Smart Cities Project May Take off Shortly: Will Boost Realty
According to the latest announcement by the Central Urban Development Minster, the central government’s pet – smart cities project will be flagged off on June 25th this year. The project was initially supposed to take off on the ground level from April 2015, after having consultations with all the stakeholders involved. The prime minister will unveil the implementation guidelines for the project in front of senior officials from various state governments and Union Territories (UT).
How does smart city affect realty sector
For the realty sector, this has huge implications. A smart city is expected to provide high-quality infrastructure to attract the establishment of several industries and technology establishments. Industrialisation of these smart cities provide employment opportunities. Employment opportunities and a good quality of living due to the information and communication technology infrastructure (ICT) attract a good workforce, which in turn will give rise to a demand for housing.
Beginning of the actual ground work implies great prospects for both builders and investors, apart from residents. With the right kind of policies and approvals coupled with the government’s ambition to provide housing for everyone by 2022, several builders and developers would be willing to be a part of the smart city initiative. Smart cities also offer good investment options with a substantial scope for price appreciation, especially for a long term investment horizon. A case in point is the GIFT city in Ahmedabad, which has already resulted in a property price appreciation of up to 10-15 per cent annually (and about 30-40 per cent in some localities).
Need for smart cities
The concept of smart cities was conceived by the central government keeping in mind several factors.
• The biggest reason for creating a smart city is to create sustainable communities. As cities are growing in population, there is a growing demand for efficiency and effective utilisation of resources. This needs ‘smart’ planning and management of cities, which gave rise to the concept of smart cities.
• To reduce the pressure on the present metros, while driving the growth of other cities in the country.
• Creation of smart cities will help in efficient utilisation of the resources, while giving a significant boost to the country’s economy.
• From a real estate standpoint, this would also lead to growth in different real estate markets across the country.
Creation of smart cities
The concept of smart cities was raised since the previous government at the centre. The concept gained steam after the new government was formed at the centre. The government spoke about creating 100 smart cities across the country. It also laid certain criteria to be met by the towns/cities to be developed as smart cities.
The government is currently taking a three-fold approach to create smart cities. This involves retrofitting and redevelopment of unsustainable urban areas that are already present and developing new smart cities. The government is planning to select the proposed 100 smart cities in three phases – 20 this year and 40 each in the subsequent years. This means that there will be 20 smart cities taken up for development this year.
The government will also select a ‘Smart City’ aspirant through a ‘City Challenge Competition’, which will link the centre’s financing with ability of the cities to perform in order to achieve the objectives. Each state will shortlist a number of smart city aspirants as per the listed norms. The proposals will be then sent for further evaluation for extending support from the central government. The centre has already earmarked about Rs 48,000 crore for the project.
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