The smart cities of India

August 08, 2017 10:00 am | Updated 10:00 am IST

CHENNAI: TAMIL NADU: 12/07/2015:  As Chennai Metro Rail comes into operational from Koyambedu to Alandur, the land prices considerably increased in these areas. Photo: V. Ganesan

CHENNAI: TAMIL NADU: 12/07/2015: As Chennai Metro Rail comes into operational from Koyambedu to Alandur, the land prices considerably increased in these areas. Photo: V. Ganesan

Picture this — a city with cutting-edge urban planning, smart infrastructure and replete with systems running on the latest information technologies. This dream could turn into reality with the Smart Cities Mission that promises to transform the way our cities look, function and how we live. Launched in 2015, Government of India’s Smart Cities Mission encompassing 109 cities, aims to provide residents with an efficient and reliable infrastructure, enhanced quality of life and economic opportunities. So far, a total of 90 cities have been selected over four rounds with the latest announcement made in June this year.

Positive impact on real estate

Smart cities are expected to be catalysts in improving the quality of life and give a major fillip to the real estate in urban locations.

According to a white paper released by The Royal Institution of Chartered Surveyors (RICS), the largest chunk of spending in smart city projects will be in areas related to real estate. The total proposed capital investment for the first 20 cities stands at Rs 48,220 crore. Out of this outlay, 89% will be spent on building environment, transportation, water and wastewater management and energy.

The Smart Cities initiative is likely to have a multi-prong effect on real estate in the following ways:

High-quality infrastructure: Smart cities will create more jobs facilitating the economic development of urban centres. Expansion of physical as well as information and communication infrastructure will generate more employment opportunities and improved standards of living for residents.

More affordable homes: With the allocation of land and capital, affordable homes will receive a significant impetus from the Smart Cities Mission. The ‘Housing for All by 2022’ scheme targets 2 crore homes to be built across all urban locations over the next five years. As more homes are built for lower income groups, fresh demand will be created, energising the housing market.

Stronger public-private partnerships: The synergy of public and private spheres through partnerships will play a key role in the building of smart cities. They will be instrumental in gathering the necessary finances and efficient delivery of utilities and services. These initiatives will kick start a pooling of capital from private enterprises and developers towards developing joint ventures within the smart cities.

Demand for commercial real estate: The office space market will be a direct beneficiary of improved infrastructure and connectivity promised by the Smart Cities initiative. Moreover, the development of smart cities will also push the demand for other asset classes such as hotels, service apartments and shopping malls.

Key role for developers: Developers are expected to play a crucial role in developing the regional, social and economic infrastructure of any smart city. As the vision of building over 100 smart cities is realised, real estate’s contribution to the GDP is expected to rise to 10-12% by 2022.

Most promising cities

The Government of India has shortlisted cities from all regions of India with high economic and industrial potential. With their upcoming infrastructure projects and other growth drivers, here are five cities which hold a distinct advantage and can be safe bets for ‘smart’ real estate investments:


The nation’s IT capital finally made it to the latest Smart Cities list, after missing the cut twice. With the influx of IT companies, the real estate market has exploded but at the cost of infrastructure.

The Bruhat Bengaluru Mahanagara Palike (BBMP) aims to bring the infrastructure on track with an outlay of Rs 1700 crore to improve roads, markets, lakes, parks and heritage structures.

Growth Drivers: Namma Metro, Outer Ring Road, Aerocity


Boasting sound infrastructure and home to a rapidly growing IT industry, the city is a viable real estate destination.

The pharma and IT sectors here have been driving demand in and around the city. Experts claim that the turning point for realty in the city has been the recent state bifurcation, opening up fresh opportunities for the port city.

Growth drivers : Vishakapatnam-Chennai Industrial Corridor and Metro Rail


With its salubrious climate, local talent and presence of world-class educational institutes, Pune has emerged as a prominent IT and automobile hub. The Mumbai-Pune Expressway changed the city’s fortunes making it a much sought-after location for out-of-town investors. Little wonder that it has grown to one of the best performing real estate markets in the country.

Growth drivers : Metro Rail, Bus Rapid Transport System (BRTS), and the upcoming International Airport


Traditionally regarded as a manufacturing hub, Chennai has recently emerged as the second largest exporter of software after Bengaluru, and home to some of the biggest names in the software industry.

The state government is now focusing on providing improved road connectivity along key IT hubs to develop these upcoming centres.

Growth drivers: Outer Ring Road II, Chennai Metro and Mass Road Transit System (MRTS), and Chennai Monorail


One of the country’s largest business and trading hubs, Ahmedabad has evolved into an attractive real estate market. The employment landscape is driven by the textile, engineering, chemical, and automobile industries.

A surge in employment opportunities has attracted talent, placing the city on the national radar. Infrastructure initiatives such as GIFT city have already pushed real estate prices in the city.

Growth drivers: GIFT City, Outer Ring Road and Metro Rail

The Road Ahead

A smart city is the result of the efforts of many stakeholders, working together in partnerships of different shape and form. Cities don’t become smart on their own or even overnight – they require a government that has vision and the will to make tough decisions, ably backed by municipal authorities and urban local bodies.

Ideally, it is easier to build new smart cities rather than transform old ones. However, in the Indian context, upgrading cities is as imperative, and it may take several years to accomplish it.

A lot hangs in the balance for the Smart Cities Mission as 63% of the country’s GDP is generated in these cities. With 70% of the country’s new employment expected to be generated in urban areas by 2030, it’s time our cities got ‘smarter’.

This article is contributed by RoofandFloor , part of KSL Digital Ventures Pvt. Ltd., from The Hindu Group

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