In a city where space and connectivity remains a premium, can Namma Metro provide the next big corridors of development? Can metro stations be gateways to malls, large IT parks, and even mega retail stores?
Banking on a positive answer is Bangalore Metro Rail Corporation Ltd. (BMRCL), which recently launched a maiden attempt to “monetise” large land parcels owned by it. In the recent Invest Karnataka meet, it offered nearly 30 acres of land adjacent to seven stations in the city; while, the recent State Budget promised “innovative fund raising mechanisms” to fund ambitious expansions to the metro network.
First on the block is the 14-acre property at Nagasandra on a long-term lease; and by June 3, the BMRCL will get to know how much money can flow into its coffers. “We have received a very good response so far, and based on this success, we hope to bring out bids on each of our large land holdings every two months,” said U.A. Vasanth Rao, general manager (Finance), BMRCL.
Big moneyThe BMRCL is hoping for an excess of Rs. 240 crore for the land, which is to be paid in a lump sum; while, each year, an “annuity” (roughly 1 per cent of bid) will be additionally paid to the company. For the builders, the advantage is the connectivity — which is a premium in a city lacking public transport — offered by the metro; while, for BMRCL, the bids on the large chunks will see cash pouring in to deal with its large debts as well as its expansion plans. The company’s debt has soared past Rs. 8,500 crore as per the previous financial report.
“Through these sales and other means of raising money through real estate, we hope to raise between 20 to 25 per cent of our revenue from non-fare sources, including land, advertising, commercial ventures … while this is lesser than what Hong Kong has achieved (45 per cent), it is still more than what other Indian metros have done,” said Mr. Rao.
Real estate welcomes
Integrating metro development with real estate will see the fervent expansion — currently seen along expressways on the outskirts of the city — come back to the core areas, believe builders.
“Developers will jump at the chance of offering projects close to metro projects, or even connected to it. This becomes an important selling point. This is the sort of development seen in developed western countries, where the metro is the lifeline of cities,” said Farook Mahmood, president of the India Chapter of the International Real Estate Federation.
While prices will rise along the corridors initially, he believed it will lead to stabilisation of prices in the long run. “In places on the outskirts, congestion and lack of connectivity sees prices becoming low. With increased connectivity, this will stabilise,” he said.
Capitalising on proximity
Imagine more than 33 sq.km area in the city where the sky is the limit.
With Bangalore Development Authority (BDA) in the process of issuing a notification that increases the floor area ratio to four for buildings 500 m around metro stations, the BMRCL is hoping to cash in on the “real estate development”. If builders want to go taller to capitalise on proximity to the rail transport, a fee needs to be paid — much of this will end up with the BMRCL.
“The draft has been published, and tentatively, the money will be given to the metro. But, we are perusing the objections received for the draft notification (on various zonal regulations),” said Chode Gowda, town planning member at the BDA.
Stations too
It isn’t just the land adjacent to metro facilities that may lure the real estate sector. Even the stations, and the vast areas above them, may be available for builders looking to capitalise on the nearly 2 lakh sq.ft floor-space offered. In Phase I, the BMRCL was looking at Trinity station (two floors on top of the station is being considered), while the Kempegowda Interchange will offer eight floors.
Metro investments
Land on offer
Station | Extent (acre) |
Nagasandra | 14 |
Jalahalli | 1.5 |
Peenya | 5 |
Yeshwantpur | 1 |
Mysuru Road | 6 |
Banashankari | 5 |
Swami Vivekananda Road | 2.1 |
How metro will make its money
To be decided through competitive bidding
60-year land lease, development premium given to BMRCL in lump sum
Yearly, 1 per cent of premium to be given to BMRCL
Development to be given access to stations
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‘Innovative fund-raising’
Stations: Development of office space, parking on Trinity station, eight floors above Kempegowda Interchange station. Stations offer 2 lakh sq.ft. of space on each floor
Floor area ratio: To be increased to 4 (that is, height can be four times the built-up part of the plot). Portion of the additional amount to be paid for this FAR will be given to metro.
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Why metro needs the money
Network: 42.3 km
Project cost: Rs.13,845.01 crore
Funding: Rs. 8,025 crore from Union government (construction) and State government (land, construction). Rs. 5,820 crore as loans from lending institutions
Phase II
Network to be added: 72 km
Project cost: Rs.26,405 crore
Funding: 55 per cent from Union government and State government; balance from lending institutions (French and German development banks).
