Interviews

Ahmedabad is the fastest growing metro city in India

October 2011
Suresh Patel, President, GIHED

Make no mistake; Gujarat is in the grip of an irresistible momentum, constantly buzzing with activity. From real estate and automobiles to infrastructure activities galore, the state promises to be a viable option for investors and developers in the country and abroad. In this scenario, the Gujarat Institute of Housing and Estate Developers (GIHED) plays a vital role in the state's infrastructure and real-estate sectors by presenting the state's real-estate issues to the government and developing, discussing and framing new government policies.

One of the men at the epicentre of all the action, Suresh Patel, President, GIHED, shares his insights and views on the infrastructure frenzy that has taken over Gujarat with Shanti Padukone. Excerpts from an exclusive interview....

Gujarat is fast becoming the infrastructure hub of the country.
Well, Gujarat has always been a leader in overall development in the country. The national GDP growth rate is currently 9 per cent; Gujarat is growing at a rate of around 13 per cent. In a few sectors, this has even gone up to 16 per cent! In fact, such rapid growth is visible not only in the construction sector but in other fields. Agriculture, small and medium industries,  
the pharmaceutical and medical sectors, ports and automobile industries all have an equal share in this growth. Such growth spawns employment opportunities while developing infrastructure. Today, almost a third of the investments in the stock exchange are from Gujarat; this gives us a fair idea of the state's financial and infrastructural stability as well as its potential.

How much money has the government earmarked for infrastructural development in this fiscal?
According to the latest reports, Ahmedabad is the fastest growing metro city in India. Hence, a number of grants have already been awarded by the Central Government under the JNNURM scheme. Also, the Gujarat Government has developed many cities over the years, and a minimum of Rs 10,000 crore has been allocated for Ahmedabad's infrastructure alone.

What initiatives have been taken by the government for private investment in the state? What about government-sponsored programmes?
I think the biggest change was brought about with regard to revenue reforms. With the ULCX clause taken out, people can now purchase any product; similarly, getting non-agriculture permissions have been converted into a single-window system. This shows the state's commitment to welcoming private investments. Such proactive governance may be seen in the case of Tata Nano, which was granted all the permissions within a week's time - something unheard of in other states. The government does not invest money in the state but people take their own initiatives through entrepreneurship. For example, the Vibrant Gujarat International Delegation is a platform for people from all sectors in the state to promote their subjects and industry. Hence, transparent policies, proactive governance and public private partnership are some of the excellent examples set by Gujarat.

In fact, Gujarat was the first state to implement the public-private partnership (PPP) system. How successful has this system been?
The best example of the PPP scheme is seen in the case of town planning. Today, not even 1 per cent of the land reform cases in the Supreme Court are from Gujarat. According to the state policy, privately owned land is divided into two parts: 35 per cent is taken by the government while the remaining 65 per cent stays with the individual. The government develops roads, gardens and different infrastructure by charging a developmental fee on its portion of the land, and sells around 15 per cent to generate income for the city's betterment. Moreover, the market value of the privately owned 65 per cent is not reduced, making it a viable proposition for investors and landowners.

What are the ongoing infrastructure activities in the state?
Several large-scale projects such as Kandla Port, the international airport coming up in Phaedra, and the biggest cargo airport in India - for which primary sanction has been granted - are giving the state ample potential to be channelled for development. Also, all shipments, primarily for North India, will now be transported from Gujarat. And, compared to other cities, we already have around four ring roads in Ahmedabad, with two more already on the drawing board. Apart from this, a riverfront development, based on the Thames river settlement in London, is being developed along the Sabarmati river and will extend up to Gandhinagar. Again, if the bullet train plan is sanctioned, the seven-hour journey between Mumbai and Ahmedabad will be reduced to a mere two hours.

Coming to the real-estate sector, around 40 per cent of real-estate transactions are taking place in Gandhinagar and Ahmedabad; this, along with employment generation, will lead to migration into the state. Ahmedabad and Gandhinagar will officially be the twin cities in the next five years. Coming up in the area in between are education hubs. Currently, there is a requirement of about 140,000 houses in the state and we are currently only able to provide for 32,000; even if the government policy changes, we won't be able to provide more than 50,000 houses annually. Under such circumstances, people investing here receive an annual appreciation ratio of about 30 per cent - a big advantage!

What are the current trends in the real-estate sector in Gujarat?
There is an extensive use of international technology in Gujarat. In the past five years alone, we have studied technologies from countries like Japan, Dubai, the US and UK and are trying to incorporate as well as encourage their use, owing to which new buildings with the latest architecture are coming up. Add to this, Gujarat is a power surplus state with 24/7 power supply; hence, purchasing property here is viable not only for investment purposes but to assure residents an enviable lifestyle.

Which infrastructure segments are currently flourishing?
The construction of roads and flyovers, construction of the new airport, the Central Government's infrastructure projects and the laying of pipes for the Narmada canal water supply project make up the leading infrastructure projects in the state. Port development is also a top segment. SEZs and SIRs (special investment regions) are taking over, and the Delhi-Mumbai Industrial Corridor (DMIC) has 37 per cent of its land in Gujarat. Also, in accordance with the north-south development corridor, the government has planned to develop an east-west corridor, which will result in complete networking of the entire state. In the real-estate sector, around 97-98 per cent of housing is being provided by the private sector. We also have a few townships by companies like Godrej, Adani, Applewood, etc.

How feasible is it for outside players to collaborate with local developers in the state?
Our local bylaws, revenue codes and ownership policies all assist the smooth launch of a project. They also ensure quicker bookings. Hence, collaboration with local players attracts the interest and investment of outside players.

You mentioned SIR projects, out of which Dhulera is the biggest. Can you tell us more about this project?
The Dhulera SIR project is still in the primary stage of its development, and preliminary permissions have been granted. The government has also granted permission for land surveys and setting up a town planning officer to draw up the town planning scheme. Meetings with private land owners have been set up for the project. The investment involved runs to crores of rupees and the project involves international developments as well. The initial phase should commence within one-and-a-half years or so, and will take at least 10 years to complete.

What about social infrastructure?
Ahmedabad has become an educational hub. Apart from the internationally renowned collection of institutes, universities for biotech and law, the Bhaskar Acharya University and Dhirubhai Ambani University, are being set up in the state. Medical tourism is also developing very fast with a number of international hospitals marking their footprint on Gujarat's soil.

So, how do you view Gujarat's future?
Given that our current GDP growth is at about 13 per cent, agriculture in the state is highly developed, we are an energy surplus land and with the number of infrastructure and real-estate projects coming up in Gujarat, we are expecting an appreciation growth of a minimum of 24-30 per cent per annum.

GIHED 2011: Showcasing world-class developments

With an active involvement of various government and private bodies, GIHED successfully represented Gujarat as a real estate hub by organising 'GIHED (The Gujarat Institute of Housing and Estate Developers) Property Show from September 10-11, 2011, at the Bombay Exhibition Centre, Goregaon (E), Mumbai. The show, attended by over 75 developers, showcased around 500 properties from Gujarat. It provided global exposure by organising international technical tours for the progress of developers and thus preparing them for the international market. It also laid emphasis on efficient construction, by focusing on perfect labour welfare activities. GIHED projected the city as upcoming auto hub in the backdrop of Tata Nano's plant and the announcement of companies like Ford and Peugeot to set up units in Sanand. Besides, the apex realtors' body also displayed improving infrastructure including the success story of BRTS and the proposed GIFT project.

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