National highways offer real estate opportunities across India with over 15% returns: JLL

In the short term, due to infrastructure development and connectivity being created, the real estate appreciation in the vicinity is estimated to be in the range of 60 to 80 percent. The other spurt in prices happens when the facilities or wayside amenities such as food courts, retail outlets, electronic vehicle charging stations, etc., become operational along the highways, the JLL report said.

Having recognised this opportunity, the NHAI (National Highway Authority of India) has identified more than 650 properties across 22 states with a combined area of over 3,000 hectares to be developed with private sector participation in the next five years.

This includes 94 sites along the Delhi Mumbai Expressway, 376 sites along under-construction new highways and expressways, and close to 180 sites along an existing network of highways in the country.

The clear emphasis on national highways and expressways has given a boost to India's growth story in the last three decades.

The government is focusing on providing world-class infrastructure and related services for the highway network and developing commercial spaces, warehouses, logistic parks, and traveler facilities including wayside amenities.

The JLL Strategic Consulting Head said: “We envisage that the NHAI will give an impetus to modernisation of the Indian Highway network in coming years, ultimately culminating in various advantageous effects for highways users, market players, developers, investors, and facility operators.”

JLL has been appointed as an international consultant by NHAI for properties located in the northern and southern regions of India. The engagement comprises shortlisting of existing and new land parcels in a phased manner, identifying options for land monetization, detailed feasibility, and financial viability of each site.

Out of the 650 identified sites, bids have already been invited for 138 sites and had received enthusiastic participation from market players.

“The majority of the said 138 site tenders are still active to receive bids as of 30 June 2021,” A Shankar said.

Capex investment per site ranges from Rs 1 to 10 crores on an average or Rs 2 crores per hectare of site area, which altogether translates to private investment to the tune of Rs 4,800 crores in the next five years for this mission. The lessee returns for a typical site and project are estimated to be in the range of 15 percent to 30 percent.

Clear land title, encumbrance free and pre-approved sites with no change in land use required, in addition to attractive lease tenure option of up to 30 years with flexible project development options will open more doors of growth for developers and potential investors.

The real estate development around this area provides immense potential for private sector participation. It emanates from established demand from the highway and non-highway traffic. Further, sites in prime locations across India, in the vicinity of major cities and towns are likely to appreciate, the JLL report said.

The development would also go a long way in providing employment to the local population as well as rounded development of the neighbourhoods of these identified sites, the report added.