The Navi Mumbai international airport,
which has been in the pipeline for quite a long time, has just
received a much-required push from the state government, rekindling
hopes of revival in the realty market. Along with local builders, Mumbai
developers too are looking forward to expanding their wings in the twin
city, which is proposed to see major infrastructure projects like
Mumbai Trans-Harbour Link (MTHL), metros and elevated CST-Panvel
air-conditioned rail corridor in the near future.
Of all the above infrastructure projects, developers are pinning their maximum hopes on the international airport only as they believe that once it comes, other projects will follow suit.
The proposed Navi Mumbai airport is to be developed as a second airport for Mumbai, as the existing Chhatrapati Shivaji International Airport by 2014 would reach its optimum level of handling four crore passengers a year.
“The new airport project will make land available to the entire industry that is currently facing a severe space crunch in order to expand major development projects. This includes both commercial and residential,” said Paras Gundecha, president of Maharashtra Chambers of Housing Industry (MCHI).
Moreover, experts claim that it will also help builders construct projects in accordance with their capacity, which they are not able to do today due to lack of space in Mumbai.
“The city is already saturated so the only way to construct here is through redevelopment. In such circumstances construction of Navi Mumbai airport will offer an alternative to builders where they don’t have to deal with redevelopment or project affected people (PAP) issues. Besides, the builder who has a capacity of 10 lakh houses is able to construct only three lakh houses here due to several constraints - such builders will get a better and newer platform,” added Gundecha.
Recently the project received a major boost after the Maharashtra government cleared a major bottleneck by breaking the deadlock of compensation with project-affected persons (PAP). The state authorities reached an agreement with farmers on compensation for land to be acquired for the project. After several discussions, project-affected persons (PAPs) have agreed to the state government’s offer of 22.5% developed land with floor space index (FSI) of 2 for every hectare of land acquired.
The PAPs have also withdrawn their demand for cash compensation. The agreement for acquisition of a total 671 hectare of such land, including 292 hectare in the core aeronautical area, will pave the way for City and Industrial Development Corporation (Cidco), the nodal agency for the project, to invite requests for qualification (RFQs).
Even six of the eight villages that opposed the compensation package for land, have agreed to the deal recently. The decision was taken at a recent meeting with the Centre and senior state officials, including chief secretary Jayant Banthia, in Delhi. The two villages still opposing the compensation package are expected to agree to it soon as discussions are still on with them, senior Cidco officials familiar with the matter told the media on condition of anonymity.
The airport project, stuck for years over compensation for the land to be acquired, saw a major breakthrough with most villagers agreeing to a sweetened compensation deal offered by Cidco.
With 22.5% developed land and FSI of 2, the compensation is estimated to be approximately Rs17 crore per hectare, confirmed the Cidco official. Further, about 80 hectare of land in Wadghar and Wahal, which had come under the high-tide zone under the 2011 coastal regulatory zone notification, has now been exempted from it, clearing the way for resettlement.
Cidco will soon send detailed proposals to the Ministry of Environment and Forests and Prime Minister's Office (PMO) on the airport project.
The report by Jones Lang Lasalle India spoke of how infrastructure projects influence real estate values. It stated that scheduled infrastructure projects tend to increase the value of properties in adjoining areas. This occurs because the infrastructure project becomes a part of the unique selling point (USP) for developers or property owners. There have been instances where property prices have increased 50-70% from the announcement of an infrastructure initiative until the operational phase.
“Property values increased almost overnight in and around Panvel, Kharghar, Ulwe and most southern parts of Navi Mumbai as well as Mumbai’s eastern corridors which are well linked to the announced international airport. Besides, infrastructure projects like airports result in increased employment opportunities in logistics, hospitality and commercial sectors. Naturally, low-to-mid income residential property demand increases because more people employed in these sectors will need to live in the immediate vicinity,” said Anuj Puri, chairman and country head, Jones Lang Lasalle India.
Other than providing better connectivity and decongesting the existing international airport, this new airport will add enormous value to realty projects in the Mumbai Metropolitan Region (MMR) which consists of eight municipal corporations and 15 smaller municipal councils. With a total MMR area admeasuring 4,355 km² it comprises a population of 20,998,395 and is among the top ten most populated urban agglomerations in the world.
The key municipal corporations falling in MMR are Brihanmumbai Municipal Corporation, Navi Mumbai Municipal Corporation, Thane Municipal Corporation, Vasai-Virar, Mira-Bhayandar, Bhiwandi and Ulhasnagar.
“Construction of a new airport is very important from the builder’s perspective as it will give a required push to residential and commercial property value. Besides, it will contribute to overall development of the region as other infrastructure namely schools, hotels, employment opportunities, colleges and hospitals of global standard will follow this mega project,” said Nirav Shah, director of Shah Group.
Moreover, builders with their projects in eastern suburbs find connectivity to Navi Mumbai airport better than the existing Chhatrapati Shivaji International Airport in Andheri. Flourishing commercial and marketing zones like Ghatkopar, Mulund, Chembur and Vikhroli have better connectivity with Navi Mumbai as compared to the Mumbai project. Thereby, people would prefer to fly from Navi Mumbai airport once it comes up as they will not get stuck in Mumbai’s traffic snarls.
Several big infrastructure companies like Larsen & Toubro and Reliance Infrastructure might be interested in bidding for the project. GVK Infrastructure, the operator of the Mumbai airport, has the first right of refusal.
But the project faces higher development costs. The project cost was earlier estimated to be Rs10,000 crore, but people tracking the development say the cost will now rise due to inflation and delays. The original plan envisaged the first phase of the three-phased project to be completed by 2014.
AM Naik, CMD, L&T, was previously cited in media as saying that the airport project cost will go up by Rs5,000 crore due to delays in land acquisition alone and this will challenge the viability of the project. The project is challenging as it involves land filling of the swampy area, levelling of land by removing a hill and moving power transmission lines. “This cost is pegged at Rs5,000 crore,” said a person involved with the project on condition of anonymity. “But these will see an upward revision by at least Rs3,000 crore,” Naik added.
Of all the above infrastructure projects, developers are pinning their maximum hopes on the international airport only as they believe that once it comes, other projects will follow suit.
The proposed Navi Mumbai airport is to be developed as a second airport for Mumbai, as the existing Chhatrapati Shivaji International Airport by 2014 would reach its optimum level of handling four crore passengers a year.
“The new airport project will make land available to the entire industry that is currently facing a severe space crunch in order to expand major development projects. This includes both commercial and residential,” said Paras Gundecha, president of Maharashtra Chambers of Housing Industry (MCHI).
Moreover, experts claim that it will also help builders construct projects in accordance with their capacity, which they are not able to do today due to lack of space in Mumbai.
“The city is already saturated so the only way to construct here is through redevelopment. In such circumstances construction of Navi Mumbai airport will offer an alternative to builders where they don’t have to deal with redevelopment or project affected people (PAP) issues. Besides, the builder who has a capacity of 10 lakh houses is able to construct only three lakh houses here due to several constraints - such builders will get a better and newer platform,” added Gundecha.
Recently the project received a major boost after the Maharashtra government cleared a major bottleneck by breaking the deadlock of compensation with project-affected persons (PAP). The state authorities reached an agreement with farmers on compensation for land to be acquired for the project. After several discussions, project-affected persons (PAPs) have agreed to the state government’s offer of 22.5% developed land with floor space index (FSI) of 2 for every hectare of land acquired.
The PAPs have also withdrawn their demand for cash compensation. The agreement for acquisition of a total 671 hectare of such land, including 292 hectare in the core aeronautical area, will pave the way for City and Industrial Development Corporation (Cidco), the nodal agency for the project, to invite requests for qualification (RFQs).
Even six of the eight villages that opposed the compensation package for land, have agreed to the deal recently. The decision was taken at a recent meeting with the Centre and senior state officials, including chief secretary Jayant Banthia, in Delhi. The two villages still opposing the compensation package are expected to agree to it soon as discussions are still on with them, senior Cidco officials familiar with the matter told the media on condition of anonymity.
The airport project, stuck for years over compensation for the land to be acquired, saw a major breakthrough with most villagers agreeing to a sweetened compensation deal offered by Cidco.
With 22.5% developed land and FSI of 2, the compensation is estimated to be approximately Rs17 crore per hectare, confirmed the Cidco official. Further, about 80 hectare of land in Wadghar and Wahal, which had come under the high-tide zone under the 2011 coastal regulatory zone notification, has now been exempted from it, clearing the way for resettlement.
Cidco will soon send detailed proposals to the Ministry of Environment and Forests and Prime Minister's Office (PMO) on the airport project.
The report by Jones Lang Lasalle India spoke of how infrastructure projects influence real estate values. It stated that scheduled infrastructure projects tend to increase the value of properties in adjoining areas. This occurs because the infrastructure project becomes a part of the unique selling point (USP) for developers or property owners. There have been instances where property prices have increased 50-70% from the announcement of an infrastructure initiative until the operational phase.
“Property values increased almost overnight in and around Panvel, Kharghar, Ulwe and most southern parts of Navi Mumbai as well as Mumbai’s eastern corridors which are well linked to the announced international airport. Besides, infrastructure projects like airports result in increased employment opportunities in logistics, hospitality and commercial sectors. Naturally, low-to-mid income residential property demand increases because more people employed in these sectors will need to live in the immediate vicinity,” said Anuj Puri, chairman and country head, Jones Lang Lasalle India.
Other than providing better connectivity and decongesting the existing international airport, this new airport will add enormous value to realty projects in the Mumbai Metropolitan Region (MMR) which consists of eight municipal corporations and 15 smaller municipal councils. With a total MMR area admeasuring 4,355 km² it comprises a population of 20,998,395 and is among the top ten most populated urban agglomerations in the world.
The key municipal corporations falling in MMR are Brihanmumbai Municipal Corporation, Navi Mumbai Municipal Corporation, Thane Municipal Corporation, Vasai-Virar, Mira-Bhayandar, Bhiwandi and Ulhasnagar.
“Construction of a new airport is very important from the builder’s perspective as it will give a required push to residential and commercial property value. Besides, it will contribute to overall development of the region as other infrastructure namely schools, hotels, employment opportunities, colleges and hospitals of global standard will follow this mega project,” said Nirav Shah, director of Shah Group.
Moreover, builders with their projects in eastern suburbs find connectivity to Navi Mumbai airport better than the existing Chhatrapati Shivaji International Airport in Andheri. Flourishing commercial and marketing zones like Ghatkopar, Mulund, Chembur and Vikhroli have better connectivity with Navi Mumbai as compared to the Mumbai project. Thereby, people would prefer to fly from Navi Mumbai airport once it comes up as they will not get stuck in Mumbai’s traffic snarls.
Several big infrastructure companies like Larsen & Toubro and Reliance Infrastructure might be interested in bidding for the project. GVK Infrastructure, the operator of the Mumbai airport, has the first right of refusal.
But the project faces higher development costs. The project cost was earlier estimated to be Rs10,000 crore, but people tracking the development say the cost will now rise due to inflation and delays. The original plan envisaged the first phase of the three-phased project to be completed by 2014.
AM Naik, CMD, L&T, was previously cited in media as saying that the airport project cost will go up by Rs5,000 crore due to delays in land acquisition alone and this will challenge the viability of the project. The project is challenging as it involves land filling of the swampy area, levelling of land by removing a hill and moving power transmission lines. “This cost is pegged at Rs5,000 crore,” said a person involved with the project on condition of anonymity. “But these will see an upward revision by at least Rs3,000 crore,” Naik added.
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