Hong Kong prices, Third World facilities

RAISING LIVING STANDARDS

Mumbai - An international financial centre

The high-powered committee, chaired by former World Bank economist Percy Mistry, has recommended a package of radical measures to transform India's business capital into a global financial hub. Can they work?

Mumbai must be the only financial hub, aspiring or otherwise, that prays to the rain god every monsoon. Will it rain so much that the city's 150-year-old drainage will give way once more?

When the city fathers of London decided to rebrand the City of London a financial hub, they rebuilt its drainage and other systems and cleaned up the Thames and turned it into a major tourist attraction. In Dubai, the spanking new financial city has a state-of-the-art infrastructure""from roads and ports to power, telecom and housing with redundancy to take care of the next 10 years.

The plan to replace the drainage system laid by the British is gathering dust at the city municipal corporation's offices despite a Rs 1,200-crore central government grant. Forty per cent of the city continues to live in slums and does not pay for the electricity or water they use and yet the city rivals Hong Kong in expensive real estate. It has been ranked as the 10th most expensive city in the world.

The Percy Mistry report, on turning Mumbai into a financial hub, recommends that the city's infrastructure in terms of new roads, expressways, suburban railways and water-borne transport should be in place by 2011, with feasibility and technical studies starting this year.

But given the present state of apathy, what is required is long term political will to implement the plans that have already been drawn up, says Ambar Maheshwari, head investments at DTZ, a property advisory firm.

"The state government is not even willing to scrap the Urban Land Ceiling Act to access funds from the central government that could be used for the city's infrastructure projects. Compare this with London, where successive governments supported the plan to make the city a financial hub and rebuild entire districts to accommodate new services and service providers," says Maheshwari.

The city can immediately absorb as much as 10-15 million sq ft of additional office space, while only 6-8 million sq ft is expected to come up in 12-18 months.

The demand-supply gap for premium housing in the city has approximately doubled in the past two years. As a result, values in south Mumbai localities from Colaba to Worli are Rs 18,500 per sq ft to Rs 22,500 per sq ft.

The financial services sector contributes as much as 40 per cent of the demand for the commercial office space in the city with global financial services majors all queuing up to set up offices. Recently, Lehman Brothers took up two floors in a prime locality in the island city with brokers reporting a 50 per cent rise in enquiries.

Even as the number of cars on the city's roads has doubled, roads have grown by just 5-10 per cent, despite the Mumbai Metropolitan Regional Development Authority's attempts to widen existing roads and build new ones. Says Akshay Kumar, former CEO of Colliers International: "What the city needs are quick investments in infrastructure."