Even as the Rail Budget proposal to commercially exploit the railways’ Mumbai land and airspace got a thumbs up from various quarters, the ministry has to tackle the issues of encroachment and infrastructure bottlenecks before the plan can be implemented.
The railways are sitting on prime land of 500 acres in different areas such as Bandra, Parel and Andheri in Mumbai, according to leading property consultants.
Back of the envelope calculations put the value of the land at over Rs 20,000 crore at an average of Rs 10,000 per square feet, though most of it is encroached.
“There will be a lot of demand for these locations due to the high footfall. Developers would be keen to do retail or office developments here,” says Anuj Puri, chairman and country head of Jones Lang LaSalle, a global property consultant.
Adds Pranay Vakil, chairman of property consultancy Knight Frank: “Given the real estate prices in Mumbai, definitely it will be lucrative to develop such parcels.”
For starters, Mumbai has seen home prices shooting up to Rs 1,00,000 a square feet, making it one of most expensive residential prices in the world.
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Knight Frank’s Vakil points out how the railways developed the Vashi and CBD Belapur stations, which have offices on top of the stations. “They can do offices on top of stations and residential developments in the vicinity,” Vakil says.
Besides, the new supply of commercial properties also expected to put downward pressure on office rentals in city, which are also one of the highest in the world.
According to estimates, every one million sq ft of new office supply is expected to bring down rents by 10 per cent. “If supply goes up in a particular area, rentals will get corrected. Not in their current shape, but when swanky offices come up near or on top of railway stations, everybody would love to operate from that place,” says Raja Seetharaman, managing director of Aperon Realty - TCN Worldwide, a property consultant.
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Advertising experts say the railways can also earn substantial revenue through different forms of advertising. Currently, the railways earns a meager Rs 30 crore from all forms of advertising on its platforms, trains etc. "This, in itself, is an opportunity if they simply refurbish the railway platforms," says Sanjeev Gupta, chairman and managing director of Mumbai-based outdoor agency Global Advertisers.
By some estimates, stations which have large footfalls such as Bandra, Dadar and Churchgate, garner revenues of Rs 2-3 lakh a year in advertising. With proper development, this can go up to Rs 12 lakh a year, say market experts.
But the railway ministry's plans to develop land will not be without challenges. The Railway Land Development Authority (RLDA) plans to develop the 11 acre plot owned by the railways in Bandra is in a limbo for the last five to six years. Apart from slowdown in property market, the suburban collector’s objections also posed challenges to sell the land in the past.
Sunil Bhandare, leading consulting economist, makes a case for railways to first do land mapping in order to evaluate volume of quantity in its possession and how much free from encroachments.
"Besides, the railways need to augment infrastructure, especially road connectivity while developing spaces adjacent to railway stations. the railways also will have to upgrade facilities for commuters while developing food malls and other amenities in the railway stations to avoid congestion," suggests Bhandare.
Sudhir Badami, transport expert, calls for total transparency during commercial exploitation of land by the railways. "In my view national assets should not be put for commercial utilisation. If the railways want to do it then it should be done in the most transparent manner. Further, the proposed commercial utilisation should not put additional burden on commuters as the railways will have to develop additional infrastructure simultaneously," he adds.