INFRA GROWTH REALIZES REALTY RECOVERY IN 2021

BY Realty Plus

Year 2021 has been a challenging and eventful year for the real estate sector having faced the intense second wave of Covid 19 early on. The Indian economy took a beating and slowed down amidst pandemic induced lockdowns and the infrastructure sector, the sector that drives growth of other segments of the economy was no exception.

India's infrastructure that includes construction projects in various sectors for social infrastructure, connectivity transportation infrastructure comprising roads, highways, metros and airports has a direct bearing on real estate and indirectly the ancillary products segment. With infra projects stalled the dependent sectors took a beating too.

The cities selected under Smart Cities Mission were expected to complete their projects within five years of being selected. However with pandemic situation, the timelines for the implementation of Smart Cities Mission had to be extended to June 2023. As many as 144 central infrastructure projects reported delays (single and multiple) in its completion in the current financial year and the total cost overrun of these is Rs 14,960.02 crore.

INFRASTRUCTURE INVESTMENTS OF THE YEAR

Private sector investment in road construction till November this financial year stood at Rs 15,164.25 crore. The government is further working on a scheme to raise funds from the public at 6 per cent annual interest rate for road infrastructure projects.

Year 2021 saw the launch of India's first infrastructure investment trust by National Highway Authority that has raised more than Rs 5,000 crore.

Infrastructure Investment Trusts (InvITs) are instruments on the pattern of mutual funds, designed to pool money from investors and invest the amount in assets that will provide cash flows over a period of time.

“NHAI InvIT attracted two international pension funds, Canadian Pension Plan Investment Board and Ontario Teachers' Pension Plan Board, which along with diversified DIIs invested units worth more than Rs 5,000 cr in InvIT portfolio which has currently 5 National Highway. Going forward, more national highways will be added to the InvIT portfolio, as the long-term revenue-generating assets,” as per Union Minister Nitin Gadkari.

INFRASTRUCTURE INITIATIVES 2021

Government on its part to raise spending for economic stability, announced various infrastructure projects in 2021 including policies to streamline the development process. Around 35 multi-modal logistics parks (MMLPs) will come up in the country under the Bharatmala project. Four MMLPs will be developed in Maharashtra, including Jalna, Nasik, Solapur and Sangli. One in the northeastern region has already been completed and MoU has been signed for starting other MMLPs in Chennai and in Sindhi-Wardha.

In addition, four Greenfield industrial cities or nodes are being developed in Gujarat, Maharashtra, Uttar Pradesh and Madhya Pradesh under the Delhi-Mumbai Industrial Corridor (DMIC). In these cities, 138 plots (754 acres) have been allotted to companies with investment to the tune of more than Rs 16,750 crore. Further, as many as 23 nodes/ projects in other industrial corridors are under various stages of planning and development.

The objective of the industrial corridor program is to create Greenfield smart industrial cities with sustainable 'plug n play' ICT enabled utilities to facilitate the manufacturing investments into the country. The government has approved 11 such corridors consisting of 32 projects to be developed in four phases.

Haryana government too announced its plans for a Global City project in Gurgaon, spread over 1,000 acres, “on the model of Dubai’s Business Bay”. The Haryana State Industrial and Infrastructure Development Corporation Ltd (HSIIDC) will develop the infrastructure and auction the big plots.

Tamil Nadu government in April 2021 announced an Electronic Vehicle Park at Maanallur in Tiruvallur district, a Medical Devices Park at Oragadam in Kancheepuram, Leather Product Park at Panappkkam in Ranipet, three Food Parks at Manaparai, Theni and Tindivanam and an international Furniture Park at a cost of Rs 1,000 crore on 1100 acres in Thoothukudi district.

The Yamuna Expressway Industrial Development Authority (YEIDA) has also invited bids for the construction of a 1,000-acre film city near the upcoming Jewar airport that will bring a lot of investment from multiple industries including HNIS, UHNIs.

The Ministry of Road Transport and Highways (MoRTH) also constructed 40 kilometers of national highway every day in the current fiscal. The target was higher than the record construction of 37 kms daily during 2019-20 period. The Cabinet under ‘PMGSY’ phase 3 has further approved the construction of 32,152 km roads in far-flung areas of the country at a cost of Rs 33,822 crore.

This year, government commenced implementation of the PM Gati Shakti National Master Plan as well which is an integrated plan depicting the economic zones and the multimodal connectivity infrastructure with an objective to holistically monitor and implement the infrastructure and project across divisions and states.

The Maharashtra government’s City and Industrial Development Corporation (CIDCO), has adopted certain provisions of the recently introduced Unified Development Control Promotion Regulations (UDCPR) for rapid and efficient development of the Navi Mumbai Airport Influence Notified Area (NAINA) that will specify uniform set of

regulations from the height of buildings to the width of roads and the size of amenity spaces. “This will also facilitate ease of doing business,” as per Sanjay Mukherjee, Vice- Chairman and Managing Director, CIDCO.

Foundation laying of Noida International Airport at Jewar in November 2021 too will change the dynamics of NCR real estate, drawing investors and homebuyers alike for the commercial and residential real estate to Noida, Greater Noida, and Taj Expressway. “We have witnessed a big jump in sale of properties in 2021 amid progress in the work on the Noida International Airport project in Jewar,” said Arun Vir Singh, chief executive officer (CEO) of Yeida

“The Centre has accorded in-principle approval for setting up of 21 Greenfield airports across the country of which six have been constructed and operationalized till now,” stated Minister of State for Civil Aviation V K Singh

INFRA IMPACT ON REAL ESTATE MARKET

Inevitably the development of smart cities, industrial clusters and logistics hub and transportation infrastructure will have a “multi-prong” impact on the real estate. The year 2021 has seen some favorable announcements and initiation of projects that will hold the sector in good stead in coming years.

The improvement in infrastructure and investments by domestic and foreign manufacturers in Indian cities will call for more office spaces. The more job opportunities around the industrial and commercial hubs is also set to create more demand for housing across cities and especially in tier- II and III cities where economic activities are set to increase.

One of the trends of the year 2021 was the asset monetization by real estate developers as was manifested in two of the largest office space portfolio divestments this year. In addition, REITs have offered an attractive avenue for foreign investors to invest in Indian commercial realty. Warehousing and data centre asset classes gained significant traction on the back of industrial and logistics infra development and increasing digitization of all aspects of the economy.

There is no doubt that improved connectivity in a region, boosts its real estate prospects. The ease of access to far flung areas has already opened up more land parcels for the developers for future developments. The airport development scheme too is expected to bring a similar change and fuel growth in the Indian realty market. As a matter of fact, the highlight of the year has been the infrastructure and airport sector, attracting new long-term investors such as pension funds and insurance companies. In conclusion, 2021 made infrastructure sector the biggest focus area for the Government of India to propel India’s overall development.

IN 2021, INFRASTRUCTURE WAS A PRIORITY AREA FOR THE CENTRAL GOVERNMENT. TRANSACTIONS IN THE AIRPORTS SECTOR AND IN THE ROADS AND HIGHWAYS SPACE WERE COMPLETED, UNDERLYING THE ATTRACTIVENESS OF THE SECTOR TO FOREIGN AND INDIAN DEVELOPERS. NEW DELHI STATION REDEVELOPMENT PROJECT ON PPP BASIS WAS ALSO LAUNCHED THIS YEAR.

THE ENHANCED ROAD CONNECTIVITY IS BOUND TO UNLOCK THE ECONOMIC POTENTIAL OF THE CONNECTED REGIONS AND WOULD NOT ONLY GENERATE ECONOMIC BENEFITS BUT ALSO UPGRADE HOUSING, REAL ESTATE AND LIVING STANDARDS FOR THE POPULACE.

Tags : Union Minister Nitin Gadkari The Haryana State Industrial and Infrastructure Development Corporation Ltd (HSIIDC) Electronic Vehicle Park Maanallur Tiruvallur district a Medical Devices Park Oragadam Kancheepuram The Yamuna Expressway Industrial Development Authority (YEIDA) HNIS UHNIs The Ministry of Road Transport and Highways (MoRTH) Sanjay Mukherjee Vice- Chairman and Managing Director CIDCO Arun Vir Singh chief executive officer (CEO) of Yeida