TO GO WITH Lifestyle-India-housing-construction-tourism-environment,FEATURE by Phil Hazlewood   This undated handout photo received on September 15, 2009 from Lavasa Corporation Limited shows construction in Lavasa, near the western Maharastrian city of Pune.  Lavasa's new "hill station", long associated with past colonial rulers, is being billed as "free India's first and largest hill city" but to its corporate backers and those who will run it, it represents more than just a symbol of independence.    RESTRICTED TO EDITORIAL USE      AFP PHOTO / HO / Lavasa Corporation Limited
TO GO WITH Lifestyle-India-housing-construction-tourism-environment,FEATURE by Phil Hazlewood This undated handout photo received on September 15, 2009 from Lavasa Corporation Limited shows construcShow more

Mega-city projects face tough birth in India



Hemmed in between the shale-brown hills of India's Western Ghats, a new city is about to be born.

Spread over almost 9,500 hectares, it comprises Mediterranean-style waterfront villas, hotels, schools and a technology park. A golf course designed by the British golfer Nick Faldo is also planned, along with a football academy operated by Manchester City football club, and a Hollywood-style theme park by the global entertainment giant MGM.

The picture-perfect Lavasa - a 1.4 trillion rupee (Dh114.73 billion) project being built in four phases by the Hindustan Construction Company controlled by Ajit Gulabchand, a property tycoon, is due to be home to 200,000 people by 2021 when it is fully completed.

"Lavasa cannot be termed as a real estate project," Mr Gulabchand says. "This is more like a city state; a whole new urban centre with hospitality, tourism and education at its centre."

Such futuristic cities - also known as integrated townships - replete with modern infrastructure and self-sustainable habitats, are the new buzzwords in India's property sector.

Urban planners say they offer a promising solution to the Gordian Knot of congestion and chaos choking Indian cities and stifling economic growth.

The UN says the world's urban population is set to almost double to 6.3 billion from 3.4 billion by 2050. With its soaring population, India will be at the forefront of this population explosion. About 340 million Indians live in cities. In the next 30 years, an additional 400 million people from the countryside are expected to arrive in cities.

Most of them are bursting at their seams as increasing numbers migrate to them in search of economic opportunity. Mumbai, India's financial capital, which is a magnate for migrant workers, crams in more than 6,000 people per square kilometre. Almost two thirds of the city's population lives in grubby slums or decrepit tenements, often without a clean water supply or adequate sanitary facilities.

Although India's villages house most of the population, its cities generate more than two thirds of the country's GDP and account for 90 per cent of government revenues. Enhancing the productivity of India's cities, experts say, can accelerate economic growth and curb poverty.

"India lacks the infrastructure to accommodate and sustain growth," says Sanjay Dutt, the chief executive of Jones Lang LaSalle Meghraj, a global property services company in Mumbai. "These large developments are needed to align infrastructure with economic growth."

The urban development minister Kamal Nath says India suffers an "infrastructure deficit". The country's choked ports, shoddy airports and heavily potholed roads and motorways shave between 1 and 2 per cent from its GDP annually. The country needs US$1tn (Dh3.67tn) of investments over the next six years for infrastructure projects.

In the past few years, several property companies have launched integrated township projects around India that are expected to fill that gap.

Sahara Prime City, a large property company in northern India, is developing 88 integrated townships across the country under the title of Sahara City Homes. The company plans to build such projects in 217 urban centres around India.

"In new integrated townships, planners are looking at solutions to increasing pressure on existing urban infrastructure and rapid urbanisation," Sushanto Roy, the chief executive of Sahara Prime City, said last year.

India's urban development ministry recently sought an assistance of 185bn rupees from the central government to develop seven cities spanning six states between Delhi and Mumbai. These are expected to be world-class, eco-friendly cities with 24-hour electricity, full fresh water supplies, and efficient public transport systems. These cities will also be developed as industrial hubs that are expected to provide employment and boost industrial production and exports over the next decade.

Of the total investment, 175bn rupees is earmarked for building infrastructure - roads, bus and rail-based public transport, sewage and waste recycle plants, and flood management systems. The first of these cities is likely to be in the Dholera Special Investment Region of Gujarat, about 100km from the state capital Gandhinagar.

At least 17 similar cities are being planned in other parts of India. The government of the southern state of Karnataka recently invited proposals from developers to plan four cities - in total of about 3,650ha - near the state capital Bangalore. The government of Chhattisgarh, a state in central India, also invited similar proposals to set up a new capital city about 25 sq km in area near the capital Raipur.

Economic activity is expected to be at the heart of integrated townships. Commercial units set up within or near the townships are expected to be a magnet of economic activity, with the bonus of reducing travelling time to work, developers say.

Traffic snarl-ups are frequent on congested roads into and within cities. The number of cars projected for India in 2030 is expected to rise to 70 per 1,000 people from the current rate of eight per 1,000 people, adding much pressure to India's poor road infrastructure, says the Centre for Science and Environment, based in New Delhi.

But only about half of the 200 planned projects are up and running, even though most of them were launched in 2007 and 2008 during the peak of India's economic boom.

Procuring large land parcels for such developments is a key challenge. Because most of these projects are away from cities, developers must also deal with rural governments badly equipped to tackle the necessary infrastructure needs.

Many projects, including Lavasa, are caught up in the legal wrangle of procuring land from restive farmers who are unwilling to part with it. Land rights activists accuse Hindustan Construction Company of coercing farmers to sell their land at throwaway prices. The company denies any wrongdoing.

But the biggest challenge for such projects is acquiring environmental clearance. In November, Jairam Ramesh, India's environment minister, halted the construction of Lavasa. Mr Ramesh contended the project was illegal because approval had not been sought from New Delhi and was responsible for causing environmental damage in the region. He asked for the project to be razed.

Mr Gulabchand challenged his decision in court, which later ordered an inspection of the development. Hindustan Construction Company, which carries a debt burden of 17bn rupees, is losing 50 million rupees a day because of delays in construction. The company's proposed $440m initial public offering this year has been postponed indefinitely.

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