Hyderabad Metro expected to earn more than 50% revenue from Real Estate

L&T Metro Rail is a Special Purpose Vehicle (SPV) that was formed for the development of the metro rail project in Hyderabad. It is expected that the conglomerate is expected to earn more than 50% of its revenues from real estate. The rest of its revenues are expected to be earned from commuters traveling in the metro during the initial years. This equation is likely to change once ridership picks up in later years.

Project details

The Hyderabad metro rail project, which is the largest Public-Private Partnership (PPP), is being developed at an estimated cost of more than Rs.17,000 crore. Construction on Phase-I of the project covering about 72 km is progressing at a brisk pace. The project is being developed across three corridors, with 66 stations in between. Besides, it has also been proposed to undertake about six million sq.ft. of Transit Oriented Development (TOD) along the metro corridors out of the 18.5 million sq.ft that was initially proposed. Work on the remaining 12.5 sq.ft would be subsequently undertaken using accrued rentals on a per project basis.

Stage-I of the metro that extends from Nagole to Mettuguda is expected to be operationalised by March, 2015 with about 90-95% of civil works on Stage-I already completed. It is expected that trial runs would be conducted at depots in May, 2014. The first full train to be used for the trial run, with three coaches, would arrive from Hyundai Rotem in South Korea.

Implications of external factors:

There have been apprehensions with regards to the impact that the bifurcation of the state would have on the progress of the project as well as the passenger traffic that would be generated. Moreover, queries have also been raised as to whether the future status of Hyderabad would have a bearing on the project. However, Project MD had rejected such apprehensions stating that the project would not be get affected by such factors, and would be completed as proposed.