The rise of the township model and the fall of Mumbai

Hiranandani Gardens in Powai is a more than 250 acres project.

A few weeks back I had the opportunity to interview arguably the most competent township builder of Mumbai – Niranjan Hiranandani. His brother, Surendra, and he have created two of the best townships in the commercial capital of India. One – at Powai. The other – at Thane.

His story of Hiranandani Gardens at Powai is best demonstrated by its pricing trajectory.

While home prices in Mumbai have jumped multi-fold across the board, nowhere else has there been the extent of appreciation than at Hiranandani Gardens at Powai. It started at INR 241/sqft in 1987 and today goes at INR 35,000/sqft.

As fascinating as the rise of his township is, one of the lesser explored aspects is the reason for setting up the township. After constructing several nice standalone buildings in the 1980’s, looking around he said “I was so disappointed. No good roads. No street lights. Sewage all over.”

Hence it was critical for him to not merely make the building but everything around it. It led me to a trend that is now almost omnipresent in Mumbai real estate: The rise and rise of township projects and gated communities. These are projects wherein the developer provides the building as well as several amenities and experiences around it.

The scale of the project varies according to the land parcel. But even inland parcels of less than an acre there is now a necessity to provide something beyond the building that enhances the experience. Structured data doesn’t exist but I would reckon that at least 70% of the housing supply in Mumbai are in projects that can be labelled as non-standalone buildings.

There are many reasons for this phenomenon. But one driver behind the rise of the township/gated community model is the failure of urban governance in Mumbai.

Open spaces have been encroached upon or grabbed by land sharks. Pavements have been sold to hawkers making even a walk feel as an adventure in select parts of the city. Infrastructure is in such terrible shambles that flyovers and roads develop cracks even before they are inaugurated.

Approach roads are built in such a shoddy manner that large developers now prefer to fund and construct it themselves. And traffic is now so dense and mismanaged that even a nearby club for recreational purposes can feel like a hostile ride.

To get away from it, developers create small islands for home buyers to get an honorable experience. The experience can be limited to merely a small well-lit passage that is clean for a short walk. And it can extend to providing scores of amenities in a large club house.

The transition from a third-world experience to a first-world life is often the entry gate of a real estate project. Loosely put – with the state failing its citizens, real estate developers stretch further to win customers. Developers of course play down this aspect for fear of retribution. While municipal bodies and administrations may not have the caliber to provide constructive solutions, they do have an ability to introduce destructive problems.

Even a heavyweight like DLF in Gurgaon faced the wrath of an agitated administration. As the promoter of DLF, KP Singh, wrote in his book – former Haryana Chief Minister Bansi Lal almost brought him down to his knees. In the case of the Hiranandani Group, rumours have always lurked of one ‘demanding’ Chief Minister who stalled his project at Powai over a decade ago.

In fairness – not all of Mumbai is witnessing this phenomenon. Standalone structures in micro-markets like parts of South Bombay, Bandra etc continue to have their appeal. The surroundings of these micro-markets are superior and they are in proximity to major economic centers.

For the rest the immediate surrounding is so poorly maintained, that a gated community with finesse possesses more appeal even at elevated purchase prices. Yet what this does is that it increases the overall cost of living as maintenance bills rise to provide those set of amenities to residents and home buyers.

Some projects have amenities that cannot be delivered by any administration but often the amenities listed in a project include merely a walking track or a garden that ought to be provided by the state itself. Mumbai often lives below its means as several services that ought to be provided free by governments are instead provided by private developers – at a fee.

In a city that has been hollowed out by ruthless misgovernance, developers have attempted to fill the void. The rise of the gated community model is directly linked to the fall of Mumbai. Many of Mumbai’s developers have risen to the occasion – it’s time the government did as well.