supporting infrastructure such as sewage systems, roads, transport and power. Responds Mr. Maken: "The master plan makes the best of the existing situation without compromising the livelihood of millions."

India's Supreme Court, which is looking at the various issues concerning the plan, has ordered the government to study power-and-water supplies before giving notice about more roads and allowing the addition of third floors to existing buildings.

The ministry, however, sees these requirements as small hurdles and not a threat to the plan as a whole. "These are minor changes; the bigger policy still stands," Mr. Maken said.

Write to Binny Sabharwal at binny.sabharwal@wsj.com1

URL for this article:
http://online.wsj.com/article/SB117865921456296293.html

[rohanmathur1]

nice..its about time. Although infrastructure development shouldn't be regarded as small hurdles at all

[Jai]

Thanks for the post bro!

I'll add it to the existing thread for collection purposes:
Delhi Master Plan 2021 -- Delhi's Skyline to be Radically Changed

[BTinSF]

^^^Sure. I looked for an existing Delhi thread. Didn't find it--was it well buried?