Integrated townships set to make a comeback

23 Sep,2019

Madhurima Nandy
Integrated townships are making a comeback.
Many of the big clusters—announced during the real estate boom of 2006-07, only to be aborted during the economic downturn—are seeing a revival in interest.
Developers and realty funds are backing townships again but mostly for residential developments, as home sales have been driving the renewed enthusiasm in the sector.
At least 25 large residential townships were shelved during the downturn as builders squeezed for funds opted for smaller projects.
Earlier this month, a 700-acre township was launched in Sriperumbudur near Chennai, some three years after it was announced. It boasts of a 150-acre golf course, villas, apartments, a hotel and a hospital and is targeted at non-resident 
Indians and golf-loving foreign communities.
Sriperumbudur is a manufacturing hub for foreign brands such as Hyundai, Saint Gobain, Nokia and BMW and ideal for such a township.
Kotak Realty Fund has picked up a 28% stake for Rs.270 crore in the project, named Aavisa, which will be developed by IVRCL Assets and Holdings Ltd. “Township projects are a safe asset class in India during a time when (venture) funds 
require to deploy money and developers need that money to invest in such projects,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang La Salle Meghraj, a property advisory. “However, the success of township 
projects would depend on the location and in acquiring adequate land in proximity to a large city.”
In Bangalore, a 300-acre project by Prestige Estates Pvt. Ltd, in which Red Fort Capital Advisors Ltd invested Rs.150-200 crore some two years ago, is set for a launch soon. “Integrated living is a great concept but only if the developer 
has the funds to execute and has the intent to provide infrastructure, those projects can be easily developed,” said managing director Subhash Bedi.
Townships, typically of 100-300 acres, are a natural outcome of the phenomenal growth of cities, say real estate experts. These were earlier conceived not only as mere residential developments but also as education, healthcare or 
knowledge city clusters. The new breed not only focuses on residential projects but also targets various demographies with a range of products.
Developers such as Godrej Properties Ltd and Kumar Urban Development Ltd, for example, are building multiple townships but largely with an affordable price tag.
Gujarat leads the pack in township developments, having sanctioned nine projects this year. The state makes it easy for developers as its single-window clearance system ensures all approvals are got within three months, said Jaxay Shah, 
president of the Confederation of Real Estate Developers Association of India (Credai), Gujarat.
In states such as Maharashtra and Karnataka, the approvals take six-seven months.
Analysts say the revival can be sustained only if both developers and investors are committed to building inclusive townships and state policies are clearer.
“Townships are not just housing projects and the policies in most states are nondescript,” said Pravin Malkani, president, Patel Realty India Ltd, a subsidiary of Patel Engineering Ltd. “The same building laws apply to them (townships) 
while globally there is continuous dialogue between state bodies and the developer on infrastructure building.”
Even in Gujarat, the rush towards residential townships prompted the state government to discard in June its amended township policy of 2008, which allowed unlimited floor space index (FSI) or development rights.
Credai’s Shah said developers are in talks with the state government to double the floor space limit.
However, the revival in townships has been partial.
A 150-acre residential township on Old Mahabalipuram Road near Chennai by Bangalore-based DivyaSree Developers Pvt. Ltd hasn’t taken off yet as the promoters continue to go slow on the project, which is still in approval stage. Kotak 
Realty Fund has invested an undisclosed amount in the township at the project level.
Another 100-acre township in Hyderabad that was announced back in 2007, and in which Red Fort has invested Rs.200 crore, is indefinitely postponed.
That’s not all. Many of the proposed knowledge, education and healthcare townships haven’t taken off as developers are opting for mostly residential clusters.
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