Will proposed industrial smart cities drive real estate boom?

Cabinet’s decision to develop industrial smart cities is set to change the real estate dynamics in these region, say experts

The Union Cabinet’s decision to develop 12 industrial smart cities across 10 states of the country is set to give a boost to real estate in those cities as experts anticipate an increase in the demand for housing and commercial spaces.

The real estate experts also foresee an uptick of about 15-20 percent in these towns in the next couple of years. However, some experts also voice caution that real estate prospects will get a boost in and around these cities provided there is timely execution of such projects.

The Union Cabinet on August 28 had approved development of 12 industrial smart cities at an estimated investment of Rs 28,602 crore.

Also Read: Cabinet approves 12 new industrial smart cities; Uttar Pradesh and Andhra get 2 each

These cities will be strategically located in key regions across 10 states, such as Khurpia in Uttarakhand, Rajpura-Patiala in Punjab, Dighi in Maharashtra, Palakkad in Kerala, Agra and Prayagraj in Uttar Pradesh, Gaya in Bihar, Zaheerabad in Telangana, Orvakal and Kopparthy in Andhra Pradesh, and Jodhpur-Pali in Rajasthan.

Impact on land prices

Experts highlighted that the increased economic activity and improved connectivity will drive growth in these regions, making them appealing for new investments and developments. They added that land prices in these areas are also likely to go up after the announcement.

Vishal Raheja, Founder & MD, InvestoXpert.com, said that development of 12 industrial smart cities will impact the real estate sector in these regions as these cities will have potential to emerge as big economic hubs, encouraging investments on a large scale.

“More than 5,00,000 direct employment opportunities are likely to be generated in these hubs, while the requirements of residential and commercial real estate will see a quantum leap, which in turn, is projected to appreciate (to) values as high as 20 percent in couple of years. The inflow of technology companies with qualified professionals will result in good demand for quality real estate and, thus, the creation of pulsating economic centers," Raheja said.

According to experts, previously too smart city projects had given a push to the real estate landscape in different cities across the country.

For instance, in Karnataka’s Hubbali and Belagavi smart cities the rates of properties were pushed upwards after the implementation of smart city initiatives.

Also Read: How Smart City projects are changing real estate dynamics in Hubballi, Karnataka

Shashidhar Shettar, a real estate expert and former representative of the Hubballi-Dharwad chapter of CREDAI, said that commercial as well as residential real estate has boomed in adjoining areas of the green mobility corridor and Tolankere Lake in Hubbali and property rates had shot up by almost two times after the implementation of such initiatives.

Residential and commercial demand to grow

G Hari Babu, President, National Real Estate Development Council (NAREDCO), said that the approval of 12 new industrial smart cities will open up opportunities for industrial as well as real estate investment, as these areas are likely to see a surge in interest from both businesses and homebuyers looking to benefit from the new industrial growth.

“As a result of this initiative, demand for residential and commercial spaces is set to rise in key areas such as Agra and Prayagraj in Uttar Pradesh, and Orvakal and Kopparthy in Andhra Pradesh. The increased economic activity and improved connectivity will drive growth in these regions, making them more appealing for new developments,” Babu told Moneycontrol.

Under the National Industrial Corridor Development Programme (NICDP), these hubs will blend residential, commercial, and industrial zones supporting various industries.

Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com said that infrastructure upgrades in these smart cities are set to drive demand for residential, commercial, and industrial spaces, creating new opportunities for homebuyers and investors alike. “This initiative can also alleviate pressure on existing urban centers, paving the way for better-serviced communities," he said.

Also Read: Industrial smart cities to be ready by 2027: Commerce and industry minister Piyush Goyal

Nirmalya Chatterjee, Country VP – Indian Subcontinent, Nemetschek Group, said that the industrial smart cities will enhance the urban infrastructure, driven by enormous investments in construction and real estate development with integrated advanced technology and eco-friendly practices.

For instance, GIFT City in Gujarat has shown how reforms at the urban level can help boost not only demand but also economic activity in these sectors as a means of providing modern features and greater connectivity, he explained.

Timely execution is the key

Santhosh Kumar, Vice Chairman - ANAROCK Group said that the government's nod to build 12 industrial nodes under NICDP will enhance growth in and around these areas.

“The key lies in the faster execution of this smart city project. In the past too we have seen various initiatives being rolled out but the real challenge was in its execution. Hence, the real benefit will be seen only if there is timely execution of it,” Kumar said.

Also Read: Cabinet greenlights 12 industrial smart cities; which stocks should you keep on radar?

Lovekesh Singh, a real estate broker in Agra, said that though the central government has selected Agra for being developed into an industrial smart city but the only apprehension is that it should not merely limit to an announcement.

“A mere announcement will not give any long-term real estate benefit so the government will have to ensure that these industrial projects are executed on the ground soon. Project execution matters as, for instance, the real estate landscape started changing in Agra only after the construction of Jewar airport started on ground,” Singh said.