ANALYSIS AND SOLUTION- A Real Estate Investor’s perspectiveSenior VP and Head- Investments at LICHFL Asset Management Company

Presentation Flow

An unusual solution

Benefits of the suggested solution

ANALYSIS AND SOLUTION- A Real Estate Investor’s perspective

Executive Summary

PE perspective for township development

Need for alternate models

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Challenges for Walkers and Cyclists

Township Developments

Solutions for existing urban developments

Funding

Caveats

Executive Summary

More efficient the transportation over long distances, more the choices people has to locate their home and businesses.

Conversely, spread out land use patterns increase the demand for transportation because of greater travel distances.

This has become an eternal cycle that we now find ourselves in, one that is unsustainable in the long-run.

Township Development offers an opportunity to integrate transport and land use.

Solutions are urgently needed for resolving transportation problems in the existing urban development.

Providing dedicated and secure cycle tracks and making the ride comfortable and interesting could be a solution to the problem.

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Township DevelopmentsAdvantages:Township developments are being seen as a sustainable model for reducing motorized travel, which offers an opportunity to integrate transport and land use.Across the Country, Governments are introducing incentives so as to make townships self-sustainable by granting higher FSI’s for mixed land uses to make them independent micro centres of urban growth and incorporating housing for economically weaker sections.Townships provide an opportunity for balanced and planned development.Integrated Township will minimize travel distance.Provision of dedicated walking and cycling tracks along tree lined avenues with refreshing green cover may overcome discomfort in our hot and sweaty environs.

Challenges:Aggregation and acquisition of large contiguous land masses required for township is becoming increasingly difficult. Township eligibility criteria dictate a minimum cut off area of 100 acres or more to be developed by one entity. Obtaining Statutory Approvals take a long time.

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PE perspective for township development

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Challenges Solution

1.

PE funds have a shelf life, typically seeking exit between 3 to 6 years while township developments take longer time periods ranging from 6 to 12 years to complete

Government could permit consortium development on the back of a master plan wherein a large project can be divided across multiple developers facilitating development in a parallel mode with multiple PE funds and multiple developers as compared to the current series mode which entails one developer for a longer project life.

2 Typical IRR expectation varies from 20 to 30%. The carrying cost of initial investment over time increases resulting in cost escalation of the housing unit, making it unaffordable for the economically disadvantaged.

Government could offers tax incentives for township development considering their critical role in cutting down on fuel cost and saving valuable foreign exchange. This in turn would enable lowering return expectations of Investors.

3 Developers require funding at pre approval stage while funds are not comfortable to expose themselves to approval risk.

Government could provide a dedicated single window approval mechanism which would grant approvals within maximum 3 months.

Need for alternate models Townships addresses transportation problems in new developments.

Solutions are needed to address the mobility issues arising from the chaos in existing urban developments.

Cycling and walking as a choice of travel is virtually non-existent in existing urban developments.

Choice of transportation modes provides more equitable access, empowering the end users and result in improving liveability at our existing urban areas.

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The existing infrastructure does not address safety issues for walkers and cyclists due to uncontrolled Interaction with other transport modes.

The affluent sections taking up cycling or walking in a token manner may not make a difference. The bulk of the population needs to be involved.

Cycling and walking in the hot and often humid climate in the midst of dust, noise and pollution is a daunting task.

It will be challenging to replicate in our cities, success of cycling and walking as a means of transportation in cleaner and cooler climates abroad.

How do we encourage and incentivise walkers and cyclists?

Challenges for Walkers and Cyclists

Solutions for existing urban developments Rapid mass transport systems like elevated or underground trains.

Bus Rapid Transit Skywalks to cross major arterial roads. Dedicated and cordoned paths for walkers and cyclists alongside road

transport. Bicycles & even tricycles to be made available on hire which can be picked

up and parked at different locations, through a smart card, debiting users on number of hours used.

Cycles fitted with Power generating mechanism integrated with mobile batteries.

Cycles to be parked at docking stations with a power downloading facility connected to a smart grid thus tapping the generated power and crediting the rider for the power generated.

Incorporate amenities like shower rooms, etc. to make bicycling user friendly.

For the model to be viable and self-sustaining, elements of real estate may need to be incorporated.

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An unusual solution- Elevated Eco City The solutions is based on the assumption that subject to conducive

environment, the distance which an average walker or cyclist comfortably negotiates at one stretch is 2-3 km. and 6-9 km respectively.

An independent elevated route way for cyclists and walkers could be explored where the system is designed in a modular grid pattern to enable easy installation and dismantling.

To overcome climatic discomfort of cyclists and walkers, the environment inside the elevated route could be controlled using air diffusers and other artificial means powered by roof solar panels.

To improve user experience, integrate transportation with social spaces, adding elements of entertainment, public spaces, retail outlets, restaurants,, parks, rest rooms, guest houses and even office space along the route to make travel not only interesting but the project self-funded.

Elevated cycling and walking could also complement the rapid transport system serving as the last mile connectivity and as feeder routes.

In short it could be an elevated eco city with zero access for motorized travel!

Alternatively an option to provide dedicated bicycle tracks and walkways alongside elevated rapid transport system can also be explored.

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Benefits of the Elevated Eco City End user cost benefit will chiefly consist of savings from replacement of

motorized transport. Considering average travel distance of an end user at 5 kms/one way/day

aggregating to 250 kms / month, for a travelling cost ranging from Rs. 1/km (for public buses) to Rs. 15/km; users could save between Rs. 250 ($ 4.5) to Rs.3750 ($ 68) per month.

Credit from power generation. Reduced health maintenance costs. Carbon Credits. The real benefit lies in reduced use of fuel and consequently a reduced

current account deficit! On an average assuming use of fuel @ 0.05 litres/km/person/day (fuel

efficiency of 3 kms/ litre for a Bus carrying 60 passengers), a 10 kms daily commute would result in replacing use of 150 litres of fuel/ person/year. Assuming that on a daily basis in Mumbai, 2 million citizen travel in the proposed network, consumption of 300 million litres of fuel could be avoided per year. Assuming basic fuel cost at say Rs. 25/litre, we avoid burning Rs. 750 Cr. (135 MN. $ ) of fuel per year just in one city!

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Funding the Eco City Assuming construction cost at Rs. 40,000/sqm., one kilometre of elevated

route for 16 mtr. width would cost Rs. 64 Cr. Assuming space of 58,000 sft. rented @ Rs. 60/sft/month and advertisement

space of 22,000 sft rented@ Rs. 60/sft/month for a one kilometre stretch, annual revenue could amount to Rs. 5.76 Cr or 1.05 MN $.

Income from renting cycles ignored. ROI works to 9%. At a preliminary level, the elevated eco city model makes economic sense.

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Caveats Existing technology for converting pedal power into electricity is inefficient. How doe we handle aesthetics of an elevated carriageway which if done

insensitively could be an eyesore? Whether cyclists would be comfortable riding at an elevation from ground? How many people would be ready to bicycle to work? Unlike in cooler countries where cycling is a leisure activity or for health

reasons, whether in India after putting in a days work, there be an inclination to cycle back home?

Thank Youhegde_ashutosh@yahoo.com;

The views presented are personal in nature.

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