A. Shankar, National Director & Head of Operations – Strategic Consulting, JLL India
Today, the scale of urbanization in India is only 33%, whereas the size of the urban population is about 429 million – much larger than that of many other countries, according to World Bank data. The fact that Indian cities are among the fastest-growing in the world is clearly evident from JLL’s recent Cities Momentum Index 2017 – a research report which identifies the world’s 30 most dynamic cities. 6 out of 30 cities, namely Bangalore, Hyderabad, Pune, Chennai, Delhi and Mumbai, are in India.
Though it is an indicator of positive development, rapid urbanization is also accompanied by a host of challenges. The growing urban sprawl in India is leading to increased use of private vehicles, congested roads, increased pollution, public safety issues, increased household spending – and the stress that increasing population puts on the existing infrastructure of our cities.
Many of these problems can be solved or at least significantly reduced by cities augmenting their public transport systems and also integrating land use planning and development with the transport network. Such solutions can lead to markedly improved infrastructure efficiency – and a better quality of life for citizens.
Transit-Oriented Development (TOD)
After focused efforts to dovetail infrastructure and technology through its AMRUT and Smart Cities programs, the Government of India is now turning its attention to developing a Transit Oriented Development (TOD) policy to support the transformation process already underway in most of the Indian cities. This transformation will attract lot of investments to the respective cities, and vastly increase their ‘livability’ in a sustainable manner.
Essentially, TOD is any macro or micro development focused around a transit node that results in improved ease of access to the transit facility. When done correctly, such developments encourage citizens to prefer walking and using public transportation over using private vehicles.
Globally, cities like Singapore and Hong Kong in Asia, Curitiba in Brazil, Stockholm in Sweden and Washington DC in the US have TOD as an integral element in their master planning and integrated with their mass transport networks. The success and inherent inducements for growth that TOD delivers in these cities are remarkable. Around 26-30% of these countries’ populations – and the majority of their job centres – are along Metro corridors.
The TOD trend is now gradually making its mark in India, as well. Cities like Delhi, Ahmedabad, Mumbai and Chennai now have extensive high-order transit options either in place or in the planning stage. BRT (Bus Rapid Transit), LRT (Light Rail Transit) and MRT (Metro Rail Transit) are actively exploring the TOD opportunities in these cities by exploiting higher FSI along transit corridors for developments.
It is safe to state that TOD will be the future of urbanization, and that it will have a major impact on various sectors – not least of all the real estate industry.
Direct & Indirect Benefits of Transit-oriented Development
1) Releases under-utilized urban lands: The major reasons for urban sprawl and shortage of urban land is the fact that urban lands are not exploited to their optimal potential. TOD opens up dense developments near transit nodes through relaxed FSI norms, thereby increasing the developable area in the same piece of land.
2) Ensures sustainable urban growth: TOD curtails urban sprawl and hence reduces the strain on existing infrastructure. This helps in achieving compact and controlled developments within the cities, and reduces the average travel time and household spends on transportation.
3) Increased modal shift towards Non-Motorized Transport (NMT): Done correctly, TOD creates a balanced mix of land use through concentrated residential development at a walking distance of 500 to 800 m along the transit corridor, or from the transit station. This increases ‘walkability’, encourages public transport use and also makes ‘last-mile’ options such as cycle sharing systems much more viable.
4) Increased financial viability of transit investments: Increase in the modal shift increases the ridership (the number of passengers using a particular form of public transport) by improving access to transit stations through seamless connectivity. This enhances the economic and financial viability of transit investments. It also helps in better channeling of peak hour traffic along with both directions, improving the efficiency of existing vehicle fleets.
5) Improved quality of life with better places to live, work and play: Factors such as increased walkability, reduced traffic congestion and shorter commutes result in more leisure hours, reduced pollution, more reliable and safer public transport systems, mixed-use development, and efficient and shared open spaces. All these add up to the significantly improved quality of life for citizens.
6) Efficient management of infrastructure spending: In a city, a lot of infrastructure investments are often planned for the fringe areas owing to the urban sprawl and lack of infrastructure facilities. Infrastructure spends also need to be concentrated to benefit the core cities; it costs less to build roads/ expressways and other physical infrastructure for the urban sprawl. Also, transit options are first developed within city limits and later scaled to outer areas. Effectively optimizing this spending within the city limits is critically important, and is the perfect solution. Also, TOD exploits available urban lands to the maximum, thereby making enough space available to meet the growing demand for affordable housing.
7) More stable property prices and improved municipal revenues: While TOD puts urban lands to optimal use, the associated higher FSI, denser developments, bigger catchments and increased foot traffic help stabilize property prices and increase property tax revenues from the same land parcel for municipal corporations
8) Increased availability of EWS housing: TOD increases housing availability, and mandatory caps for the construction of EWS housing also indirectly help increase the supply of such housing.
9) Expanded economic opportunities and public safety, especially for women, who prefer to travel shorter distances to work in India. Many Indian cities are now working on improving general public safety and particularly reducing crimes against women. Commercial activity (hawkers, shops) at street levels on major walkways and other commuting paths create safer neighbourhoods by facilitating more ‘eyes on the street’.
TOD also impacts and change the dynamics of commercial real estate to a great extent. Increased FSI along transit corridors or 500 m to 800 m near the transit station will result in increased land cost by about 10-15%, projected to be about 1.6 to 1.7 times the existing GLV (Guide Line Value). The demand for retail or commercial spaces along the corridor increases on the back of improved accessibility, while residential demand also increases due to maximized employment opportunities, reduced commuting times and costs, etc.
TOD not only significantly alleviates residents’ daily commuting hassles, but also brings the collateral benefit of boosting property prices via the premium placed on residential premises situated close to the public transit systems like MRT and BRT), since there are immense savings in terms of reduced time and cost. The rentals of the residential units also increase significantly, as more people will want to live near Metro stations to benefit from faster and cheaper transport. If the feeder service is strengthened, this impact will expand the influence zone to 4-5 km from Metro stations.
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