Will Panvel beat Navi Mumbai to become the new gateway to Maharashtra’s hinterland?

Monday, 21 February 2011 - 2:34am IST | Place: Mumbai | Agency: DNA
Cities that are thriving always tend to grow. And sometimes they outgrow themselves and spill over to areas in the neighbourhood, which are first called suburbs, then extended suburbs and then satellite towns.

Cities that are thriving always tend to grow. And sometimes they outgrow themselves and spill over to areas in the neighbourhood, which are first called suburbs, then extended suburbs and then satellite towns. Navi Mumbai was meant to be a satellite town that could take away some of the population density away from Mumbai. It worked, but partially. Lack of government will to push for the development of Navi Mumbai was the primary reason.

But the story of Panvel could be a bit different. Though located a bit beyond Navi Mumbai, it has attracted attention as a new town, which could become bigger than Navi Mumbai and even ease some of the population pressures that Mumbai currently faces.

To discuss the potential of Panvel was a panel comprising (in alphabetical order) MD Lele, chief planner, Cidco; Joy Sanyal, local director and head, development initiatives, Jones Lang LaSalle Property Consultants (India) Pvt Ltd; Mayur R Shah, managing director, Marathon Realty Pvt Ltd; V Suresh, principal executive officer, Hirco; Pradeep Swami, director, Fortune InfraProject Pvt Ltd; Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd; Aparna Vedula, senior planner Cidco.

During these discussions, moderated by DNA’s RN Bhaskar, several issues were raised. Given below are excerpts from this conversation:

DNA: The idea behind this Conversation is to explore the possibilities and to enlighten our readers about the risks and the challenges that might arise related to the Panvel region. We would like to learn about policy decisions to be taken and what additional policy initiatives are needed. Since we have two people from Cidco, could we have them tell us what Panvel is all about? You are the master planners, you are the people behind Panvel. What have you done in Panvel that you have not done elsewhere?
Lele: Panvel is the gateway to the MMR — the Mumbai Metropolitan Region. The main hinterland of Maharashtra lies towards the east and south of Panvel. Panvel provides quick access to the hinterland and it is the opening towards Pune. With the opening of the economy, one can expect a lot of development to take place in and around Panvel. There will be dramatic improvements taking place there.

Panvel has been a middle-class area, the other Navi Mumbai nodes are more affluent. Proximity to Pune is its biggest asset. With the new international airport coming up in Navi Mumbai, Panvel’s future seems very promising. It can really take off. Another plus point is its proximity to JNPT [the Jawaharlal Nehru Port Trust], the dedicated freight corridor [DFC], the industrial corridor [DMIC or the Delhi Mumbai Industrial Corridor, which could transform much of the business and logistics scenario for West and North India]. Even currently, the rail connectivity is excellent. As a terminus it is suitable for freight-related activities. Towards Pune you have agriculture, floriculture, so Panvel is poised for a great future.

Swami: We launched our project on the Panvel-Matheran road in 2008 at a rate of Rs1,500 per sq ft; it is now selling at Rs2,900. We are getting 15 to 20 bookings every month. In the stretch from Panvel station to Nere, not Nerul, six km approximately, 11 projects by different builders are coming up. In 2012, MMRDA [Mumbai Metropolitan Regional Development Authority] is going to revise the regional plan for the area. Land is [more abundantly] available in Panvel than in Mumbai [or even Navi Mumbai]. Once it is opened up for development, the possibilities are tremendous. In 2008, land prices were Rs3,000 per sq m. The same land today is selling at Rs12,000 per sq m.

Sanyal: Navi Mumbai is an economic hub. At the higher end locations, getting good land is a challenge. Since more land is available at Panvel, this becomes a plus point for real estate developers. You have to look at the agglomeration economy. Very few lands are available for development. Cidco is not giving out land in large pieces.

So far, the trend is towards buyers from the middle class who want some better amenities that they can get with the same budget in Mumbai. You cannot do this in old Cidco plots. However, in Panvel that is possible. People are fed up of staying in small buildings; they want playgrounds and open spaces. So supply will not reduce the price. On the contrary, because of the better amenities provided, it will increase the price, unless there is a glut in supply, which is not happening here.

Suresh: We identified the potential of Panvel three years back. We have taken up township development. It is an integrated, self-sufficient township with residential, commercial, health care, school, recreational facilities across 600 acres. People are aspirational, they want facilities within their own complex. We never had a dip in prices even during the recession; we are selling at Rs4,000 per sq ft now. We are offering 1BHK, 2BHK, 3BHK, 3-1/2 BHK and 4BHK apartment options.

People want their complex to be green and open, roughly 40% to 45% of the development of our project will be green, with a picturesque backdrop of the hills at the back.

Accessibility and connectivity is important from our point of view. I agree with Lele that what we thought was a small town has really developed. The current population of Navi Mumbai is around 18 lakh. You go for a match in the Chinaswamy stadium, they say it is no good, Eden Gardens is no good. And then you have the DY Patil stadium where international cricket matches are held. You have all the facilities in this region.

There are 31 engineering colleges in that area, 25 management colleges, 21 general colleges, 18 medical colleges. It is amazing. Roughly about 1.5 lakh young students are in the Navi Mumbai area. The total development of Navi Mumbai as a series of nodes is great; you have a population of around 2-3 lakh per node. We will be contributing to this with our project in Panvel with an addition of 35,000 to 40,000 homes in these 600 acres.

So what has causes the price volatility? It is the opportunity cost of land. In most of the development that has been taking place in Mumbai or on the outskirts of Mumbai, land costs are extremely high. Of the total project cost, land cost is 90% and construction cost is 10-15%. This is where the price spiral comes in. The real advantage for everyone comes in when the land cost is just 45%. Otherwise opportunity cost in prime areas is 90% when you have prices like Rs10,000 and Rs20,000 per sq ft and construction cost is at the most Rs2,000 per sq ft.

The attraction here is that there will be steady growth. Moreover, there is a great scope for capital appreciation because you are adding value to the land. You are creating all the amenities and facilities at a price of Rs4,000 per sq ft. With the fast connectivity, the airport coming up, hardly nine km from our location and connectivity on both sides, this is what people want.

The moment the railway line came up via Mankhurd to Vashi, Belapur, development began to take place. People want all this, they want fast connectivity, they want jobs, they want the walk-to-work concept. After all, the quality of life is about these things.

Vakil: We have twin cities everywhere. The success of Panvel will depend on the success of Navi Mumbai. The only exception is that the Nhava-Sheva link could change the fortunes of Panvel. It immediately reduces the distance between Mumbai and Panvel by almost half.

The key is connectivity more than the airport. Infrastructure connecting that airport with Mumbai will make a difference. There has been a 40% rise in prices post the airport announcement. In some places it is 60%. The more finished the product, the higher the acceleration. Whether this appreciation is greed, or the perception of value, remains to be tested.

Shah: Today, the land mass in Mumbai has gone up to Nalasopara and Dahanu [on the extended western suburbs of Mumbai]. Panvel and beyond Panvel up to Raigad are equidistant. Panvel has a lot more scope because it has JNPT, one of the largest employment providers; the largest IT corridor, at Mahape, has generated huge income opportunities. On the Pune side, there is development from Hinjewadi towards Lonavla, and now you will find the same development from Panvel.

Land is easily reachable. You have the Panvel-Uran railway line being laid out. Once the population comes up you can start it. You have the Mumbai-Pune Expressway and the old highway as well.  Most importantly, water is not going to be a problem thanks to the Morbe Dam. I got 5MLD [million litres a day] for my township. I would never have got this amount of water in Mumbai. All you need right now is a proper development plan. The social infrastructure needs to catch up. Huge chunks of land are available. We just need to develop the area in a proper and planned manner  That is why the development plan is critically important. And once land supply is available, and the development plan is in place, land prices could come down.

Vedula: The important thing that needs to be understood is that there are many Panvels in the Panvel region. Panvel is not a homogeneous region. There is the old Panvel comprising long-settled middle-class people.

The Cidco area is known as New Panvel. It is approximately 500 hectares. It is envisaged as a township. Cidco is developing the social infrastructure, so there is no need for developers to provide it.

For the larger Panvel, you need high-level infrastructure, not just a road or an entry to the expressway. Once the land opens up and the market supports it, development will happen. Government intervention is very important.

DNA: So who would Panvel cater to? Which are the buyer segments that will buy homes there?
Suresh: Affordability is your ability to take care of your home loan repayment. The cost will range between Rs 25-30 lakh and Rs30-50 lakh. Obviously, no builder will build anything that doesn’t sell well.

Swami: We are getting maximum customers from Navi Mumbai itself. People can sell their existing homes and buy a bigger place. A four-kilometre distance from the station is quite acceptable.

Sanyal: There are different categories of housing options in Panvel. You have the Cidco plots, then you have those along the Matheran Road catering to the affordable housing segment and finally you have the township projects.

Shah: If you want to ensure a larger development in Panvel, you will require good connectivity and a regional plan that will assure the builder that if not in the next three to four years, at least 10 years later something will come up there.

If zones for schools and colleges are allotted, then the builder will know that he has to make arrangements for the initial few years and after that the authorities will do the needful. The Panvel-Raigad region can extend the IT corridor right up to Khopoli.

You have to first see what are the employment generators. Once MMRDA decides on a regional plan, the declaration of that plan alone will be enough for developers to come to Panvel. At that point, I will know with reasonable certainty that for the five years I will have to manage; but after that the government will take over [the development of social infrastructure]. Today, Panvel offers maximum value for money.

Sanyal: If you look at the migration and population patterns, people are coming from Mumbai to Navi Mumbai. But, there is a good chance that Panvel may become the hub of Navi Mumbai in the future.

Shah: There is a need to think radically. How far am I from the Bandra Kurla Complex, from Mahape, and from South Mumbai? To make the region vibrant, and for better growth, you need connectivity between the two airports [the old one at Vile Parle and at Sahar, and the new one that has just been cleared for development]. And a sea link connecting Mumbai to this region [the Nhava-Sheva Sea Link]. We have seen this happen abroad in the case of New Jersey and Manhattan. Better connectivity with Manhattan allowed New Jersey to become a vibrant territory.

Sanyal: One has to acknowledge the quality of the planning behind Navi Mumbai. Cidco is a unique agency and it has done fantastic work. Now, it is time for the integration to happen [between Cidco and MMRDA].

Suresh: If there were no political will, the new airport would not have got cleared. There is excellent road and rail connectivity. The average age of Navi Mumbai residents is 30 years. This whole region is full of young people who have come for work and want to buy a house of their own.

Vedula: Many people make a major mistake when they refer to Navi Mumbai as a satellite town. Initially, in the ’70s when the Navi Mumbai project was conceived, it was seen as an alternate metro, not a satellite town.

The idea was to decongest Mumbai. In fact, shifting Mantralaya to Navi Mumbai was the original plan. Unfortunately, that did not happen. Ultimately, Navi Mumbai got reduced to the status of a satellite town or a dormitory.

In the mid ’90s, things began to develop with the service sector coming up in Mahape and the industrial belt in Taloja growing, IT and software companies began coming in. With these linkages, Navi Mumbai got a new lease of life. You are going to have more IT and other activities taking place in Navi Mumbai.

The new airport and SEZ is coming up now. Navi Mumbai as a city has little land where Cidco can leverage the new airport, etc. The onus is now on regional planners like MMRDA to take up large-scale intervention. There is a definite need for strategic intervention in infrastructure.

Lele: As regards land, there is a need for accessibility. If you improve the infrastructure, connectivity will drive development. Someone has to take a call on this; MMRDA needs to prepare the regional plan. You can propel or galvanise private developers to aggregate the lands. Developers will not mind paying for on-site infrastructure. But there has to be a single agency providing basic infrastructure. There has to be a Public-Private-Partnership land acquisition model. Fortunately, there is good news on this front. New norms have been introduced for developing 100 acres under the Township Act.

Shah: There is a need to offsite the infrastructure process. There should be no need for each and every builder to go to the Morbe Dam and get a separate connection for his own project.

Sanyal: Cidco’s role needs to be extended. They can make a big difference to the development of Panvel.

Suresh: If the population of an area is larger than 10 lakh, it is considered to be a metro. With an approximately two million population, Navi Mumbai is definitely not a satellite town. Panvel and New Panvel are both linked. Strategic linkages are required at the outside level.

Shah: There is a 110-km multimodal corridor being developed by MMRDA between Vasai and Alibaug, there will be a north-south-west corridor so linkages will improve in future.

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