Crucible Chronicle

CP is swinging again. Connaught Place, fondly known as CP, or Rajiv Chowk to give its official name, is seeing a rejuvenation of sorts, thanks to the Delhi Metro. Quite the heart of New Delhi, CP had seen retail businesses moving out to the fancier newer suburbs such as Gurgaon in the National Capital Region, and consequent fall in real estate values since the mid-1990s. With the commissioning of the Rajiv Chowk metro station in July 2005, and easy access to CP, shoppers are once more thronging this gracious shopping district, cash registers are ringing again, and rentals are on the rise.

It’s a vivid demonstration of the link between mass transit routes and property markets. While the primary role of a mass rapid transit system (metro, subway, whatever) is transportation, and routes are designed bearing in mind the flow of traffic and the passenger movement in a particular direction on an hourly basis, it is evident that the development of any new, large scale rail transit system has a direct impact on real estate valuations along the routes and around the metro stations. In fact, with footfalls assured, the Delhi Metro Rail Corporation (DMRC) is now looking at developing malls and business parks around a few key metro stations.

The impact of the metro rail on property prices and development is felt more strongly in Delhi, rather than Kolkata which historically had multi-modal transport, much as Mumbai, and to a certain extent Chennai, with suburban trains being integral to the city transportation network in each case. Delhi had put up with an overstretched public bus system for years, and the Metro is now proving to be a serious alternative mode of transport, gaining in popularity as each new line and section goes into operation.

The alacrity with which the Delhi public has taken to the Metro bodes well for the proposed Bangalore Metro, being developed by the Bangalore Metro Rail Corporation Ltd. The two dedicated corridors, one roughly north-south and the other east-west, intersecting at the Bangalore City railway station, have been planned in consultation with experts from the DMRC, after doing traffic studies and applying the same logic of commuter behaviour. Bangalore, like Delhi, has for long depended only on the public bus system operated by BMTC, and like Delhi, has an overwhelming number of two-wheelers due to lack of public transport options. The two cities are also radial in spatial development, and these contextual similarities suggest that the experiences of the Delhi Metro could indicate the future commuting patterns and related property markets in Bangalore, driven largely by the route plan.

Byapannahalli is the starting point of the Bangalore Metro on the east side, so all adjacent areas on the Old Madras Road could see property prices firming up. With 140 acres of factory land of the erstwhile NGEF coming into the market very shortly through an auction process, the Bangalore Metro is strategically positioned to reap the advantages of property development, and vice versa. On the west side, Raja Rajeshwarinagar and Kengeri could see positive development. In the south, Jayanagar and J P Nagar are the localities that will benefit, and in the north, Yeshwantpur, Peenya and surrounding areas. Importantly, the old localities around the City Market and the ‘pets’ – Chamrajpet, Chikpet, Nagarpet, et al, could witness urban regeneration.

Just as the Outer Ring Road has created opportunities on the outskirts of the city, the Bangalore Metro promises to transform the real estate scenario within the city. Happily, the old densely inhabited areas of central Bangalore stand to gain from this altogether new motor of development. Kempegowda would no doubt cheer.

Transportation and Land Use Integration is Essential in Practice, not just in Theory

Transportation and infrastructure is likely to prove absolutely critical for the competitiveness of global cities. Without adequate transportation investment it will be difficult to develop new outlying residential and commercial areas, or raise densities of older ones.

Transportation and land use are complementary. More fundamentally they can and must be seen and used together by planners and urban policymakers, often as substitutes for each other. In this vein, complementarity implies that not only will transportation and land use development reinforce each other, but that each can be used to complement policies and deal with problems, originating in another sphere.

This understanding of the transportation and land use duality provides urban policymakers with a powerful set of tools. Thus, the positive and reinforcing impacts of transportation investment can be readily used by the public sector to finance the transportation improvement and to help to obtain the necessary investment at little or no cost to the public. A case in point is the Hong Kong Mass Transit Railway (MTR) whose development was paid for by developers who were willing to pay for the development rights above and near future station sites. The public was able to extract, in advance, the increase in land values that would be created by the improved accessibility resulting from the MTR (e.g., there was a two way impact: MTR made density possible, and density paid for the MTR).

The positive impacts of the MTR on housing, office and shopping opportunities are particularly noteworthy since the MTR made possible the building of massive housing estate and commercial complexes directly on top of or in very close proximity to MTR stations. The key was providing sufficiently high densities to allow for very large scale developments to be built. The resulting supply of housing, offices, shops and hotels, all with excellent access, has certainly provided Hong Kong with a vitally competitive edge among it rival global cities in Asia. The MTR and its associated housing and land development policies yield another powerful illustration of the virtues of coordinating transportation investment, land use and urban development policies.

Marginal costs and benefits of urban development must be equated, especially in the transportation-land use area. Governments should consider shifting marginal costs onto the private sector through proper pricing of land use controls and development rights.

Excerpts from a paper presented by Dr Michael Goldberg, currently Chief Academic Officer at Universitas 21 Global, Singapore, at a Conference on “Urban Regions in a Global Context” held in Toronto, Canada in 1995. Reproduced with permission.