Property developers feed Indians' appetite for a luxury lifestyle

When Jitu Virwani, the chairman and managing director of Embassy Group, an Indian property developer, bought a home in the Springs in Dubai, he was so struck by the concept of the project, which aims to provide all the facilities of daily life within the development, that he incorporated the ideas into the 300-acre township he is building on the outskirts of Bangalore.

“I kept looking at [Dubai Springs] and thinking it was perfect development for the Indian circumstances,” says Mr Virwani. “It’s very smartly built – the parking, the way the houses are divided, the town centre. Everything you mostly need day-to-day is there.”

Embassy Springs, being developed north of Bangalore, a congested city which is best known for a being a hub for information technology companies, is designed to have schools, hospitals, shops, entertainment facilities, commercial space, a lakefront area and parks to cater to its residents, so that it becomes what the developer describes as “a self-sustained city”.

It is expected to become home to 5,000 families, and will offer villas and apartments, as well as plots of land on which buyers can develop their own houses.

Developers in India are increasingly building integrated township projects in the suburbs of major cities designed to offer homeowners more space and provide facilities and amenities within the development. This is driven by a shortage of land and overcrowding in India’s big cities. At the same time, incomes are rising in the country, and residents are seeking a better quality of life.

But there are a number of hurdles that accompany such projects, including securing the large areas of land needed, and executing and managing these townships well so that they become a success.

“Integrated townships are the latest buzz in the residential real estate sector,” says Hariprakash Pandey, the senior vice president of finance at HDIL, a Mumbai developer. “Increasing spending power of home buyers, rising aspirations have all compelled the developers to create homes that are all inclusive. Integrated townships, also known as self-sustained townships, include all aspects of the modern-day living within the township. Residential, commercial, retail and institutional aspects are included in a township that spreads on a vast space of land. Availability of vast space, spacious flats, decongested walkways and quiet atmosphere are some of the highlights of a residential township.”

He says that townships are rapidly gaining popularity in India as the homebuyer looks for “an edge” over others and a better standard of living.

“Today the new generations are always looking for a ‘lifestyle’ kind of living, in which all the amenities are there, so that’s a reason that the townships are more attractive to people and why there are more moving into the market,” says Shushil Raheja, the chief executive of Raheja Homes, a developer in Mumbai exploring opportunities to develop townships.

Lodha Group, India’s largest developer by sales, is building Palava City about 35 kilometres north-east of Mumbai, which will spread over 4,500 acres with a planned investment of 280 billion rupees (Dh15.3bn). The project is designed to be a small city in itself and include facilities such as a golf course and a football pitch. Although work is still continuing on Palava, thousands of families have already moved into their homes there. Prices for apartments start at about 4.3 million rupees.

“Across India because of the fact that urban amenities and urban liveability is not very high for various reasons – traffic, infrastructure, regulation – people constantly seek havens or seek to improve their living standards by moving to places that are a microcosm of having everything, but are better planned, better run and better governed, and townships reflect that process,” says Abhishek Lodha, the managing director of Lodha Group.

But he says that while some townships have already been completed in India, they have not necessarily met the expectations of the buyers.

“The consumer didn’t want more buildings together because that doesn’t add value. What the buyer wanted was a better standard of long-term governance, infrastructure, maintenance, facilities, social interaction with peers – all of those things.”

He explains that Palava is striving to meet these demands by making sure that apart from better standard of facilities and properties, it also focuses on the management and governance of the city.

“When a new township is completed, you start off with great expectations because the building looks nice and it’s new and the clubhouse is new, but three years down the line if the overall environment of running it is the same as the city, then soon the whole thing starts diminishing.”

He says that alongside Palava, there are other examples including townships by DLF in Gurgaon, a satellite city of Delhi, and Hiranandani in Powai, outside of Mumbai, where the developers have made sure they are involved in the long term maintenance and running of the developments.

Mr Lodha adds that well-managed townships in India “will clearly be a significant part of urban living going forward, as Indians look for a better quality of urban living”.

Godrej Properties, which is part of the Godrej Group, one of India’s biggest conglomerates, is developing an integrated township called The Trees in Vikhroli, in the suburbs of Mumbai.

“The concept of integrated development has gained significance in recent times as a means to enhance liveability and sustainability in our cities,” says Anubhav Gupta, the chief design officer and head of CSR and sustainability at Godrej Properties. “Integrated township developments are vibrant, mixed-use, walkable, transit-friendly and sustainable precincts … to improve liveability for our customers.”

He says that the challenges that developers planning townships face include availability of land and infrastructure.

“In India, there are very few examples of such successful developments,” says Mr Gupta. “Historically, long term development horizons, developer appetites for mixed-use integrated developments and at times the inability of the market to absorb infrastructure costs versus long-term capital appreciation tend to be dampers for large scale development. Developers who have challenged the status quo and created successful integrated mixed-use developments despite the hurdles have given hope to those who are interested in the concept.”

Mr Raheja say that beyond the task of acquiring the land, sales are challenging in the current state of the property market, with supply being higher than demand.

“The market right now is slow,” he says.

Mayur Shah, the managing director of the builder Marathon Group, says that “the major driving force behind this is the changing habits of people and the change in their social status because of global exposure, which has evolved the needs and requirements of an individual”.

Marathon is building its Nexzone township in Panvel, in the Mumbai metropolitan region.

But he explains that building townships is a costly and laborious exercise for developers, which limits and slows the development of these projects in India.

“Land costs are very high, often constituting the majority of the project cost for developers,” says Mr Shah. “Typically, in India, the process of acquiring necessary construction approvals for each project takes several months. Such a long holding period leads to additional cost escalation for developers.”

Mr Virwani explains that acquiring land was an enormous undertaking for Embassy Springs. It took him more that twenty years to acquire the 300 acres of land and this involved a process of dealing with more than 460 owners.

“I started acquiring land here when I was 29 and I just turned 50 a few months back.”

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Rebecca Bundhun

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