ram nagar feseability study -...

RAM NAGAR – FESEABILITY STUDY Executed by: MagicBricks Research

DISCLAIMER: The information in this document and all annexure are confidential and intended solely for the addressee, in this case S. Chand & Company. The data analysis is based on research across multiple sources of brokers, developers, development authority, end users and professionals. The analysis done by MagicBricks may be taken as an indicative and MagicBricks takes no responsibility either for accuracy of this data or authentication of it since it is from unstructured sources.

REPORT STRUCTURE

EXECUTIVE SUMMARY

THE STUDY

o OBJECTIVE

o TENURE

o SCOPE

o METHODOLOGY

o DELIVERABLES

CHAPTER 1: INTRODUCTON

CHAPTER 2: DEMAND ASSESSMENT

o CORPORATE USERS

CHAPTER 3: PARALLEL PROFILING

o VARDHMAN TOWERS

o JHANDEWALAN

o CONNAUGHT PLACE

o SHASTRI PARK

CHAPTER 4: PAHARGANJ

o CURRENT PROFILE

o MERITS & DEMERITS

o STUDY ON ACCESSIBILITY TO PAHARGANJ

CHAPTER 5: NEW PLANS

o A) MCD

o B) DDA

o C) Indian Railways

CHAPTER 6: RECOMMENDATIONS ON RAM NAGAR PLOT

o PRODUCT MIX

o YIELD ANALYSIS

o INVESTMENTS

CHAPTER 7: CONCLUSION

EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

The client, S Chand Group is one of the leading Indian textbook publishers and exporters in India.

It is India’s largest publishing and education services enterprise, founded more than 70 years

ago. S. Chand Group has commissioned MagicBricks Knowledge Services (a part of Times

Business Solutions Ltd), to do a feasibility study on its plot of land at Ram Nagar in Paharganj

area of Delhi.

Specifically, the client desired to understand the ideal combination of residential, retail and/or

office space that would yield optimum returns on its Ram Nagar plot at Qutab Road (of

approximately 6000 Sq.. m and plinth area of 9156 Sq.. m) in Paharganj area of Delhi. The

objective of this engagement is to determine options to maximize potential of this plot of land

through an analysis of yields on the investment.

To determine the ideal product mix, an analysis of the yields, the demand for residential, retail

and office space along with current zoning/land use regulations governing the area and upcoming

redevelopment plans in the area was carried out. The analysis also considered case studies of

similar localities such as Jhandewalan and Vardhman Tower (the only commercial building in

Paharganj) in close proximity to CP, besides other relevant buildings such as Shastri Park along

the Delhi Metro’s Rithala to Shahdara route. In addition, sensitivity of the yields to different rents

and product mix was tested.

Out of the various real estate options of retail, office, residential and hospitality, residential is

ruled out as the client desires regular rental returns. Hospitality (serviced apartment) is also ruled

out as the only land use permitted on this plot of land on the Qutab road is commercial. As per

the demand assessment, while corporate houses from IT and ITES segment are not keen to re-

locate to Delhi, certain other sectors such as Banking Financial & Insurance Companies (BFIS),

travel agencies, airline offices, management consultants and media companies evinced a strong

desire to shift to areas within close proximity of Connaught Place. This is primarily driven by the

need to stay in a place accessible to public and the fact that the rentals will be competitive

compared to the rentals in Connaught Place (CP). However, these sectors stressed that any shift

to such a building would also depend on good maintenance and availability of adequate parking

facilities. Also these units would prefer to add a branch in a place within a 2 km radius of CP.

From our analysis, the best product mix is retail on the lower floors (25-35%) and office on the

upper floors (65-75%). At this mix, a rental in the range of Rs. 200-250/sft for commercial space

(with about a 10% premium for retail space) would fetch annual yields of 13%-16%. These yields

assume that S Chand will hand over the construction of the building to a contractor and conduct

all marketing themselves and that the building would have 100% occupancy within 4 years of

commissioning. In this scenario, S Chand’s investment would be the market value of the plot (Rs.

105 Cr.) and the construction cost (around Rs. 16 Cr.)

If S Chand were to involve premium real estate developers, the rental rates would have to be at

least Rs. 340 to obtain a yield of 13%. With medium-sized developers, the rates would have to

be at least Rs. 260 to obtain the same yield. In both these scenarios, S Chand’s only investment

would be the market value of the land (around Rs. 105 Crore). While the developers would

obtain a portion of the building in these scenarios, the advantage here is S Chand would have to

do little marketing and can charge premium rents.

Since S Chand’s core business is not in real estate, it would be risky for S Chand to

consider marketing the commercial/retail space themselves. It would be better to negotiate

with premium/mid-size developers to take advantage of their brand name and captive

customers to market the building.

STUDY

OBJECTIVE To determine how to maximize potential of the S Chand’s plot of land at Paharganj area and

to understand what fetches the maximum yields on this plot of land between various real

estate options.

TENURE

The study shall be conducted over a period of twenty working days from the day of

commencement of the project i.e. October 18, 2007 to November 15, 2007.

SCOPE

The study shall include the following parameters:

1. An assessment of the Master plan 2021 - .

a. What is allowed to be built currently?

b. What is to be allowed in future?

2. Comments from MCD, DDA, and other local authorities on redevelopment plan for

Paharganj area. Issues like road widening, accessibility to plot and other

development plans will be answered.

3. Real estate survey of Connaught Place – Commercial (Office and Retail). The survey

would examine the preferences of potential occupant if a modern office building is

available in the Paharganj Plot.

a. Primary demand assessment

b. Sample survey of Jhandewalan as a control area of similar profile

i. Benchmark values and profile of development here

ii. Relative yields per Sq. ft of retail, office property in Jhandewalan

iii. Study of how one upscale development changes the image and

consequently market values in the area

c. Analysis of relative advantages and disadvantages of building in each segment.

d. Addressing the problems of parking, image, address

e. Analysis of problem of congestion by taking into account an analysis of time

taken from Connaught Place (a stretch of 1.2 kms) to the Ram Nagar plot, at

different points of time on a week day and a weekend.

f. The report would also enclose the supporting documents as part of the annexure.

METHODOLOGY The methodology will be as follows;

1. Primary market research of Paharganj area with special focus on commercial

complex of Vardhman Towers.

2. Primary market research of Connaught Place area with special focus on buildings

which have been renovated recently such as Statesman House, New Delhi House.

3. Primary market research of Jhandewalan area with special focus on commercial

building of Videocon Towers.

4. Primary market research of Shastri Park – the Delhi Metro Rail Corporation’s IT Park.

5. Demand assessment from Corporate Users spanning across sectors of IT, ITES,

BFIS, media companies, travel agencies, consultants etc.

6. Meetings with all relevant authorities- MCD, DDA to understand what is legally

allowed in this area, infrastructure initiatives coming in the near and planned future.

7. Meetings with Indian Railways to understand the Railway redevelopment plans.

8. Based on comparable values of neighboring and similar areas, a complete yield

analysis and suggestion of best product mix between retail and office.

DELIVERABLES

1. Feasibility study on Ram Nagar Plot

2. Master Plan assessment of what is possible in this area

3. Comments from various civic agencies

4. Demand assessment from Users

5. Comparative market survey reports of case study areas

6. Comparative Product Mix possible in the building

7. Financial & yield Analysis

8. Recommendations

CCHHAAPPTTEERR 11:: IINNTTRROODDUUCCTTOONN

S Chand Group is one of the leading Indian textbook publishers and exporters in India. It is

India’s largest publishing and education services enterprise, founded more than 70 years ago. S

Chand has a group of authors who are well known in their subject areas. They have also

produced 50 school curriculum related courses that are being used in both CBSE and ICSE

schools across the country. Since its inception, it has worked with more than 1200 authors and

has delivered more than 7000 titles for students in schools, colleges, universities and other higher

education institutes across India and other countries.

S Chand Group, which is basically into the business of publishing also, has a real estate portfolio.

The group owns several plots of land all over the country, of which the one in consideration

currently is the Ram Nagar plot at Paharganj. This area of this plot is approximately 6000 Sq. m

and plinth area of 9156 Sq. m and houses a printing press, two budget hotels and S Chand’s

office. Each of these constituents is freehold in nature, with the following details:

Printing Press:

The printing press RRPL, Ram Nagar, Delhi - Press of plinth area of 1142 Sq. m was

constructed on a land area of 2943 Sq. m in year 1972 and is spread over two floors of

basement and ground floor of area 353 and 789 Sq. m respectively.

Hotel Deluxe:

Hotel Deluxe of plinth area of 1219 Sq. m was constructed on a land area of 2005 Sq. m in

year 1986. It is spread over five floors (Ground floor to fourth floor) each of plinth area 289

Sq. m along with a basement.

Hotel Tourist:

Hotel Tourist of plinth area of 2943 Sq. m was constructed on a land area of 1508 Sq. m in

year 1972. It is spread over four floors (Ground floor to third floor) and each floor is approx of

plinth area 814 Sq. m, except the third floor of 501 Sq. m and on the ground floor there is an

additional kitchen of 51 Sq. m.

S. Chand & Co. Ltd:

This is the office building of S Chand which was constructed in year 1972. Spread over three

floors (First to Third floor), this building is of plinth area 3066 Sq. m, with each floor of area

1022 Sq.. m.

The group wants to re-locate the printing press to an industrial area and demolish the two budget

hotels. After demolishing and re-locating whatever currently exists, S Chand wants to maximize

the yield of this plot of land. As such, they want to understand the legally allowed land use,

building norms, and the most profitable product mix, investment required to build this structure

and the resulting yields.

S. Chand Group has commissioned MagicBricks Research to do a feasibility study, to understand

the real estate product mix (retail or office or a combination of these) that would yield maximum

returns on their Ram Nagar plot.

The group prefers a lease model, which would yield regular returns, rather than an outright

purchase and selling model. Since the group’s core competence is not real estate, it is open to

various partnership models with developers or contractors. The group wants to understand the

type of retail and corporate users that would be interested in shifting here (a non-traditional

commercial destination in close proximity to the CBD). The client wants to know the rents options

that these end users are willing to pay, amenities that they require, kind of building that they

would like to occupy and other such parameters.

The following chapters will outline demand assessment of corporate and retail users, profiles of

similar and comparable areas as well as buildings.

CCHHAAPPTTEERR 22:: DDEEMMAANNDD AASSSSEESSSSMMEENNTT

CORPORATE USERS

MagicBricks Research surveyed a sample of corporate houses across industries of

manufacturing, BFIS, IT & ITES, consultants, travel agencies, aviation companies, small to

medium scale enterprises and media companies.

Amongst the IT & ITES users, the team spoke to companies such as Xansa, Aricent,

Accenture, and HCL. The unanimous view was that they would not prefer relocating from

suburbs to the city centre. These were the primary reasons:

1. With STP regime due to wind up on 1 Apr 2009, IT and ITES companies are looking

for space in SEZs to avail the tax benefits.

2. The minimum land required for an IT & ITES SEZ is 10 Hectares, which is not

available in the land under consideration.

3. IT & ITES firms need at least between 100,000 to 150, 000 Sq. ft for optimum

operations, with floor plate measuring upwards of 35,000 - 40,000 Sq. Ft Typically

such space is seldom available in the CBD in any metro/ tier 2 cities.

4. IT & ITES companies need to be located in commercial / institutional / industrial area

away from the CBD as they need adequate parking space not only for the employees

but for the large number of cabs as well. These cabs not only clog up parking space

but also create a jam on the street affecting the traffic movement on an already

crowded street.

There is a positive demand from the following segments to be located in vicinity of

Connaught Place

1. Financial Services Companies, Banks & Insurance Companies

2. Logistics, Travel, Aviation Companies

3. Companies engaged in providing knowledge services such as Consultancies

Below are the responses given by each of these:

Company Industry Previous Place Previous

Rent Current Place

Current Rent (Per Sq.Ft/ per

month)

Main Reason for

shifting

Openness to office in

central Delhi

1 BP Oil & Gas

Connaught Place

100 Gurgaon 110 Higher space requirement

Yes

2 HFCL Telecom GK 125 Gurgaon 100 + maintenance

Higher space requirement

Yes

3 HCL Software NOIDA Own building

NOIDA Started in NOIDA and happy staying there

No, their work involves back end operations and they do not want to be present in Delhi. Same was the view of another IT major- Aricent

4 NTPC Power generation

NOIDA Own building

Badarpur Thermal Power Station

Yes

5 People Strong

HR Gurgaon NA Gurgaon 57 No

6 British High Commission

Connaught Place

Own building

Connaught Place

Yes

7 Asahi Glass

Manufacturing

Basant Lok 45 Gurgaon 60 Due to insufficient office space and parking

Yes

8 ICRA Consulting

Kailash Building Connaught Place

130 Gurgaon 40 Due to insufficient office space and parking

YES

9 Times Business Solutions Pvt Ltd

Media Bahadurshah Zafar Marg (BSZ)

45 NOIDA 45 Expansion is difficult, frequent traffic jams

Suits the business requirements.

10 Business Standard

Media Bahadurshah Zafar Marg (BSZ)

40 Bahadurshah Zafar Marg (BSZ)

Wes we would like to be in central Delhi

11 Anand Bazaar Patrika

Media Central Delhi Rs 45 Sq. Ft in 1999

Bahadurshah Zafar Marg (BSZ)

Rs 60 with AC from 9 AM to 6 PM

We shifted at BSZ Marg in 2000. We wanted to consolidate five different offices and still be in CP.

Yes why not, provided place is centrally located.

12 ICICI BFIS Established since 2000

NA Jhandewalan- occupying 6 floors-

45 (6 years back)

We have 2 kinds of operations- front end and back end. back end will always be at suburbs and front end has to be in close proximity of CBD due to customer interface need

13 ICICI Bank branch

Established since 2001

NA Barakhamba road, CP

350 Not interested in shifting office but can think of open new one as they will like to have chain

14 Canara Bank

Bank branch


NA Outer Circle, Connaught Place

old rentals Like to open another branch if provided with better infrastructure, parking space, and low rental values.

15 Standard Chartered Bank

Bank Established since 1999


350 Will not shift to other place but can think to open new branch as they are facing some space problem

16 Dena Bank

Bank branch


Outer Circle, Connaught Place

old rentals Office is very old and they have good clientele.

Will not shift but can think to open new branch or back office in the nearby area if provided with better infrastructure and area.

17 New Quest Insurance Place

Insurance

New office - Shifted one and half year back.

Outer Circle, Connaught Place

300 Clients, business purpose, location, accessibility.

Would like to open new branch if better infrastructure and area is provided at commercial place.

18 Eastways Travel Services

Travel Agency



20,000 per month for 500 Sq. ft plus 6,000 per month for parking

Not interested in shifting office but can expand or open another branch if better infrastructure office is provided at low rentals.

19 Sharaton Airways

Travel Agency


40 Profitable to be here

Can think of open new office in nearby area if clients are available.

20 Kingfisher Airlines

Airline Office



350 CP – Centrally located, big name, maximum number of foreigners clients, all other travel agencies are here.

Not interested in shifting their office but can open new office if provided at better location and with good infrastructure.

Please see enclosed annexure for actual qualitative and quantitative inputs The demand assessment illustrated the following results:

There is a positive demand to be located in Central Delhi from users currently occupying

Connaught Place

Also, some of the corporate houses who have recently shifted from Connaught Place to

the suburbs will be happy to be back in Central Delhi provided they get large floor plates,

affordable and value for money real estate proposition, good maintenance and parking

facilities.

The demand is basically from Banking Financial & Insurance Companies, travel

agencies, aviation, media companies as well as consultants and companies in the

domain of providing services especially knowledge services. Also, the online media

companies are reluctant to pay higher rental values.

The advantages of being in close proximity to Connaught Place are that it is centrally

located and easily accessible. The availability of a metro access must be exploited fully to

maximize returns.

The key issues are maintenance, lack of parking space and high parking rates with the

average current parking rent Rs 10,000 per month as well as high rentals in the range of

Rs. 250-450 /Sq. ft.

Common demand of corporate users:

Low rental values compared to CP

Easy accessibility

Adequate parking.

Good maintenance

Grade A building with adequate facilities such as power, water and telecom backup

CCHHAAPPTTEERR 33:: PPAARRAALLLLEELL PPRROOFFIILLIINNGG

I: VARDHMAN TOWERS - PAHARGANJ

In an erstwhile slum area, DDA built the Vardhman Towers in 2004 and the profile of the place

has become much better with the removal of the slums and coming up of a commercial building.

There are 250 shops of which 35-40% is occupied. Most of the ground floor shops are

vacant as the investors and not end users have bought these shops. If the developer

owns and maintains the building this problem of low occupancy can be solved.

50% of the shops have been purchased while another 50% have been leased out.

Current capital value prevailing here is in the range of Rs. 12,000-15,000 /Sq. ft while the

values three years ago were Rs. 5000/Sq. ft for a 12X24 shop.

Lease rental for commercial unit is Rs. 140 -150/Sq. ft. Therefore, an A grade building

with large unit sizes in this area can command upwards of Rs.200/Sq.ft.

Profile of tenants is BFIS (Banking Financial & Insurance Companies), tours and travel

agencies and proprietary firms.

Most of the tenants have moved from Connaught Place either because their lease had

expired and it was not viable to renew it at prevailing market rates or they were operating

in basements in Connaught Place and post MCD sealing, they had to find new locations

to operate from.

It has had a significant impact on changing the profile of Paharganj, from a slum to a

better corporate address.

Shops are available on both lease and outright purchase with the average rent for a shop

with area 72 Sq. ft being Rs 8,500 per month (Excel Photoshop and Courier Shop) and

Rs 15,000 for a 170 Sq. ft unit (Mangalam Properties, Real Estate).

Some owners bought the shops 2-3 years ago at Rs 25 lakhs for a 169 Sq. ft unit. (Mr.

R.P. Kumar import export house & shop no. 122 (GCC Consultants Pvt. Ltd.)

Most of the parking in the basement has been sold to different non occupant buyers

thereby creating an artificial scarcity. The parking rental rate here is Rs. 10.

There is availability of telecom, power and the other services offered include

housekeeping and maintenance. The terms and conditions vary with the type of owner.

Some of the tenants and owners are satisfied staying here as it is much cheaper than

Connaught Place. However others have not been able to do much business here as it is

not a good commercial address. This is an opportunity for the client.

On the flipside, the users say that there are no auto rickshaws available and there are no

foods joints close by. Though there are two canteens within the building, there are no

branded restaurants.

List of tenants in Vardhman Towers

Sarthak institute of studies, Blue line air travels,

Sunsea aviation services, Kotak Mahindra,

Shri Krishna financial services, DST offices,

Advertisers, Canteens

Chartered accountants, Graphic media,

Suvidha taxi service, Property brokers,

Stationary, Grocery and

ICICI Life Prudential, HDFC

ANALYSIS:

Though rental values are low, the services and infrastructure are not good enough

to attract the big players in the market.

The Vardhman Tower case study demonstrates that there is a definite opportunity

in targeting the large CP corporate users who have expansion plans

The problems of parking, restaurants, maintenance which is felt in Vardhman

Towers should be corrected in the proposed commercial complex at Ram Nagar

and it is for these value additions that users will be willing to pay more.

Vardhman Tower users who wish to move to a better location and building demand

good infrastructure, easy commute and value for money rentals.

Despite the fact that Vardhman Tower is only 15 minutes from Ajmeri Gate metro

station (by rickshaw), the occupancy stands at 30-40% because the complex has

no been positioned properly and there is no direct pedestrian access. Therefore,

the advantage to the client.

II: JHANDEWALAN

Originally the government allotted Jhandewalan for residential areas but over the years it

developed primarily into a commercial area. According to the new master plan, Jhandewalan has

been classified as commercial district centre.

Jhandewalan is divided into flatted factory area (Jhandewalan Main) and Jhandewalan Extension.

Jhandewalan Main comprises mainly the furniture market and few branded factory outlets

and the newly established Reliance Fresh retail outlet.

Jhandewalan Extension is more of a commercial area with 2 DDA Markets:

1. Cycle Market, Toys market

2. Anarkali Complex

PRIMARY MARKET MAPPING OF JHANDEWALAN

JHANDEWALAN

MAIN

JHANDEWALAN EXTN

CYCLE MARKET

JHANDEWALAN EXTN

DDA

ANARKALI COMPLEX

JHANDEWALAN EXTN

OTHERS

Reliance fresh-

inaugurated on

19th feb,2007

Dhabas Chartered accountant

offices

Punjab & National Bank

DASS mansion Restaurants Recharge Coupons. Rubber stamps

Reebok

showroom

Photostat Stationary shops Vodafone outlet

Hero Honda Fax Legal advocates offices HP original Cartridge store

Rashtriya

Tower

STD/ISD/Local DSA & DST Banks. Wine and beer shops

Kanishka

Hospital

Cartridge refilling Chartered Accountant

offices


Pramod Machine Computer stationary Recharge Coupons. Rubber stamps

Bearings Office stationary Stationary shops Vodafone outlet

Property Agent Courier Legal advocates offices HP original Cartridge store

Dhabas Mobile phones DSA & DST Banks. Wine and beer shops

All Steel

Market-

Furniture

Mobile accessories Chartered accountant

offices


Kendriya Bhandar Mobile Repairing Recharge Coupons. Rubber stamps

Super bazaar Provisional stores Stationary shops Vodafone outlet

Hotel king

castle

Printing jobs Legal advocates offices HP original cartridge store

A) THE ANARKALI COMPLEX

DDA demolished a graveyard and built up the Anarkali Complex (a market behind

Videocon tower) and the construction started in 1984.

Anarkali Complex is home to offices such as advocates, tax/ law consultants, CA,

advertising and printing companies, personal finance banks, DST and DSA Banks Auto

financing companies and other supporting units such as Stationary shops.

There is MCD parking which is managed by the market association.

The first floor of this complex was sold to Delhi Transco by DDA for Rs. 1Cr. as they were

unable to pay the electricity bill. The first floor is divided into two halves, one occupied by

Delhi Transco and the other occupied by the MTNL.

There are DDA offices also in the building next to the complex.

The capital value of a 12X24 Sq. ft unit is worth around Rs.60-70 lakhs and the lease

rentals are between Rs.14000-15000.

Service maintenance charges are Rs.400/month/unit. The premises are poorly

maintained

B) VIDEOCON TOWER

The Videocon Tower which was set up in 1999 led to a complete image makeover of

Jhandewalan.

Before the Videocon Tower there were only 2-3 shops in that area and most of the space

was occupied by slum colonies.

The first occupants of the Videocon tower were the National Panasonic and Dove

Chemicals, but they soon vacated it.

The tower today is mainly occupied by financial institutions, media houses and a

consumer electronic company. ICICI is the anchor tenant of the tower.

Occupancy is 100%

The market capital value for a 300 Sq. ft unit is about Rs. 25,000-30,000/ Sq. ft while the

values three yrs back was Rs. 10,000/ Sq.. ft.

Lease rental for a commercial unit is Rs.180 -220/Sq. ft

Every office has its own cafeteria or they outsource food.

Parking space is DDA parking and the charges are Rs. 5 for two wheelers and Rs. 10 for

four wheelers.

Among the services there is availability of telecom, power back up and other facilities

such as housekeeping and maintenance.

Terms and conditions of the lease vary with the type of owner.

All office units are on lease basis.

Disadvantages of the complex are the poor profile of the adjoining locality and lack of

restaurants in the vicinity.

Tenants’ demands include good infrastructure, easy commute and value for money

rentals.

List of Offices in Videocon Tower:

Location Organization

Outer Side of the Complex ICICI Bank ATM and Coffee Day Express.

1st Floor ICICI

2nd Floor ICICI

3rd Floor ICICI PRUDENTIAL

4th Floor HEADLINES TODAY

5th Floor COSMO

6th Floor AAJ TAK, TV TODAY



9th Floor ICICI

10th Floor ICICI

11th Floor ICICI

12th Floor VIDEOCON

13th Floor INDIA TODAY

The office tower is fully occupied by corporate houses and caters to the needs of media

companies and MNCs. While rentals are comparatively higher than the rents at rest of

Jhandewalan and Vardhman tower, they are much lower than CP and attract big players

due to the good facilities, services and infrastructure.

JHANDEWALAN RETAIL PROFILE

The cycle market in the Jhandewalan Extension is the only retail setup in the whole area.

The market is occupied by dhabas (small eating joints), restaurants, photocopiers, Fax &

STD/ISD booths, office and computer stationary shops, mobile phone shops, courier

centers and few provisional stores. The area also has a Punjab National Bank branch.

Shops are located on the ground floor only.

The monthly rental value of a 300 Sq. ft shop is Rs 18,000.

On average, the retail capital values range from Rs.10000 – 20000/Sq. ft depending on

location and area and rentals are Rs.50 – 60 /Sq. ft.

The Rani Jhansi Road in Jhandewalan has several showrooms such as Reliance Fresh,

Reebok and Hero Honda showroom, Kendriya Bhandar and Super Bazaar.

Videocon towers have boosted capital values to the tune of upto Rs.10 lakhs for an area

of approximately 11x9.

Analysis

Jhandewalan was originally a low profile market commercial area but the coming of

Videocon Towers as well Metro has boosted its profile significantly.

Jhandewalan had several advantages such as proximity to CBD, Karol Bagh and

Paharganj and good connectivity. The only disadvantage was the absence of a Grade A

office building. The development of such a building, couples with metro connectivity has

converted a low profile commercial area into a corporate address.

Videocon tower has become a landmark building

Access by Delhi Metro has further enhanced the prospects of this area.

Corporate houses such as ICICI feel that the extension of the Metro to the area has

brought in more business as more customers visit the bank now.

Another reason for the growth of the area has been the recent MCD sealing drive

across Delhi which led to the closure of many illegal office premises.

However the area lacks eateries.

IIIIII:: CCOONNNNAAUUGGHHTT PPLLAACCEE

Connaught Place (CP), built by the British, came into existence in the 1931. It is Delhi’s most

popular shopping destination as it is a one stop shop for all needs. The area has many offices of

major banks and corporate houses; it also houses many state emporia. Being the central

business district (CBD) of Delhi almost all major companies have their head offices or main

branchs in Connaught Place. Being near to the New Delhi Railway Station, it attracts many

outstation tourists too.

It is designed in two circles - inner circle and outer circle, with a lane between these two called

the middle circle. CP is also linked with many lanes such as the Barakhamba and Janpath.

Outer Circle

The profile of occupants in the outer circle is mixed - comprising of retail, entertainment, eateries,

proprietary firms, travel companies and institutes. It comprises of mainly Banks, Travel agencies

and Food outlets such as Bank of Baroda, State bank of India, Dena Bank, Corporation Bank,

Punjab and Sindh bank, Syndicate bank, HDFC, ICICI. There are many travel agencies such as

Atlanta Travel agency, Minar Travel agency, Omkar Airways, Pafex, Sharaton Travels, Jaipan

Airlines, Kingfisher Airlines, and Jet Airways. The food outlets include Pizza hut, Nirulas, Sagar

Ratna, Lido, Hotel York, Khana Unlimited, Subway, Dominos, Barista, Costa Coffee, Wimpy, Café

Coffee Day, and Taste of China. Others include Nokia (3), Oriental insurance, LIC, Numero Uno,

Banaras, BML internet, Foreifn exchange office, ATM.

There are branded showrooms as well as art galleries, furniture shops, music shops, customer

care centers too. There are large corporate houses present in the outer circle such as the

Kingfisher Airlines. Nokia is also present in the outer circle. The rental values in this area are in

the range of Rs.75000 - 100000 for a 200 Sq. ft unit on the ground floor. Similar space on first

floor would fetch a rent of about Rs.60000 – 90000/Month.

Occupants of the Outer Circle find it worth staying in CP because of the CBD address. The recent

metro connectivity has added to the appeal. The heritage value also attracts foreign tourists.

There are certain showrooms that are not doing well in terms of sale but are still holding on to the

property just to have a presence in CP. Retailers such as Khadigram Udyog clock sales of upto

Rs. 15 -20 Lakhs per day. The metro has increased the number of footfalls considerably.

The outer circle also houses banks who would be open to opening additional branches but not to

vacate the CP presence. (See table on Demand Assessment) If a unit is drawing footfalls at the

current location it would not like to shift from CP.

It was also observed that the outer circle is not as well maintained as the inner circle. Before the

coming up of metro the Outer circle was considered to be premium especially the area near

Shivaji stadium, but after the metro the sales have dropped a little as shoppers prefer the inner

circle. These companies can be attracted to the Paharganj plot with better facilities and services

at competitive prices.

Premium retail has moved to the inner circle because of metro connectivity, Central Park and the

redevelopment of CP inner circle. However, the offices and restaurants are still flourishing in the

outer circle. In Paharganj the effort should be at drawing these offices from CP rather than

premium retail. Any retail in the client’s building should be to service the building and not

a stand alone unit.

In the CP outer circle, the parking charges are on hourly basis - Rs.10 for the first 2 hours and

Rs.10 for every subsequent hour. On a monthly basis, Rs.800 is charged for small cars and

Rs.1200 for bigger cars. Two wheeler parking is confined to the footpaths.

In Connaught Place’s Outer Circle:

Few banks and Insurance companies such as HDFC, New Quest insurance have

opened.

New food outlets have opened and few are closed.

New Travel agencies have come in such as kingfisher, Omkar

Kingfisher airlines showroom came 2 years back.

All shops are on lease. Few shops are very old and need renovation. Some shops are

now being renovated.

Old Nirulas ice cream parlor and restaurant is vacant as their lease expired and they had

to shift to another location. Their demands are low rental rates, good infrastructure, good

parking and large floor plates.

Mix of shops from clothing to accessories to banks, travel agencies, food outlets.

Nokia hotspot, a new chain has just opened its new showroom in CP – because of

location.

Earlier there were many printing press and painting shops which have now been sold to

big hotels or travel agencies.

Rental rates for the ground floor is Rs 1000 per Sq. ft, for first floor around 800-900 per

Sq. ft and subsequent reduction of Rs 100 per Sq. ft as we move vertically.

Parking for 2 wheelers is far away.

Congested road- high traffic- very difficult for pedestrian movement.

Middle Circle

Mostly the properties in middle circle are available only on lease. Rental rates in the middle circle

are in the range of Rs.150 – 300/Sq.ft.

Inner Circle

The inner circle houses restaurants and shopping outlets, which do not wish to move out.

However, they are willing to open another branch in a good building nearby. The maintenance of

the area is undertaken by the NDMC. Most of the units are occupied under the lease model and

very few old ones are owned by the end users. The inner circle has undoubtedly benefited the

most with Metro connectivity. It has also been observed that many new retailers have opened

units in the inner circle, shifting from their spaces in the outer circle. In the inner circle the rental

rates are around Rs.700/Sq.Ft.

RENOVATED BUILDINGS IN CONNAUGHT PLACE

Some of the old dilapidated buildings have been renovated by the landlords and this has

improved occupancy levels as well real estate rentals tremendously. The client’s building could

take a cue from these examples.

A) STATESMAN HOUSE

Construction started in 1998 and completed in 2000.

Current rental rate is Rs 315/ Sq. ft and started from Rs 95/ Sq. ft in 1998.

The building is now centrally air-conditioned with modern amenities and ample parking

space for 200 four wheelers. The parking has been sold out.

Recently BSNL shifted to its own building at Eastern Court and this has created vacancy

of 33%.

Up market tea bar Cha bar & Oxford bookstore has taken up space here, now that the

profile of the building has been turned around.

B) BIRLA TOWER

Construction completed in 2002-03

Current rental rate is over Rs 350/Sq. ft.

Fully occupied

Centrally air conditioned, the building has very good ambience and security.

C) NARAIN MANZIL

Construction completed in 2002 and building has been functional since 2004-05 (2 years

gap because of metro construction)

Spread over 1.5 lakhs per Sq. ft, the building is centrally air conditioned and has 100%

power back up.

It is now fully occupied.

Most of the tenants are banks, travel offices

Current rental rates at Rs.250/ Sq. ft.

3 basements for parking with 169 car parking space.

D) New Delhi House

Building has been under renovation for two years.

Poorly maintained.

Current Rental rates – Rs 215 / Sq. ft.

2 floors are still vacant

IIVV:: SSHHAASSTTRRII PPAARRKK

A) IT PARK AT SHASTRI PARK Total land area is 6 hectare of which 1 hectare is the constructed area. (FAR is 100 in

metro corridor)

This is a unique building which is NBC 2005 compliant.

The land at Shastri Park was not leveled and DMRC had to do a 7 meter earth fill.

The coming up of Shastri Park has changed the profile of this area- now malls are

coming up in vicinity such as Welcome and Shahdara station.

Block 1 was ready in April 2005 and Block 2 will be ready by the November end. Plans

for Block 3 are in the pipeline and tendering is in progress.

Block 1 – Genpact occupies 80% of this along with Central Bank and Heritage Solutions.

Block 2 has 40,000 Sq. m area and two basements of 5000 Sq. m each to accommodate

200-250 cars and also surface parking for 450 cars. Besides there is a podium floor, 7

office floors and a terrace.

Each office typically covers 2500-3000 Sq. m.

In 2005 the rental rates were Rs.40 /Sq. ft and today the market values are Rs 60/Sq. ft

and an additional Rs. 6/ Sq.Ft. maintenance charge.

B) HERITAGE SOLUTIONS – A case study of one of the tenants:

This software outsourcing unit came in 3 years ago at Rs 38/Sq. Ft. The company works

from 5 am to 8 pm, unlike Genpact.

Occupies 1500 Sq. m (smaller size of office space here) in Tower I where DMRC has

created a separate floor for smaller units.

The area profile was a deterrent but the low rental values and a Delhi address were

attractive.

The connectivity by Metro has helped attract good quality human resources from different

parts of the city. The occupant has the option of expanding to the new block if required.

C) PROVIDING ACCESS IMPROVES THE ACCEPTANCE OF A BUILDING A concrete Walkway (150 m long and 1.8 m wide) over railway tracks provides a direct

link from Shastri Park metro station to the IT Park. Its construction cost was Rs 50-60

lakh two years ago.

CCHHAAPPTTEERR 44:: PPAAHHAARRGGAANNJJ

PAHARGANJ: CURRENT PROFILE

RESIDENTIAL:

There are few multistorey DDA flats in the area along with private houses with area ranging

from 40 to 250 Sq. Yrd. A ground floor house on a 250 Sq. Yrd plot is available for Rs. 50

lakhs whereas, 1st, 2nd and 3rd floors are available at Rs. 35 lakhs each.

COMMERCIAL:

Vardhman Towers offers structured office space.

The table below gives the mapping of Paharganj area:

PRIMARY MAPPING OF PAHARGANJ AREA

Govt. Senior Secondary School At DB Gupta Road.

DDA Multi- Storied Flat , Block 2, Type – V, 102-

108, 202, 203, 307-308, 404, 502-508, 601-604,

701-705,

At Motia Khan, Paharganj

DDA Multi- Storied Flat, Block 1, Type – V, 66 Flats At Motia Khan, Paharganj

DDA Multi- Storied Flat, Block 5, Type – V, 66 Flats At Motia Khan, Paharganj.

DDA Shopping Complex At Motia Khan, Paharganj.

Ram Jas Senior Secondary School At Chitra Gupta Road.

Only Small Size Shop In Des Ray Bhatia Marg

Hotel & Small Size retail shop In Raj Guru Road

Hotel & Small Size retail shop In Multani Dhanda Road

Hotels & Small Size retail shop In Gali Hari Mandir

Hotel & Small Size retail shop In Qutub Road

One Hospital (Sanjeevan Specialty Hospital), St.

Anthony Girl Senior Secondary School & Hotels

In Arakashan Road

Hotels & Small Size retail shop In Arya Nagar Road

Hotels & Small Size retail shop In Sangatrashan Road

Hotels & Small Size retail shop In Chuna Mandi

Hotels & Small Size retail shop. In D.B. Gupta Road

List of all hotels currently at Paharganj:

Name of the Hotel Address

Hotel Welcome D.B. Gupta Road

Hotel Yatri International Arakashan road

Star Place Hotel D.B. Gupta Road

Yes Please Hotel Sangatrashan road

Yavraj Deluxe Arakashan road

Satyam Hotel Main Bajar Road

Step Inn International Arakashan road

Sudarshan Place Arakashan road

Anand Niwas Ram Nagar

Ashok Continental Inn Ram Nagar

Hotel Kwality Ram Nagar

Milan continental Multani Dhanda

Mohan International Arakashan road

Neelam Place Arakashan road

Sunrise Deluxe Arakashan road

Suraj Deluxe Arakashan road

Sapan Plaza Arakashan road

Mayur Hotel Basant Road

Payal Hotel Main Bajar Road

Vishal Hotel Main Bajar Road

Suvidha Dx Hari mandir Road

Syal Hotel Ram Nagar

The Spot Hotel Main Bajar Road

Tourist Home Ram Nagar

VIP Deluxe Hari mandir Road

Venus Deluxe Hari mandir Road

Delhi Empire Classic Place Arakashan road

JM Deluxe Arakashan road

Hotel Mahavir

Maharaja Castle

Majors Den Hotel

Mayur Assom Ram Nagar

White Empire

White House Arakashan road

Hotel Neha INN Arakashan road

Hotel Raja Ram Nagar

Rama Deluxe Arakashan road

Sher E Punjab Arakashan road

Hotel Sita D.B. Gupta Road

Hotel Step Inn D.B. Gupta Road

Hotel Vivek Main Bajar Road

RAM NAGAR: CURRENT PROFILE

Ram Nagar is a favorite destination of budget tourists from all over the world and has a

large number of low and medium priced hotels.

Ram Nagar also has many schools like St. Anthony’s, Ramjas, D.A.V, etc. and a couple

of colleges like PGDAV, Zakhir Hussein, etc. are located near this colony.

Connaught place, the CBD of the capital, is also just a stone’s throw away.

One of the added advantages of this area is its proximity to New Delhi Railway Station

and to large wholesale markets like Sadar Bazaar, Nai Sarak, Chandni Chowk, etc.

Quite a few restaurants and cinema halls (like Sheila and all those in CP) are also

located in the vicinity.

A majority of the residents of this area are migrants from Pakistan who got land in

compensation for the land they lost in Pakistan during the Partition.

According to G L Wadhwa, owner of Wadhwa Properties, there are few people who do

not have ownership rights but pay a very nominal rent to DDA’s Slum W ing.

In 2004, the rates for Kothis in this area (ranging in size from 75 Sq... yards to 500 Sq...

yards) were Rs 35,000 – Rs 40,000 per Sq. yard. Prices vary from Rs 26.25 lakh to Rs 2

crore. Even floors are rented and sold individually in this area.

Godowns are also available for rent. Their sizes range from 7 X 15 Sq. Feet to 12 X 40

Sq... feet. The rental rate here is Rs 5,000 per Sq... feet per month.

According to Ashok Arora, owner of Sundram Properties, prices are stable in this area

and there is not much scope for rise currently. Also buildings have been constructed in a

very congested manner. There is hardly any space in front of houses resulting in

perpetual shortage of parking space.

According to a resident, the area lacks basic infrastructure facilities like proper water and

electricity supply, a good sewerage system, roads too are in a poor state. There is traffic

jam most of the time due to heavy traffic. The area is heavily commercialized with large

hoardings and banners all over. A large number of tourists from all over the world can be

seen here.

MERITS & DEMERITS OF PAHARGANJ AREA

MERITS

Walking from New Delhi Railway Station (Just half km).

5 Km from Old Delhi Railway Station.

10 Km from Nizamuddin Railway Station.

14 Km from Domestic Airport.

20 Km from International Airport.

1.5 Km from Connaught Place.

1 Km from Karol Bagh (Famous shopping centre).

Sadar Bazar, Chawri Bazar, Ajmeri Gate Half Km.

Pragati Maidan (Fair Ground) 4 km.

DEMERITS

Congestion

Weak commercial profile

Unregulated traffic movement

ACCESSIBILITY OF PAHARGANJ AREA:

A study was undertaken to examine the accessibility of Ram Nagar plot from all different points by all modes of transport.

A) Route: From New Delhi Metro Station to Paharganj

Mode of travel: Auto Time of the study: 9.15 am Time taken to reach plot: 8 minutes

Observations:

Autos are easily available at the Metro opening. They charge between Rs 15-20 to ply to

the client’s plot.

There is a traffic signal on the way but that doesn’t take too long to turn green

The traffic is regulated in the initial stretch but it becomes un-regulated after the flyover.

There are no traffic signals and no traffic police personnel to regulate the traffic. That

area has a mixed traffic rush comprising of hand carts, cycle rickshaws, cycle peddlers,

autos, cars and other small vehicles like the tempos.

There is no proper pedestrian walkway.

There is a DDA market in front of the client’s plot (and behind the Railway building). This

market has an array of low-end shops like a barber’s shop, auto mechanic shops, small-

time dhabas, chemist etc. Right next to the client’s plot is a very shoddy complex -

Chandulal complex, built in 1932. This complex houses some shops in the first floor and

the first and second floors have been rented out. One of these shops, called Blue Point,

is run by Deepak Kumar. He has been working in this area for long. He says that this

area caters to low-profile customers. The client’s hotel (The Tourist) is, in fact, one of the

most posh and prominent landmarks there which receives a decent gentry.

The municipal boundary of Ram Nagar finishes three plots beyond the client’s plot. The

municipal boundary of Aram Nagar-Nabi Karim starts from here.

The lane in which the client’s plot is housed also has three other hotels and some small

restaurants, but none of them has a good profile.

Plans - There is a buzz about a flyover being constructed in this area. Shopkeeper

Deepak says that this flyover will connect CP to Paharganj and will ease the traffic. Shop-

keepers on the other side of the road feel differently. Mr. Balvinder of BV Sons says that

plans of this flyover have been wiped out. The flyover will now be constructed to connect

CP to Filmistan and not Paharganj. The shops and jhuggis of that area are being asked

to shift. According to him, the tyre market of Filmistan has been already been shifted to

Narela. Hence, the work is in progress there.

There was also a buzz about the DDA market being pushed far behind its present

boundaries to widen the road, but it seems that this plan was finalized years ago and

nobody is too hopeful about it. Almost all the people in that area are hopeful that the road

will be widened but have no clue how soon this will be done. Also, almost everybody is

unhappy with the way Government plans are implemented.

B) Route: From New Delhi Metro Station to Paharganj

Mode of travel: on foot Time of the study: 9.30 am Time taken to reach plot: 25 minutes

Observations: One has to walk down the Deshbandhu flyover

No proper pedestrian walkways

Traffic was well regulated

There is a short cut (through a staircase) which could save 8-10 minutes

C) Route: From Paharganj to Connaught Place (CP)

Mode of Travel: By auto Time of the study: 10.15 am Time taken to reach plot: 10 minutes

Observations: Traffic congestion near the New Delhi railway station area

Connectivity is good – autos and rickshaws are easily available

Buses also ply to the area. One has to walk down for 4-5 minutes till the New Delhi

Railway Station. This place has a bus stand too.

D) Route: From CP (Janpath) to Paharganj

Mode of travel: By bus – till New Delhi Railway Station Time: 2.30 pm Time taken: 8-10 minutes (there is a traffic signal at Regal Cinema) Onwards journey: on foot till the plot Time taken: 6-8 minutes Total time – 20 minutes

E) Route: From Paharganj to New Delhi Metro station

Mode of travel: Rickshaw Time: 3 pm Time taken: 15 minutes

Observations: Connectivity is good – Straight road to reach CP

Low profile area

No proper pedestrian path

Bottle neck at New Delhi Railway Station.

CCHHAAPPTTEERR 55:: NNEEWW PPLLAANNSS

A) MUNICIPAL CORPORATION OF DELHI (MCD) Building Department

Building norms specific to Qutab Road in Paharganj are as follows:

On Qutab road in Paharganj, land use allowed was initially residential but the master plan

on 7th Feb 2007 gave it commercial status. Only office and retail are allowed, not

serviced apartments or hospitality.

The FAR on 6000 Sq. Mtr plot will be 120.

Height restriction on this road is 15 Mtr.

This road has been designated as a Special Area under the new master plan.

Setbacks are yet to be decided.

Parking allowed is 2 ECS for commercial

2 basements are allowed. In certain areas in Delhi DDA has allowed a third basement if it

takes care of the parking problems. This could be a precedent to the client’s property

asking for a third basement for parking.

MCD’ overall plans for Paharganj:

A flyover on Rani Jhansi Road of 1.67 km from Filmistan to St Stephens hospital will be

constructed by March 2008

Qutab road widening scheme- The process is underway after clearance by the

government. The road widening from 60 Ft. to 100 Ft. will take at least 6 months or more.

The tyre units at the flyover are to be relocated from this road to Sanjay Gandhi Transport

Nagar.

Railway bridge- 3 boxes of carriage will come up at Qutab Road just like below the

Kauriapul railway bridge. Indian Railways will be redeveloping the New Delhi Railway

station while MCD will come up with these Boxes.

MCD has plans to build 3 boxes on DB Gupta road.

MCD has come up with a plan to decongest Paharganj entry of the ND Railway Station

(NDRS). This move involves shifting of the Amrit Kaur and Ram Nagar Markets into a

multistoried complex that is to come up in the neighborhood.

The plan is estimated to cost the agency around Rs 13 crore, which also includes

construction of three underpasses (rectangular in shape) for unidirectional traffic flow.

According to Naurang Singh, superintendent engineer, MCD, the arch under the flyover

near Shiela Cinema would be pulled down to give way to the three underpasses. One

underpass will facilitate a U-turn towards Deshbandhu Gupta Road, another pass will be

for vehicles wanting to go from Sadar Bazar to NDRS and the third pass will be for

vehicles wanting to go from NDRS towards Sadar Bazar.

This is the first time in the city that a road will be constructed over another road. The

whole area would be made signal free.

The stone pitching along Qutub Road will be done away with to create more space —

around 11 to 16 meters on either side of the road — and the central verge will also be

shifted.

This is one of the projects undertaken by MCD in view of the Commonwealth Games.

They have already called for tenders for decongesting the entrance to the station from

Ajmeri Gate and will soon be floating tenders for this project also.

An elevated parking is also being planned near the station to take care of the parking

troubles in the area.

The beautification work in and around the station is already in progress.

Meetings held with the Amrit Kaur and Ram Nagar market associations and Amrit Kaur

market association has agreed to shift.

Land has been taken from the railways to construct a multi-storied market in the same

area that the traders will be able shift to.

President of Amrit Kaur Market Association Anil Chopra said that talks with the MCD has

held but have not been served a notice for shifting. We will only agree on shifting to the

multi-storied market depending on where it is located

The Ram Nagar Market Association said that they had had no comprehensive talks with

the civic agency as yet.

MCD came up with a plan to decongest Paharganj entry of the ND Railway Station

(NDRS). This move involves shifting of the Amrit Kaur and Ram Nagar Markets into a

multistoried complex that is to come up in the neighborhood.

Traders in the Walled City, especially crowded markets like Chandni Chowk, Sadar

Bazar, Kashmiri Gate and Mori Gate are a worried lot. Even as the Municipal

Corporation of Delhi’s (MCD) sealing drive gathers steam, the traders point out that these

areas were listed as ‘‘commercial’’ in the first Master Plan of 1962 and hence, no sealing

action should be taken against shops here.

The Master Plan 1962, under the section on ‘‘already built-up commercial areas’’, lists

Ram Nagar, Paharganj.

B) DELHI DEVELOPMENT AUTHORITY (DDA)

Master Plan:

According to the new master plan 2021 (MPD -2021), Ram Nagar falls under the Special

Area category.

The Special Area has been divided into three separate parts, namely Walled City, Walled

City & Extension and Karol Bagh.

The special areas are allowed mix-use activities permitting variety of uses namely

residential, commercial - both retail or wholesale and industrial uses.

The mix-use policy permits the use of land for purposes other than that for which it was

originally envisaged. Mixed use generally means the provision for non-residential activity

in residential premises. It allows access to commercial activities in the proximity of the

residences. The Ram Nagar plot is covered under the following focal points:

1. REDEVELOPMENT:

Since there is not much development that can happen in Delhi due to the constraints

of buildable/urbanizable land in Delhi, the master plan has come out with the

redevelopment policy. This policy is being followed to accommodate more population

in more planned and organized manner. The redevelopment happens through the

reorganization of the already developed land. The level of redevelopment is based on

the need for up-gradation and the level of infrastructure prevailing in the stretch of

land. To encourage this redevelopment, the government has several incentives and

grants such as enhanced FAR, etc. Redevelopment Schemes are prepared by the

respective local body / land owners / residents. The concerned local body should

promote private land owners to take up assembly and redevelopment of a minimum

area of 4 hectares.

The Ram Nagar plot which comes under the Walled City and Extension category falls

under the mixed land use category, however, the criterion of selection of the mix-use

activities shall be as per Mixed Use Regulations. These regulations include required

parking and open spaces as per the norms, whereas, reduced space norms for other

facilities may be accepted. A minimum level of infrastructure and parking facilities

should be provided.

2. RESTRUCTURING AND UPGRADE OF THE EXISTING AREAS

For restructuring and upgrade of the special area it is essential to distinguish

between the heritage segment of the area and the non-heritage segment of the area.

The heritage area needs to be conserved for which well-designed Special Area

Redevelopment Schemes must be prepared keeping in view archaeological norms /

architectural character.

3. PRE 1962/MPD-1962 COMMERCIAL AREAS

The new master plan has designated those residential areas and streets which were

earlier declared as commercial areas/ streets in Master Plan -1962 will continue

under the same zone to the extent as permissible in the 1962 Master Plan. Also,

areas that were engaged in commercial activity from prior to 1962 in residential areas

are also permitted subject to documentary proof thereof.

4. FIVE TIER SYSTEM OF COMMERCIAL AREAS

The new master plan outlines a hierarchy of commercial area based on the

population and area. The hierarchy is planned such so that it accommodates the

requirement of shopping, commercial office and other service activities in an

integrated manner. The hierarchy of commercial area is given below.

5. EXISTING WHOLESALE MARKETS IN SPECIAL AREA

The existing wholesale markets in the special area are being treated sensitively,

where all wholesale markets using hazardous materials have been planned to be

shifted to the areas assigned. Also all unauthorized encroachments / projections on

roads/ government land will be removed to facilitate easy movement of traffic. The

nearest wholesale market to the plot, i.e. Sadar Bazar, has problems of traffic

congestion, inadequate physical and social infrastructure, and lack of open space,

will be redeveloped at the same location with necessary infrastructure and parking

required for wholesale trade.

6. URBAN CORRIDORS

Under this scheme, it has been proposed that reconstruction / redevelopment of

existing stations should be undertaken through comprehensive urban design

schemes. Qutab road falls under the Sub Arterial Roads. The recommended right of

way (ROW) in existing urban area is 30-40 meters. In addition to this, a separate

cycle track should be provided wherever possible.

7. TRANSPORTATION FOR SPECIAL AREAS

In order to address the problem of congestion in the special areas, the Master plan

has suggested implementing a medium capacity Mass Transit system comprising of

Bus Raid Transport System (BRTS), Light Rail Transit System (LRT) and battery

operated bus system wherever feasible. Such systems would be helpful in increasing

the accessibility to such areas, however, this cannot be implemented unless a

restraint on the use of private modes and provision of parking is not done. Also the

encroachments on the footpaths must be removed to facilitate smooth movement.

8. MIXED USE REGULATIONS

While mixed use has been permitted, certain norms/regulations that are applicable

are as follows:

a. While mixed use allows access to commercial activities in the proximity of the

residences, it needs to be regulated in order to manage the increased traffic and

increased pressure on civic amenities.

b. Adequate provision for community needs, environmental impact and provision for

safe and convenient circulation and parking should be provided.

c. Mixed-use is not permitted in government housing, institutional/ staff housing of

public and private agencies and buildings/ precincts listed by the Heritage

Conservation Committee.

d. A differential approach has been used where the colonies have been categorized

from A to G as adopted by MCD for unit area method of property tax

assessment.

9. SPECIAL AREA REGULATIONS

The new master plan has designated the Walled City and its Extensions, including

Paharganj, as Special Area for the purpose of development. The Redevelopment

Scheme for this Special Area would be prepared and notified by the MCD and the

Building regulations shall be prepared in consultation with the local body. Authority

may declare other historical / pre-1962 developed areas as Special Area. A list of

pre-1962 built-up residential and rehabilitation colonies has been provided below.

The development within these areas is governed as per the Redevelopment

Schemes and Restructuring and Up-gradation schemes explained above. Owners in

special area will have to register themselves with the local body within a stipulated

time frame indicating the existing extent of construction. Thereafter a certificate of

structural safety by qualified engineers shall be submitted within the next 6 months.

Subject to height restriction of 15 meters, all buildings covered by such registration

shall be exempted from punitive action till Special Area Building Regulations for these

areas are notified or maximum three years, whichever is earlier.

C) INDIAN RAILWAYS:

Indian railways is coming up with plans for 22 stations in India, converting them from their

existing state to world-class stations.

New Delhi Railway Station (NDRS) will be the first one to be developed and the target is

before Commonwealth Games in 2010, followed by Patna, Jaipur and Anand Vihar.

The NDRS will be redeveloped to include waiting areas, cafeteria, reception areas,

shopping malls, arcades, places to stay.

Security will be tightened and there will be separate departure and arrival.

Also, there will be escalators and hi-speed lifts.

Many plots of land at this station will be auctioned to private developers who can buy it by

bidding for it and may build commercial complexes or retail etc to maximize returns on

their projects.

Right now, things are at an exploratory stage and Indian Railways has appointed a

consultant Terryferrel & Partners for undertaking a complete feasibility study, as well as

one legal and financial consultant.

Terryferrel & Partners is a Hong Kong based consultant with an Indian partner (project

office at Gurgaon) and they will be submitting the final report by January after which

Railway Board will take a decision on the redevelopment plan of New Delhi Railway

Station.

This will be in consultation with an empowered committee with Cabinet Secretary,

Minister Urban Development, DDA, Delhi Government representation to discuss inter-

ministerial issues pertaining to this redevelopment plan.

The redevelopment of the railways is happening in line with the proposed budget.

No encroachment in the NDRS area. Railway is working out plans with MCD, traffic

police and Delhi government for the 2010 Commonwealth Games. All the planning is

happening at the ministry level.

Station at Ajmeri Gate is in a highly congested area. Plans are on to facilitate faster

handling of trains.

There are plans for utilization of air space.

NDRS had 8 platforms in 1990, it increased to 10 in 1993 and now it has 12 platforms.

Plans are on to increase it to 16 by 2008.

The NDRS will be developed in the PPP mode and will be a world class station. The

station modernization and development would need about Rs.5000 crore. A substantial

portion of it will come through development of commercial property by the private

developer to earn revenues.

The decongestion of the Paharganj side of NDRS has started with the clearing of the

DTC Terminal. The market opposite the NDRS will also be removed but since it is not

railway area it has to be dome by MCD. An integrated plan to tackle the holistic

development of the area is therefore being planned. This would substantially improve the

profile of the area.

The Ajmeri gate side of NDRS is gaining in terms of footfalls which have increased from

38% to about 75% because of increased organized parking space.

There is a plan for a foot over bridge, for which no ticket will be issued. It is a part of the

new building plan and will be put in place soon.

The Railway is coming up with another Yatri Niwas on the Ajmeri Gate side.

There are plans to widen another feeder road - Minto Road.

CCHHAAPPTTEERR 66:: RREECCOOMMMMEENNDDAATTIIOONNSS OONN RRAAMM NNAAGGAARR PPLLOOTT

A detailed financial yield analysis was carried out to ascertain yields on the development of the

plot taking into account:

Various combinations of office and retail

Different Occupancy Rates for office, retail

Varying rental rates

Different types of developers and contractors

In addition, the analysis assumed the following:

FAR of 1.2

Height restriction of 15 m

Rent escalation every five years of 10%

Property value of Rs. 104.57 Crore (based on a value of Rs. 15000/Sq. Ft)

Marketing costs at 2% of rental revenues

Construction cost of Rs. 1500/sft

Depreciation of Building at 5%

Inflation has been assumed constant

Maintenance fees of Rs 13/sft

2 Parking spaces for every 1000 Sq. Ft of space rented

Parking charges of Rs 40/day

Tax rate of 30%

Interest rate of 12% on construction debt

Demolition cost of Rs. 11.8 lakh (20 laborers working for 3 months @ Rs.100/day plus

equipment cost of Rs.10 lakh)

Completion of construction in 2 years starting in 2008

Retail occupancy rates of 30-60-100% annually after construction

Commercial occupancy rates of 20-80-100% annually after construction

The analysis considered average annual revenues from the time of full occupancy of both

retail and commercial space (from the 4th year of operations). In the scenario where S Chand

hires a construction company for developing the building, the repayment of interest has also

been spread out over a period of twenty years even though it may be paid earlier.

The ensuing yields for varying mix of retail/commercial space and a range of rents are as

shown in the table below.

Yields for different mix of retail/commercial and varying rents

13% 150 180 200 220 250 280 300 350

25% 10% 11% 13% 14% 16% 18% 19% 22%

33% 10% 12% 13% 14% 16% 18% 19% 22%

35% 10% 12% 13% 14% 16% 18% 19% 22%

40% 10% 12% 13% 14% 16% 18% 19% 22%

50% 10% 12% 13% 14% 16% 18% 19% 22%

60% 10% 12% 13% 14% 16% 18% 19% 22%

70% 10% 12% 13% 15% 16% 18% 20% 23%

80% 10% 12% 14% 15% 17% 19% 20% 23%

90% 11% 12% 14% 15% 17% 19% 20% 23%

100% 11% 13% 14% 15% 17% 19% 20% 23%

Sensitivity Analysis ofYields%

Re

tail

Commercial Rental Rate (Rs/sft)

A) PRODUCT MIX RECOMMENDATION

As can be seen from the table, for a retail-commercial mix of 25%-40%, the yields vary from 13%

to 22% depending on the rent. However, the building height restriction of 15m allows a maximum

of four floors, which implies a retail of at least 25%.,Based on experience, retail on second floor is

not very attractive to retailers and even if retail space is increased, it has no impact on the yield.

Retail is essential to cater to the needs of the office staff and will add to the appeal and

attractiveness of the building. Therefore retail clients such as a cafeteria/coffee shop,

printing/photocopying services, pharmacy, courier service companies, travel agencies and banks

may be given preference to add to the building amenities,

As such, to retain the building as a high-end office building, retail should be capped at

25%

B) INVESTMENT RECOMMENDATION

The investment required will depend upon whether S Chand prefers to go with a developer or a

contractor. The primary difference would be in the construction cost of Rs. 11.62 crore, dilution of

ownership of the building and to some extent, the marketing cost of the building. The yields with

different developers/contractor are as shown in the table below.

Yields with different developers/contractors

Yield assuming different developers Premium Medium Const. Co.

Real estate Share of Developer (Percent) 50% 30% 10%

Change in Rental rates (Percent) 0 -10% 0

Premium over Construction Cost (Percent) 0 0 15%

Annual Income 12.55 15.84 22.59

Less Maintenance Expenditure 0.03 0.04 0.05

Less depreciation of property 0.29 0.41 0.52

Less Interest Payments 0.00 0.00 0.16

EBIT 12.23 15.39 21.86

Tax 3.67 4.62 6.56

Profit after Tax 8.56 10.77 15.30

Add back Depreciation 8.85 11.18 15.82

Investment (Crore Rs) 104.57 104.57 122.92

Yield 8% 11% 13%

:

If S Chand opts to go with a developer, the developer would secure ownership anywhere

from 30-50% of the building in return for construction and marketing of the building. In

this case, S Chand would minimize the risk of non-occupancy and lower rents. Also,

there is less risk of construction delays since the developer has a stake in the building as

well. The investment here would also be only the market value of the land (about 105

Crores).

If on the other hand, S Chand were to hire a construction company or a contractor, its

investment would be higher since it would have to bear the construction and marketing

costs as well. The investment in this case would be around Rs. 123 crore. S Chand

would have to take a loan for the construction as well. The risk here is higher since the

contractor has no incentive to finish the building on time, which could delay the

occupancy of the building. In addition, marketing of the building would be an issue,

especially given the nature of the immediate vicinity of the area. One option here would

be to offer a share of the building to a Grade A contractor in return for support in

marketing and maintenance of the building. This will also provide an incentive to the

contractor to minimize construction delays.

As such, we recommend that S Chand hire a developer to construct the building. A

possible strategy is to go in with medium size developers and charge rents in the

range of Rs. 200-250 initially, for a yield of 10%. Over time, through rent escalation, the

yields would also go up to about 16%.

C) ADDITIONAL INVESTMENT TO INCREASE ATTRACTIVENESS

Another option that would substantially enhance the building’s attractiveness would be participate

in the construction of a walkway connecting the building to the metro station at Ajmeri Gate. 50%

participation would involve an additional Rs. 3.21 Crore with negligible impact on the yields

irrespective of partnering with a developer or hiring a contractor. Even a 75% or 100%

participation reduces the yield only slightly (from 13% to 12%) and that too only if S Chand were

to hire a contractor. The yields with 50% participation in the walkway are as shown in the table

below.

Yields with 50% participation in the walkway

Yield assuming different developers Premium Medium Const. Co.

Real estate Share of Developer (Percent) 50% 30% 10%

Change in Rental rates (Percent) 0 -10% 0

Premium over Construction Cost (Percent) 0 0 15%

Annual Income 12.96 16.41 23.32

Less Maintenance Expenditure 0.03 0.04 0.05

Less depreciation of property 0.29 0.41 0.52

Less Interest Payments 0.00 0.00 0.16

EBIT 12.64 15.96 22.59

Tax 3.79 4.79 6.78

Profit after Tax 8.84 11.17 15.81

Add back Depreciation 9.14 11.58 16.33

Investment (Crore Rs) 111.72 111.72 137.22

Yield 8% 10% 12%

Here, the investment would also enable S Chand to derive advertising revenues (about Rs.

100/sft of walkway) in addition to the building revenues, which essentially helps offset the

additional investment. In addition, it would substantially increase the attractiveness of the building

and enable faster occupancy and premium rents. Possible partners in this venture could be

DMRC.

CCHHAAPPTTEERR 77:: CCOONNCCLLUUSSIIOONN

The Client property is well positioned for commercial development because;

It is just 1.5 kms. from the CBD

A similar property on anther radial road from the CBD has not only become an extension

of the CBD, but also has changed the area profile.

The recently approved master plan has not only recommended an upgrade of the area,

but also has laid down norms for redevelopment

An extensive redevelopment plan of the adjoining New Delhi Railway Station is already

underway and will supplement the client’s efforts at positioning a premium commercial

development here.

If this building is executed immediately the client will enjoy a first mover’s advantage

which can be enhanced when the railway redevelopment takes off.

There is a huge captive demand for good quality A Grade commercial space in the

vicinity of the CBD. Large floor plates are currently available only in the suburbs of Delhi

but are in demand even in the CBD area. The client can capitalize on this captive

demand to position his property as a modern extension of the CBD.

Many corporate houses which have exited Delhi for the suburbs are finding it

inconvenient and are looking for comeback options. Also many CBD based users are

looking at expansion into affordable quality real estate.

Parallel profiling of similar properties in Jhandewalan and Shastri Park have revealed

that real estate can be a major driver of the transformation of an area profile from a weak

commercial destination to that of a premium location.

Parking is one of the major deterrents in CP and the client can create a pull factor by

providing ample parking space within the complex.

Corporate users will shift from CP to a nearby location or establish new offices there if

provided with better infrastructure, space, transportation at low rates. The client’s

property would accommodate the relocation and/or expansion plans.

The key to success of such buildings is superior quality development and consistent high

quality maintenance and services. Further, the strategy should be to position it as a high

profile office building with retail establishments that directly support the office clients. In

addition, the metro link at Ajmeri gate NDRS can be capitalized upon by the client to boost

accessibility to the building. Preliminary discussions with DMRC have revealed a strong

interest to develop this concept here on a pilot basis. This could even include sharing of

expenses and revenues of the walkway by DMRC.

ram nagar feseability study -...

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